I sat down with a prospect the other day who was looking to sell her business. When I asked her what her main reason for selling was, she told me that she has never made more money before in her life yet she still has nothing to show for it.
Translated: She had tremendous revenues and even greater expenses. Part of her problem was the unrealistic expectation that she could just start a business and treat it like a job where she was the boss. A good company has systems and processes. It also has a great deal of complecity over and above being one of the best employees and being the boss at the same time.
This business owner was so deeply involved in day to day operations that she could not have been a good manager of the business. She was working in the business and not on the business. At some point she will need to start working her way in to a management and ownership role instead of owning a job. Her mindset should be that of an individual creating an asset to sell instead of an employee looking for job flexibility.
Do you have a job or do you own a business? Define your exit strategy now so that you can leave the business as a wealthier person in the future.
Monday, March 3, 2008
Wednesday, February 27, 2008
What is my Business Worth?
Most business owners have no clue what their business is worth. I guarantee you that they have a number in mind and it is usually higher than actual value.
The answer to the question is: Your business is worth what somebody is willing to pay for it. Have you ever seen those car auctions on television? The ones where celebrities are roaming the floor and obviously arrogant rich people are exuding an aura of self grandeur? If not not then I am sure that I have accurately painted a picture for you. These are the auctions where a 1972 American muscle car will go for $90,000 and the same muscle car goes $20,000 in Auto Trader. What is the car really worth? Its obviously hard to say from this limited amount of information, but rest assured there is snowballs chance in hades that an Auto Trader reader would pay $90,000 for the car.
You don't have to subscribe to Entrepreneur Magazine or Inc. Magazine to know that a business losing money is not a good investment on the surface. There may be circumstances where a buyer would pay top dollar for a business losing money. Perhaps the company has contracts in place that would allow a new buyer access to a tough market to gain access. Once again the value is in the details. In this scenario, the buyer is in essence paying the Muscle Car Auction Premium, where as most potential buyers would be ready to pay Auto Trader Pricing.
Determining the asking price for a main street business has a lot to do with the performance of the business and not so much about the intangible benefit it might bring a buyer. Cash flow is king and you should focus on maximizing your profitability to command the highest price possible.
Request a business valuation at http://www.go4big.com/form_viewer.html?formid=41
The answer to the question is: Your business is worth what somebody is willing to pay for it. Have you ever seen those car auctions on television? The ones where celebrities are roaming the floor and obviously arrogant rich people are exuding an aura of self grandeur? If not not then I am sure that I have accurately painted a picture for you. These are the auctions where a 1972 American muscle car will go for $90,000 and the same muscle car goes $20,000 in Auto Trader. What is the car really worth? Its obviously hard to say from this limited amount of information, but rest assured there is snowballs chance in hades that an Auto Trader reader would pay $90,000 for the car.
You don't have to subscribe to Entrepreneur Magazine or Inc. Magazine to know that a business losing money is not a good investment on the surface. There may be circumstances where a buyer would pay top dollar for a business losing money. Perhaps the company has contracts in place that would allow a new buyer access to a tough market to gain access. Once again the value is in the details. In this scenario, the buyer is in essence paying the Muscle Car Auction Premium, where as most potential buyers would be ready to pay Auto Trader Pricing.
Determining the asking price for a main street business has a lot to do with the performance of the business and not so much about the intangible benefit it might bring a buyer. Cash flow is king and you should focus on maximizing your profitability to command the highest price possible.
Request a business valuation at http://www.go4big.com/form_viewer.html?formid=41
Thursday, February 21, 2008
2008 Daytona 500 - celebrate small victories
This year's Daytona 500 came down to a fantastic finish with Penske Automotive taking the top two spots. It is the first time in Roger Penske's storied racing history that he won the Daytona 500 as a car owner.
A big reason for the victory by Penske driver Ryan Newman was the support of his team mate Kurt Busch. Kurt Busch had an opportunity to try and pass Ryan Newman who was running in second place, but there was no guarantee that he would have passed him. It was also likeley that if he did try that move, neither he nor team mate Newman would have been able to pass race leader Jimmie Johnson. It was more likely that they both would have slipped back to third and fourth place.
Kurt Busch chose to push Ryan Newman in to the lead then take his chance to pass him. By doing so he finished second and his appreciative team mate won the race.
As business owners we sometimes risk a lot for the possibility of a huge success rather than give up a little for a very respectable success. Focus on achieving small victories every day and in the long run you will finish further ahead than if you always go for big wins.
What small victory did you celebrate today?
A big reason for the victory by Penske driver Ryan Newman was the support of his team mate Kurt Busch. Kurt Busch had an opportunity to try and pass Ryan Newman who was running in second place, but there was no guarantee that he would have passed him. It was also likeley that if he did try that move, neither he nor team mate Newman would have been able to pass race leader Jimmie Johnson. It was more likely that they both would have slipped back to third and fourth place.
Kurt Busch chose to push Ryan Newman in to the lead then take his chance to pass him. By doing so he finished second and his appreciative team mate won the race.
As business owners we sometimes risk a lot for the possibility of a huge success rather than give up a little for a very respectable success. Focus on achieving small victories every day and in the long run you will finish further ahead than if you always go for big wins.
What small victory did you celebrate today?
Subscribe to:
Posts (Atom)
