Do you regularly think about how much your business is worth? What would happen if you are not in the business for one week, 14 days, a month? What about three months? 6 months? Or a year or two?

Most business owners don’t! And that is why 90% of businesses don’t sell! And most business owners are surprised (not positively) when they need to sell their business. And most owners don’t realize that it could happen. Of course, you don’t need to want to sell the business ever, but you might need to! Or your partner (life or business one) will need to if something happens to you. 

Is it a ridiculous idea to have an option to sell your business for maximal value whenever you need or want? 

Ok, maybe you said that it’s ridiculous, perhaps that it’s a great idea. Whenever… Just pretend you said it’s a great idea.

How would you make your business valuable and build this option?

You will need to:

Increase the profits

Increase the cash-flow

Lower the risks

Would you want your business to be more profitable, spin more cash, and have lower risk even if you don’t want to sell it? 

I would say we all want that. So if you’re going to build your business to be sellable whenever you need or want, you will do the same thing that you would do even if you don’t want to sell it. Maximize profit and cash flow and lower the risk.

So, easy valuation of your business is

Profit in $ * multiple (lower the risk = higher the multiple) = values of your business

Let’s look at the significant factors that affect the value of your business.

Eight significant profit and risk factors are affecting the value for how much you can sell your business.

1. Financial Performance

Your history of producing revenue and profit combined with the professionalism of your record keeping.

2. Growth Potential

Your likelihood to grow your business in the future and at what rate.

3. Dependancy & Diversification

How dependent your business is on any one employee, customer, or supplier.

4. Cash-flow

Whether your business is a cash suck or a cash machine.

5. Quality of Revenue

The proportion and quality of automatic, annuity-based revenue you collect each month.

6. Unique Selling Point

How well differentiated your business is from competitors in your industry.

7. Customer Satisfaction

The likelihood that your customers will re-purchase and also refer you.

8. Owner effect on business performance

How much is the owner involved in and affects the performance of the business? How your business would perform if you were unexpectedly unable to work for a period of three months or a year.

Is it a bad idea to improve these factors to make your business more profitable and build a cash flow with minimal risk? 

Sometimes people think it's so much work, but most things can be improved rapidly by the right plan, strategy and a lot can be solved quickly by mergers, acquisitions, and strategic partnerships.