Music has an incredible effect on people of all generations, I’m certainly no exception. Whenever the song “Takin Care of Business” by Bachman-Turner Overdrive comes on, I just have to reach over and crank up the volume. For those of you who are too young or simply don’t know this 1973 classic, I urge you to Google it and listen to it as you read this post.
“And I’ll be takin’ care of business every day / Takin’ care of business every way / I’ve been takin’ care of business, it’s all mine / Takin’ care of business and working overtime, work out…”
The question is, “What Are You Doing to Take Care of Your Business?"
While people start businesses for a variety of reasons, most entrepreneurs have high hopes of someday being able sell their business and retire comfortably. Unfortunately, only a few actually make any attempt to grow their business in such a way that makes it attractive for someone else to buy. When it comes time to sell your business, no one will care that you need X-amount of dollars to retire on, and sadly enough, no one will care about the blood, sweat and tears you poured into it. What they will care about is, (1) can they make money, and (2) can they see themselves doing this for a living?
Like anything else, a business is only worth what someone is willing to pay for it. Valuing a business is a combination of part science, part art and part trust. Most investors will start out by reviewing your “Schedule C” that’s filed with your federal tax form 1040. More than likely they’ll want to see the last 3 years’ forms so that they can see if the profit is trending up or down or if it is stable. While there are more than one ways to value a business, one common strategy is to average the last three years’ profit, multiply it by 2 – 4 to have a starting point for a negotiation of a sale price. So realistically, if you’re averaging $100,000 bottom line per year, your business would probably be worth in the neighborhood of $250,000 - $300,000, depending on other circumstances. If you want to see $500,000 to $600,000 out of your business, you better show net profits of at least $200,000.
The point is taking care of business should be one of your top priorities. Start now and don’t stop! Don’t wait until you want to sell, just to find out that you may not have anything anyone wants to buy. Keep your business attractive. Grow your revenues, watch your expenses and of course, take good care of your customers. You’ll not only profit when it comes time to sell, you’ll reap the rewards along the way.
Miracle Method has been providing a proven business model to motivated entrepreneurs since 1979, click here for more information.