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 can be “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? Your Financial Planners, CPAs, and other professional advisors all have an important role to play, but few of them can accurately tell you what your business will bring on the open market. Yet, a surprising number of very competent advisors will plug in a figure that you give them 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 today, so if that number doesn’t work, there is time and a strategy to get the value to a number that does work.
So, whether you’re 5 years or 20 years away from selling, value your business each year to get the magic number for your financial planner. We offer this service to help you prepare for your succession whether it’s now or later.