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The value of your business
Small businesses are the backbone of almost every economy in the world. As a small business owner, you focus most of your time on growth and success without even thinking about leaving your company. Yet, it comes a time when you’re ready to move on.
However, understanding, simulating and calculating the value of your business might be a difficult and unpleasant work. The costs are high, the process is tedious and more than often, business owners quit before even starting the procedure.
Let’s face it, business exits have a Machiavellian aura to it and about 25-27% of entrepreneurs over the age of 50 simply retire or end their companies through liquidation. For example, the U.S. economy loses an estimated 150-200 billion$ because of failed exits according to the Exit-Planning Institute. But the options give you no opportunity to receive a compensation for the value of intangible assets. On the contrary, when you decide to sell your small business, you capitalize also on other assets like brand, market share, management, employees – all wrapped up in what is called goodwill.
So, what can be done? Which one should be the first step if you decide to sell your business? How can you evaluate what is your small business worth?
You should have a look at your sales and profit history, products and services, location, equipment etc. Of course, you will probably discover that there is room for improvement and you might be forced to decide whether to sell now, sell later or liquidate. Using a business simulator would really help entrepreneurs like you to discover how attractive your company is to buyers or investors.
But there is actually something else that you should always keep in mind. No matter if you choose to sell the business to an existing partner, to another business, to an employee or to pass it on to your relatives, you are cooperating with people. Sometimes, even in real life, magic can happen. Sometimes, 1 plus 1 equals 10, 20 or even more. This is the wonderful result you obtain when 2 or more remarkable people decide to collaborate for a better common good.
Knowing the value of your small business will help you describe and point out the strengths and the opportunities of your business. All your prospective buyers would need to know the truth and the facts behind your company and therefore they will expect from you accurate information and data.
Business exits shouldn’t be a headache – in the end, it is all about collaboration and coaction.
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