Let's discuss a small issue we're facing within our organization that is a business valuation calculator. People look at tools and real estate such as Zillow, or they look at Kelly blue book of automobiles and ask"Why don't you have a calculator for business valuations?
You've been doing this for so long and, in reality, we'd love to. But it's not easy. And so there are a few very good benchmarks, such as earnings and revenue, and we could discuss guidelines and how they will look like. What makes it difficult to achieve is that you can take two businesses that have the same revenue and earnings, but with vastly different multiples. In reality, two, three X each other, almost not even as close. That's due to intangibles.
There's a myriad of aspects to a business including intellectual propertyand defensibility software, and so on that can create an extremely complex issue than just, Hey, what are your earnings and are you worth five times the amount you're imagining. Now we're working with it. It's probably a little far too early to speak about it, but we're working with an incredible business to solve this problem and we're going to come up with a solution shortly. But in the interim should you have any queries about how do you improve the potential of your company or what your business is worth, then why don't you give us a call toll free at Freedom Factory. We look forward to speaking with you soon.
How to prepare my business to sell?
Entrepreneurs are often confused about how to prepare their business to sell. If you've made the decision that you'd like to sell your business. Now what? Well, the first thing you'll need to take care of is get your home organized to get your company to sell. Also, get two or three years worth of tax-related tax documents.
Also, financials and put them together. Get them from your accountant and get them ready to go. In the second, if you've never made an operational manual, this is a great opportunity to create one. You know how your business works, you know the ways that different departments interact however, when you decide to are selling your company, you wish ensure that it is as effortless as possible for the transition to an owner who is new.
This value is likely be included in the price of sale. So go put your operations manual and job descriptions together and put your house in order. And the third piece is find, you know, put your team together. Find a reputable appraiser and broker. Find out what your business is worth. Begin to write the story and then figure out, okay, how are we going to bring the business to market?
When will we launch it? You know, what's the tax situation currently. What can I recast my financials? What do I say by that is straightforward. They're going to, we're going to take the information from your EBIDTA or your accountant could do the same thing and then translate it into the seller's discretionary cash flow, which is.
A fancy way to describe all the money that your, that your business creates as you file your tax returns. It's a game of minimization you think? Tax evasion is illegal. Tax avoidance is very smart. You're trying to pay as little tax as possible. Well, we have to translate that it's from certain of your other expenses depreciation, for instance, some of your discretionary stuff and add that back to increase the value.
Make sure you highlight the value your business generates which will have a major impact. And finally, you know which industry you likely to be in? How do we maximize your multiple? And there are methods to be able to do this. Think about the sector you're in. Determine, you're aware, all your financials.
Put an operations manual together to ensure that the transition is as smooth as is possible. All of this will be is going to help you by putting together the best team together. Find the most qualified appraisers, and find the best brokers to help you prepare your company for selling If you require assistance with this get in touch with us to us toll free at Freedom Factory.
What is the best time to sell my business
This is a really important issue and when is the right time to sell your company? This question has a bit more art than it does science. And ultimately it's kind of a gut check of what you know. We're outside. This is the backyard of my mountain home and is a part of my home.
The first thing I'm going to recommend to you is some fresh air. Take a break from the workplace. Take a break from the commute whether with your family or away. Find a location where you could go, no matter if you like to fish or ski or go to the mountains or go to the beach , and whatever else, just go somewhere and change your destination and go to a place that you feel really comfortable.
And then think on your own business. And I look at it and I analyze it using three areas. First, am I really here and do I have a clear understanding? Do I truly believe in my business? Do I serve my business or is my business serving me? And I think life is too short to live where you work for your company. Your company is your personal road for more freedom and money.
What I mean by freedom is pretty straightforward - it's about doing whatever you like, whenever you desire, and as often as you'd like and with whom you'd like. And if you love the work you're doing and feel like, God, this is amazingand I'm there and I'm focused and I'm doing what I'm supposed and that's how I think about selling my businesses to entrepreneurs in general, then that's awesome.
It's not the time to sell your company. If you're unsure about that, I would consider a bit more and then look at the situation and ask: is my business positioned with the proper vision? Do I have a clear vision on where
I'm planning to expand my business on in the next two, three, or maybe up to five? What can I do in order to resolve it and feel great and feel that I've achieved what I've done? If your company is growing 40% a one year or even 50% per year, you probably have an eye-opening vision. You're probably executing really well and you're probably feeling in flow. However If you've been growing at 5% over the last five years, then it's more difficult, and perhaps someone else is able to do it better than you.
If my company is expanding at 5percent, I'm considering to sell. I'm thinking, okay. I'm looking for an operator. It's more of a strategic guy. How do we concentrate on really creating something that's incredible, and you're on point and on purpose however, your growth rate is a good indicator of this.
The final point is that you've accomplished what you set out to do if you, if you went into your business, when I came to the business brokerage business, i was aware that I wanted to alter the way entrepreneurs purchase and sell their businesses. I've started three of the biggest brokerages. I hired, the third one, purchased them to gain the right people, and I've really made it a much better market. That's exactly the thing I wanted to achieve when I moved to this place.
But if you left your current job and thought about it for a moment do you feel satisfied or would you feel like you didn't finish the job you came there to do. So I looked back at it and I say, okay does my company serve me. Are I focused and clear every day?
Do I have anything left to accomplish and do I have new ideas to implement the vision? These are the things that walk you through it. It's an imprecise science, however overall it's really a gut check. Do you agree? Do you think it's time to sell your company?
If I'm thinking about selling it, it's about six months too in the past. If you have other questions regarding this, or any other topic we would consider it our pleasure to assist with your questions here at Freedom Factory. So just give us a call
Go to https://freedomfactory.com/about-freedom-factory/ will give you a free business valuation to find out the worth of your business. Denver business broker Tyler Tysdal will help you to prepare your business for sale.
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