I want to look at a minor pain point that we have in our company that is a business valuation calculator. People look at real estate and tools such as Zillow, or they go through the Kelly blue book of automobiles and ask"Why don't we have a calculator for business valuations?
You've been doing this for a long time, and the reality is we'd like to. Problem is it's hard. And so there are a few really good baselines, like revenue and earnings and we can discuss guidelines and what that looks like but what makes us so difficult is you can take two businesses that have the same revenue and earnings, and they are worth vastly different multiples. It's like two, three times one another, and not even far apart. This is due to intangibles.
There's a myriad of aspects to an enterprise such as Intellectual property rights, defensibility tools and more that can create an even more complicated discussion than just, Hey, how much are you making and you're worth five times that hypothetically. We're now working on the issue. It's probably a little early to talk about it, but we're working with an incredible company to solve this problem and will find a solution in the near future. However, in the meantime should you have any questions regarding how to increase the value of your business or how much your company is worth, why don't you give us a call at Freedom Factory. We're looking forward speaking with you shortly.
How do I prepare my business to be able to sell?
Many entrepreneurs aren't sure of what they should do to prepare their company to sell. If you've made the decision that you'd like to sell your business. What do you do now? Well, the first thing you'll need to take care of is to get your house in order to prepare your business to sell. Also, obtain three or two years of tax or tax-related reports.
Financials and then put them together. Get them from your accountant and have the documents ready for. If you've not made an operational manual, this would be an ideal time to do so. You're familiar with how your company operates, and you understand how the different departments interrelate, but when you are selling your company, we would like ensure that it is as effortless as possible for the transition to the new owner.
This value is likely be included in the price of sale. Therefore, put your operation manual as well as new job descriptions together , and make sure your home is in order. The third step is to discover, well, how to put your team together. Find a reputable broker and an appraiser. Determine the value of your business. Begin to write the story and figure out, okay, how are we going to bring it to market?
When do we plan to launch it? You know, what's the current tax climate. What can I recast my financials? What I refer to as straightforward. We're going to use your EBIDTA or your accountant's ability to do similar things, and we're going to translate it into the seller's discretionary cash flow, that is.
A fancy way of saying all the money that your company earns when you do 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 trying to pay as little tax as possible. Well, we need to translate that, you know, from the non-cash costs you incur such as depreciation certain extra-ordinary expenses, and then put it into the equation to maximize the value.
Make sure you highlight the value your company creates which will make a big difference. And finally, you know which industry you going to be in? How do we maximize your multiple? There are ways to achieve this. But think about what sector you're in. Figure out, you know all your financials.
Put an operations manual together to ensure that the transition is as smooth as possible. The whole process, and everything it will be will be easier when you put the right team together. Find the right appraisers, and find the best brokers to help you prepare your business to sell and, if you require assistance with this contact us here at Freedom Factory.
Is it the right time to sell my business
This is an extremely important issue and when is the right time to market your company? This one is a bit more art than it does science. In the end, it's a gut check of what you know. We're outside. This is my backyard. It's in my mountain home and is a part of my happy place.
The first thing I'll suggest to you is get a change of scenery. Get out of the office. Take a break from the commute, either with your family or out. Now figure out some area where you can go, whether you love to fish or ski or go to the mountains or visit the beach or whatever simply go there and switch your place of residence and get somewhere you are comfortable.
Then think of your company. And I look at it and consider it in three questions. The first is, am I here and do I have a clear understanding? Do I truly believe in my business? Are I doing my best to serve my company or does my business serve me? And I think life is too short to live in a place where you serve your business. Your company is your personal road to more freedom and more prosperity.
And the way I define freedom is quite straightforward - it's about doing what you want, when you need, whenever you want and with whom you'd like. And if you love your work and feel like, 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 look at selling businesses for other entrepreneurs and entrepreneurs, then that's great.
The time is not right to sell your company. If you're unsure about that, I'd think a little bit harder and then look at the situation and ask: is my business positioned with the proper idea? Do I have a clear view about where I want to go?
I'm thinking of taking my business on in the next one, three, perhaps even five years? What can I do in order to resolve it , and also feel fantastic, and feel like I've achieved what I've done? If your company is growing by 40% per an year, or 50 percent a year, then you've probably got an enlightened view. You're probably doing really well and you probably feel that you're in the flow. On the other hand If you've been growing at 5% over the last five years, well that's a little bit more challenging and somebody else can do it better than you.
If my company is growing at 5%, I'm looking to sell. I'm thinking, okay. I'm looking for an operator. I'm more of a strategic guy. How do we concentrate on creating something that's incredible, and you're on point and on purpose However, the rate of growth is a good indicator of that.
And the final thing is, you have done what you came to do were to start your own business, when I began my business brokerage business, i knew I wanted to change the way entrepreneurs purchase and sell businesses. I've started three of the largest brokerages. I've hired the third one, I've bought them to attract the people, and I've created a better market. This is the thing I wanted to accomplish when I arrived to this place.
But if you left your current job and thought about this for a second and then decide to leave, would you feel happy or would you feel like you didn't finish the job you were there to complete. When I look back on the situation and thought I'm okay, is my business serving me. Do I feel clear and focused every day?
Do I have any remaining tasks to do and do I have new ideas to really implement that vision? These are the questions which will help you figure it out. It's an imprecise science, however all in all, it's an assessment of your gut. Do you agree? Do you think it's the right time to sell your business?
Since, if I ever think about selling it in six months, it's too to be. If you have other questions on this or something else that you need help with, it's our pleasure to assist here at Freedom Factory. Give us a ring.
Visit https://freedomfactory.com/market-valuation/ 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.
Call Freedom Factory for a free business valuation
Freedom Factory
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Phone: (844-629-8258)
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