I want to talk about a little problem we face in our company which is a valuation calculator. Many people look at tools and real estate like Zillow, or they go through the Kelly blue book of automobiles and ask"Why don't you have a business valuation calculator?
It's been going on for a long time but the truth is we'd like to. The problem is that it's difficult. So there are a few really good baselines, like revenue and earnings and we can talk about guidelines and what they look like but what makes us difficult to achieve is that you can take two businesses, same revenue, same earnings, and they are worth hugely different amounts. It's like two, three times the other, and they're not even far apart. This is due to intangibles.
There's so many things to an enterprise such as Intellectual property rights, defensibility tools and more that create an extremely complex issue that just asking how much are you making and are you worth five times that hypothetically. We're now working on the issue. It's probably a little far too early to speak about the issue, but we're currently working with an incredible company to resolve this issue, and will have a solution soon. However, in the meantime If you have any queries about how you can increase the worth of your business, or what your business is worth, then why don't you give us a call by calling Freedom Factory. We're looking forward speaking with you soon.
How to prepare my business to be able to sell?
Many entrepreneurs aren't sure of how to prepare their business to sell. If you've made the decision that you want to sell myour business. Now what? Well, the first thing you need to do is get your home ready for your company to sell. Also, obtain two or three years worth of tax of tax reports.
Financials and then put them together. Find them from your accountant and get ready for. If you've not created an operating manual, now is an ideal time to do so. You're familiar with how your company works, you know the ways that different departments interact, but when you decide to sell the business we wish for it to be as simple for you to transfer the business to the new owner.
This value is likely to be reflected in the sale price. Therefore, put your operation manual and new job descriptions and make sure your home is in order. And the third piece is find, you know, how to put your team together. Find a good appraiser and broker. Determine the value your business has. Start to craft the story and then figure out how we going to bring it to the market?
When will we take it to market? What's the tax situation currently. You know, how can I recast my financials? What I mean by that is really easy. They're going to, we're going to use your EBIDTA or your accountant could do the same thing and then translate it into seller's discretionary cash flow. That is.
A fancy way of saying all the money, that your business creates as you file your tax returns. It's a game of minimization isn't it? Tax evasion is a crime. Tax avoidance is a smart strategy. So you're seeking to be as tax-efficient and pay as low a tax as you can. We have to translate that you know, from some of your non-cash expenses such as depreciation, some of your discretionary stuff and add that back in to maximize the value accurately.
Highlight the value your business creates which will bring about a significant change. Finally, you should know which industry you going to be in? How do we maximize your multiple? And there are methods to accomplish that. But think about what field you're working in. Figure out, you know, all your financials.
Put an operations manual together to ensure that the transition is as smooth as possible. And all of this will be is going to help you when you put the right team together. Find the most qualified appraisers, find the right brokers to assist you in preparing your company for selling If you require assistance with this get in touch with us right here, by calling Freedom Factory.
What is the best moment to sell my business?
This is an extremely important topic and when is the best time to sell your company? This one is a bit more of an art than science. It's basically a gut check of the things you've learned. We're outside. This is my backyard. mountain house and is kind of my home.
The first thing I'll suggest to you is get an escape. Get out of the workplace. Escape the daily grind whether with your family or away. Now figure out some place that you can go, no matter if you like to fish, ski or visit the mountains or go to the beach and whatever it is you like, go to a place and switch your place of residence and go to a place that you're comfortable.
Think of your company. When I think about it, and think about it in three areas. First, am I really here and am I clear? Are I actually in my business? Am I serving my business or is my business serving me? In my opinion, life is too short to live in a place where you work for your company. Your business is your personal vehicle to more freedom and more money.
The way I think of freedom is fairly easy - doing what you want, at the time you desire, and as often as you'd like and with whom you'd like. If you are in love with the work you're doing and think, God, this is incredible, and I'm there and I'm clear and I'm doing exactly what I'm supposed to do and that's how I look at selling my businesses to entrepreneurs in general and entrepreneurs, then that's great.
The time is not right to sell your business. If you're not sure about this, I'd take a second look, and I would dive in and say, do I have the right vision? Do I have a clear view about where I want to go?
I'm thinking of taking my business in the next two, three, maybe or even in five years? What can I do in order to resolve it and feel great, and feel like I've accomplished what I've accomplished? If your company is growing by 40% per one year or even 50% per year, you probably have a clear vision. It's likely that you're doing a great job and you probably feel that you're in the flow. However If you've been growing by 5% in the last five years, that's a little bit more challenging and someone else is able to do it better than you.
When my business is expanding at 5%, I'm looking to sell. I'm thinking, okay, I'm looking for an operator. It's more of a strategic person. How do we concentrate on really creating something that is amazing, where you're on point and on purpose, but your growth rate is a good indicator of this.
The last thing to remember is, you've done what you came to accomplish if, were to start your own company, when I came to the business brokerage business, i was aware that I wanted to alter the way that entrepreneurs buy and sell businesses. I've started three of the largest brokerages. I hired, the third one, I've purchased them to gain the staff, and have created a effective market. This is the goal I set out to achieve when I moved here.
But if you left your current job and thought about this for a second and then decide to leave, would you feel happy or do you feel that you didn't finish the job you came there to do. When I look back on it and said I'm okay I'm satisfied with how my business is serving me. Do I feel clear and focused each day?
Do I have anything I need to do and do I have new ideas to implement the vision? These are the things that walk you through it. It's a little bit of an unreliable science, but overall it's really an assessment of your gut. What do you think? Do you think it's the right time to sell your business?
If I'm thinking about selling my business, it's about six months too in the past. If you have additional questions about this or anything else we would consider it our pleasure to assist here at Freedom Factory. We're waiting for you to give us a call.
Check out https://freedomfactory.com/why-freedom-factory/ will give you a free business valuation to find out the worth of your business. Denver business broker Ty Tysdal will help you to prepare your business for sale.
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