Hope is Not a Strategy

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You probably have a financial advisor who is managing your money and will advise you as to whether or not you’re on track for retirement. That’s smart and, for most of us, essential. Even the most talented, worth-their-salt money manager will tell you that their financial models are “garbage-in; garbage-out”. In other words, the model is reasonably accurate only to the extent that the inputs are reasonably accurate.

For most business owners, their largest asset is their business, so why guess on the value? Financial planners, CPAs, and other professional advisors all have an important role to play in your success, but none of them can tell you what your business will bring on the open market. Yet, a surprising number of very competent advisors will plug a figure in for the value of your business and hope for the best. Hope is not a strategy.

A lack of planning based on real numbers can be devastating. We all have an idea in our minds of what we’d like retirement to look like, and we work toward making that ideal scenario happen, but what if a medical diagnosis interrupts things? Or another pandemic? Or a fire? Or you lose your key client or employees? Life can happen (if 2020 has taught us anything) and we need to know the value of our business to stress test that number to see what effect it will have in light of our entire portfolio. Perhaps buying a hedge will make sense or rebalancing your mix of stocks and bonds…but one thing is clear: you shouldn’t make any decisions based on inaccurate information.

So, whether you want to value your business each year just to get the magic number for your financial planner, or you want to engage in one of our value coaching plans that include an annual business valuation…know your value at all times. We offer these services to help you prepare for your succession whether it’s now or later.