Your Successful Path to Financal Freedom
Your business is an asset… Just like everything else you own. But like any other asset you have that you want to sell, you must be sure it is READY to sell.
What is the value? How is that determined? How can you maximize it?
Seems simple enough.. Add up what you had for sales from the previous year, or year to date, and there’s your number.
But what if you had a bad year? What if a pandemic hit? Would that throw everything off?
What is your profit margin? How is calculated? Is it revenue minus expenses?
Is it what your Tax Advisor puts down on your Schedule C?
What the heck is EBITA? It’s a measure of a company’s financial performance.
E – Earnings
B – Before
I – Interest
T – Taxes
D – Depreciation
A – Amortization
Enterprise value is the measure of a company’s total value. It looks at the entire market value, so all ownership interests and asset claims from both debt and equity are included.
This would be completed by a third party. You would hire a Business Evaluation firm to do an evaluation on your business. Its an appraisal and will provide a value of your business.
Don’t laugh.. But MANY business owners use this as a calculation for what their business or practice is really worth.
It’s a guess. It takes into consideration what Joe-Schmoe, down the street, sold his business for (which is like yours…. But kinda not)
This is something that should be thought about, at least 5 years, in advance (closer to 10 actually).
Once your time frame is established, the HOW needs to be figured out.