If you plan to sell your business in the next few years, you need to avoid one anchor above all…
Getting a value number in your head…
before you’ve talked to an expert. Why? Because once you have it, I find few can let loose of it…even if they are shown a lot of proof that the number is too high. And then it’s like the adult version of dreaming about a Christmas present that never arrives.
I can’t attribute this to a certain personality type. Whether it’s someone smart or not so smart, hard-working or not, kind or rude, it doesn’t seem to matter. The issue is getting fixated on a figure before talking to someone who can help you understand and quantify business value.
By now, you may be asking, now you’re going to tell me how to fix this right? I don’t have a great answer but here are some of the warning signs.
- My friend sold their business for $_____. Surely, it’s worth at least that!
- Our sales are $_____ and they’ve grown by _____%. (Psst – Sales aren’t cash flow).
- I need $_____ to buy the retirement home in _____ and live like _____.
- My equipment is worth $_____. (Are you walking away…and what about the debt on the equipment?)
- I work hard so I deserve this.
If any of these sound like you or someone you know, please don’t ignore it. Reach out to me so I can help you understand how business value is determined and, more importantly, how to drive it up long before you get anchored to a value. If you want to understand this better, look at The Four Things that Drive Business Value.
It’s also a good idea to consider the possibility your business may not make you a millionaire or fully fund your retirement. Instead, start thinking about how you can have more fun by making small improvements one day at a time. That’s one of my goals with this blog.
Sign up for this blog here if you want tools to increase the value of your business or want a refreshing view on business valuation from a recovering CPA. I’m Josh Horn, CPA, CVA of Horn Valuation. I value businesses for growth and exits with a focus on HVAC and trade contractors. I also assist litigation and divorce attorneys as a business valuation consulting or testifying expert. My clients are business owners and attorneys. If you’d like more information, email me at [email protected], or call me at 217-649-8794.
I’m a licensed Certified Public Accountant (CPA) and credentialed in business valuation (CVA). I’ve been a tax and business consultant in a top 100 CPA firm and a controller in a large international company. I’ve also valued and advised small family-owned and multimillion-dollar companies. You can connect with me here on LinkedIn, Facebook, Twitter, YouTube and Instagram.
“Once-in-a-lifetime events demand an expert.”
Josh Horn, CPA and Certified Valuation Analyst