Is there a pot of gold at the end of your rainbow?

Posted by Phil Murray 06 March 2015 07:00 AM

What the most successful businesses do

For most business owners, one of the main reasons they own a business is to create value for themselves. In other words, to build a business that is actually worth something when they want to sell it or retire. And to build a business that becomes more and more valuable over time.

So, measuring how much their business is actually worth - and how that value is changing year by year - is something all successful entrepreneurs, investors and managers do.

Really big companies, of course, do this by watching their share price on the Stock Exchange, and judging their success by how much their share price increases over time.

Businesses whose shares are not listed on the Stock Exchange, on the other hand, do not have the luxury of daily share prices. So what the most successful of them do instead is to get an accountant to produce an independent valuation of their business - often as frequently as every year.

That way they can make sure that:

  • The business is focussed on the things that create rather than destroy value
  • The business is on track to be worth the amount the owners want it to be worth when they come to “cash in their chips”, and that
  • Where necessary, they take corrective action to make sure that the value of the business lives up to their hopes and expectations

As a result, the business owner is fully and properly rewarded by being able to move on or retire when they want, and with the amount of money they want.

If you are interested in a business valuation please contact me via my team page

 

Topics: Business Owner