American Business Brokers & Advisor Founder & President PROFESSIONAL INTERMEDIARY & MARKET MAKER FOR PRIVATELY HELD COMPANIES Author of ‘The Art of Buying and Selling a Convenience Store’ & ‘Selling with Certainty’ Involved in the Sale of 750+ Businesses Advisor • Consultant • Speaker
One of Terry’s Pet Peeves
“The bottom line is this: Havingmore information about your business’s value can only benefit you.”
Business Owners Who Don’t Know HowMuch Their Business Is Worth
If you ask anyone what they think their home is worth, probably about 90% of them will know off the top of their head. If you ask them what they think their vehicle is worth, most people will probably have a basic idea. If they don’t know for sure, they can easily Google the make and model of their car and get a pretty fair estimate of their vehicle’s value. However, if you ask a business owner how much they think their business is worth, you might be surprised by how many of them will look at you like a deer looks at oncoming headlights. At least, that’s a common response I get when I ask that question. Isn’t it ironic that while many business owners are quick to know the value of their house and vehicles, they likely have no idea how much their greatest financial asset is worth? It honestly blows my mind. From what I’ve gathered during my years of consulting and brokering business deals, there is a somewhat unconscious idea, as well as a conscious decision, that lead many men to ignore the value of their business. I briefly discuss this unconscious idea in my book, “Selling with Certainty,” in the subsection “Who do you think you are, Superman?” In my line of work, many of my clients are men who are in their 60s and 70s. Mentally, many of them still think they’re in their 40s or 50s. They don’t try to think of themselves as younger than they are — they just do. I’m 66, and I sometimes still view myself mentally as being in my 40s and 50s. Even though our bodies physically age and remind us we’re not as young as we used to be, many men still want to think they’re going to live forever. That makes some of them terrible planners, especially when it comes to what they should do with their business.
Despite all evidence to the contrary, many business owners believe life will carry on as it always does and that they’ll successfully run their business until they die. As I’m sure many of you reading this can attest, life rarely goes that smoothly. As the old joke goes, if you want to make God laugh, tell him your plans. In my book “Selling with Certainty,” I talk about what I call The Dismal D’s: death, disease, disruption, and dissolution of partnerships to name a few. These factors all have the power to change the plans you’ve made for yourself and your business, and to some extent, they are inevitable. You should expect to encounter at least one, or more likely a few of The Dismal D’s during your time as a business owner, and you should know what your options are in the event of that encounter. The way you do that is by getting as much information about your business’s value as you can — and that’s ultimately what I aim to provide my clients. At best, not knowing the value of your business will leave you uninformed. At worst, it might mean missed opportunities to maximize the value of your business. If you know what your business is worth, it won’t just be a benefit to you. Say you learn the value of your business and you decide it’s a good time to sell. The money you get in the sale can become assets for your spouse, your kids, or even your favorite charities if you want. Those assets can last long after you’re gone, too. The bottom line is this: Having more information about your business’s value can only benefit you. Life is about trade-offs and options. With the more information you have, the more options you will have.
This unconscious idea leads to the very conscious decision to not even consider selling their business.
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