Is Your Business Worth Buying?

One of the toughest questions we face as small business owners is whether or not we are building a business worth buying. It is a fundamental question. We understand why its value is an important issue. We realize that the price paid will reflect, in some way, the benefits received. Buyers will trade their cash for perceived future benefits.

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We invest our most valuable resources of our time, our energy and our talent. We also invest our money, if not in the price paid, the down payment, the monthly payments or in the working capital, then in the money we lose from other missed opportunities. We are also investing today in anticipation of future benefits.

So, the tough question is: are we building something worth buying? The question is one that makes most of us uncomfortable. If we do have our business on the market, we are usually uncertain of its value. If it is not on the market, we are usually reluctant to face the issue at all.

Facing the Issue

 

The problem is that we invest our time and money in our business without enough thought. The result is well known. It is estimated that 80% of all small businesses fail within the first five years! For those of us who try to sell before we burn out, we can't believe the low offers we receive! It is less well known that most businesses offered for sale do not sell for anywhere near the listed price or within the anticipated time frame.

Our business is valuable only if it is truly profitable, creating a good life for its owner. This is as true for us as it is for any stranger who might buy our business. If our business isn't profitable, why should we come to work every day? Obviously, we shouldn't! How can we expect someone else to take our place? The answer, of course, is that we can't.

What we need to create is a business that functions exactly like a franchise prototype. A franchise prototype is a small business (a franchise) run like a big business (the franchisor). It is a 'turnkey' operation. Systems exist for each aspect of its operation. It runs independently of its owner. The key is the system. Just turn the key, and it runs by itself!

To accomplish this, we need to first ask ourselves, "What do we want to do better than anyone else so that customers will choose us over our competitors?" Bigger profits and the benefits that follow are the result of better systems: marketing systems, operating systems, administrative systems. In order to know what systems are needed to make our business more successful, we first have to know what we want to achieve.

We must have a vision of what we want and of what we need to do in our business in order to achieve it. This is a vision of what our business could be. Then, like big business, we have to design better systems to take us in the right direction to implement our vision.

We must spend our time designing and redesigning 'the way we do it' until we are profitable at it. Our employees will enjoy the satisfaction of high productivity. Our customers will delight in our effectiveness and efficiency of delivering what they want. We will make money, get some time off, and build a valuable business.

http://www.2misi.com/article/2012/06/is-your-business-worth-buying