Do you know what your business is worth? I mean, really worth? When I say worth, I mean if you were trying to sell your business do you know what someone is likely to pay you for your business?
The reality, of course, it that it is always hard to know what a business could truly sell for … but instead of just avoiding the question, we think it is critically important to try to answer the question. Why? Because when you measure your business by external metrics, you get very clear very quickly about what adds value to your business. All of us as business owners have a fiduciary responsibility to add and build value for our businesses.
But I want to encourage you to measure this regularly and to think of the value of your business as the TRANSFERRABLE value you are creating. Why transferrable value? Because if the value you are building in your business is all about you as the owner, it may be benefiting the business in a real sense but you won’t ever be able to actualize a payout of that value. The business value that really matters ultimately is the value you can transfer upon sale.
For those of you who think you are nowhere near ready to sell, I still encourage you to think about the value of your business, and how you are growing that value. This will help focus you as a business owner, to measure how you are continuously increasing the value of your business. It will also help you in your personal planning. Valuing your business also is an important element for contingency planning of all sorts – we never truly know what will happen to us, and it’s always beneficial to have clear ideas about what would happen to your business if something suddenly happened to you.
At ZümiFi, we can help clients think about their business valuation, and track increases year over year. The situations we have experienced, the average valuation increase has been 60-100% year over year!
Are you interested in increasing the value of your business? Start tracking it now, and make sure you are continuously driving your business to grow in value.