This podcast will look at a minor problem we face within our organization that is a business valuation calculator. People are looking at real estate and tools like Zillow or go through the Kelly blue book of cars and think"Why don't we have a calculator for business valuations?
It's been going on for so long, and the reality is we'd love to. But it's not easy. And so there are a couple of excellent baselines, for example earnings and revenue, and we could discuss guidelines and how they will look like. But what makes it so difficult is you can have two businesses with the same revenue, same earnings, worth vastly different multiples. In reality, two, three X one another, and barely even as close. And that's because of the intangibles.
There are a lot of things that go into an enterprise such as intellectual property, defensibility software that create an extremely complex issue than just, Hey, what are your earnings and how much are you worth? that hypothetically. Now we're working with this issue. It's probably too early to talk about it, but we're working with an incredible company to resolve this issue, and we'll come up with a solution shortly. But in the interim If you have any questions about how you can improve the value of your business or even what your business is worth, why not contact us at Freedom Factory. We look forward to speaking with you in the near future.
How can I prepare my company to sell?
Entrepreneurs often aren't sure what they should do to prepare their company to sell. You've decided that you'd like to sell your business. What next? The first thing you need to do is get your home organized to get your business for selling. Therefore, you should take two or three years of tax-related tax reports.
Financials and then put them together. Take them to your accountant and have them ready to go. If you've not made an operational manual, this is a great moment to start. You know how your business works, you know how different departments work, but when you sell your business, we want to make it as effortless for you to transfer the business to an owner who is new.
The value of that will to be taken into consideration in the price of sale. So , get your operations manual and new job descriptions together , and put your house in order. The third step is to discover, well, put your team together. Find a reputable broker and an appraiser. Get an idea of the value your business has. Start to craft the story and then figure out what you want to accomplish. we going to get it to the market?
When will we take it to market? What's the tax situation currently. You know, how can I alter my financials? What I say by that is simple. We're going to take your EBIDTA or your accountant's ability to do similar things and then translate it into seller's discretionary cash flow. That is.
A fancy way to describe all the money, that your business creates during the process of filing tax returns. It's a game of minimization, right? Tax evasion is a crime. Tax avoidance is extremely smart. It's why you're trying to pay as little tax as you can. Well, we must translate that, you know, into the non-cash costs you incur such as depreciation, some of your discretionary expenses and then add it back in to maximize the value accurately.
Make sure you highlight the value your business creates which will bring about a significant change. Finally, you should know which industry you planning to enter? How do we maximize your multiple? And there are methods to accomplish that. Think about the field you're working in. Figure out, you know, all your financials.
Make an operational manual to ensure that the transition is as smooth as is possible. All of this will be can be a huge help by putting together the best team. Find the most qualified appraisers, find the right brokers to assist you in preparing your business to sell If you require assistance with this contact us to us by calling Freedom Factory.
When is the right moment to sell my business?
This is an extremely important topic and when is the right time to market your company? This question has a bit more of an art than science. It's basically a gut check of what you know. We're outside. This is the backyard of my mountain home and is a part of my happy place.
The first thing I'm going suggest is to get a change of scenery. Take a break from the office. Get out of the commute or with your family or out. Find a location where you could go, whether you love to fish or ski or go to the mountains or go to the beach and whatever else you like, go to a place and switch your place of residence and get somewhere you're comfortable.
Think about your business. When I think about it, and consider it in three areas. First, am I really here and am I in the right place? Are I actually in my business? Am I serving my business or is my business serving me? It seems to me that life is too short to live where you serve your business. Your company is your personal road to more freedom and more wealth.
What I mean by freedom is fairly easy - doing whatever you like, whenever you desire, and as often as you want, with whom you want. If you are in love with your work and consider, God, this is amazing, and I am here and I am clear and I'm doing exactly what I'm supposed to do in the way I view selling businesses to fellow entrepreneurs This is awesome.
It's not the time to sell your company. If you're unsure about that, I would take a second look and then I'd take a deep breath and ask, is my business positioned with the proper vision? Do I have a clear vision about where I want to go?
I'm going to take my business in the next one, two, three, maybe up to five? What can I accomplish to overcome the issue and feel good and feel that I've achieved what I've done? Now, if your business is growing at 40% per year or 50% per year, you're probably having a clear vision. It's likely that you're doing a great job and you're probably feeling at ease. However, if you've been growing by 5% in the past five years, well it's more difficult, and perhaps someone else is able to do it better than you.
Whenever my business is growing at five percent, I'm planning to sell. I'm saying, okay, I'm in need of an operator. My style is more of a strategist. And how do we focus on really creating something that is amazing, where you're right on target and focused However, the rate of growth will be an important indicator of that.
The final point is, you've done what you set out to do if you, were to start your own company, when I entered the business brokerage business, i was aware that I wanted to alter the way that entrepreneurs buy and sell their businesses. I've founded three of the biggest brokerages. I hired, one of them, or bought them to attract the staff, and have created a effective market. And that's what I set out to accomplish when I arrived to this place.
However, if you quit your current job and thought about this for a while and then decide to leave, would you feel happy or would you feel as if you didn't finish the job you set out to accomplish. When I look back on it and said that's fine does my company serve me. Are I focused and clear every day?
Do I have anything left to complete and do have new ideas for implementing that idea? These are the factors that walk you through it. It's a little bit of an imprecise science, however in the end, it's an assessment of your gut. What do you think? Are you convinced that it's time to sell your business?
Because usually if I think about selling the business the item, it's usually six months too late. So if you have any other questions regarding this, or something else we would consider it our pleasure to assist with your questions here at Freedom Factory. We're waiting for you to give us a call
Click here https://freedomfactory.com/ 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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