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How Much is Your Business Worth?

Author: Loida Guevarra
by Loida Guevarra
Posted: Mar 24, 2015

If you're like most entrepreneurs, the majority of your wealth is tied up in your business. Increasing the value of your largest asset can have a much greater impact on your overall financial picture than a bump in the stock market or the value of your home.

How much did your home increase in value last year? Depending on where you live, it may have gone up by 5 - 10% or more. How much did your stock portfolio increase over the last 12 months? By way of a benchmark, The Dow Jones Industrial Average has increased by around 13% in the last year. Did your portfolio do as well?

Now consider what portion of your wealth is tied to the stock or housing market, and compare that to the equity you have tied up in your business. If you're like most owners, the majority of your wealth is tied up in your company. Increasing the value of your largest asset can have a much faster impact on your overall financial picture than a bump in the stock market or the value of your home.

Find Out How You Stack Up

Through an analysis of 6,955 businesses, we've uncovered that companies that achieve a Sellability Score of 80 out of a possible 100 receive offers to buy their business that are 71% higher than what the average company receives.

How long would it take your stock portfolio or home to go up by 71%? Years - maybe even decades. The eight key drivers that make up your Sellability score that drive the value of your company are:

Financial Performance: your history of producing revenue and profit combined with the professionalism of your record keeping.

Growth Potential: your likelihood to grow your business in the future and at what rate.

The Switzerland Structure: how dependent your business is on any one employee, customer or supplier.

The Valuation Teeter Totter: whether your business is a cash suck or a cash spigot.

The Hierarchy of Recurring Revenue: the proportion and quality of automatic, annuity-based revenue you collect each month.

The Monopoly Control: how well differentiated your business is from competitors in your industry.

Customer Satisfaction: the likelihood that your customers will re-purchase and also refer you.

Hub & Spoke: how your business would perform if you were unexpectedly unable to work for a period of three months.

Interactive Wealth Advisors is a Portland, OR Fee-Only investment management firm. Interactive Wealth specializes in providing objective unbiased investment planning to help our clients build and protect their assets through life’s transitions. Visit http://www.interactive-wealth.com/business-services/ for more details.

About the Author

Hi folks I am Loida Guevarra and I love sharing useful information.

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Author: Loida Guevarra

Loida Guevarra

Member since: Mar 05, 2015
Published articles: 108

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