true value T 44 scrapbook business
This is an excerpt from the newly-released book, Entrepreneurial Insanity: When Doing the Same Things Do Not Produce Different Results, It’s Time to do Different Things! by Roger McManus. Roger is a regular contributor to Scrapbook Business magazine, generally writing about new profit center opportunities and business strategies for small businesses. His presentation at the 2010 CHA Conference was titled: “Small Business or Entrepreneur; It’s a Mindset that Makes a Difference”.
rue Value by: Roger McManus S Could your successful business be worth-less?
ometimes people who own apparently successful businesses are taken aback when it is suggested to them that the businesses are “worthless”. A softer way to say it is to split the word and say their business is “worth less” (than it could be). In harsh reality, the first term may actually apply.
Usually the owners of these successful businesses are right in the middle of the action. They keep a sharp eye on the details and have a joyful relationship with customers and a ready answer for employees seeking counsel. And, odd as it might seem, those traits actually keep the business from being worth as much as it could.
Valuation Model. The “legal” definition of value is, “the price at which a willing buyer and a willing seller agree on.”
The key word is willing. No “fire sales”. No duress. No opportunistic gouging.
Businesses are sold every day where one party or the other is not on solid footing. But, in long-term planning, the key objective is to prepare your business for sale from the first day you open it. It does not mean that you will sell it. It certainly does not mean that you have to sell it. But, if you have it ready to sell, it always has a value. The decision not to sell it essentially means you decided to buy it yourself (with the money you could have gotten from the sale), because it is a good income stream
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