“I’ll figure it out when I’m ready to retire, which is the day after never …”

That is the response we get from small business owners when we ask how much their business is worth.

According to the Exit Planning Institute, the wealth of (80-90%) of all small business owners is tied up in their business. For many of those individuals, the business becomes the personal retirement savings vehicle. In the US, 78% of small business owners plan to sell their businesses to fund more than 60% of their retirement. Those individuals, however, could be driving blind. Without knowing the value of the business, how will they know when they can stop working or the lifestyle to expect in retirement?

Having the information needed to prepare adequately for retirement is just one of the many benefits to a business valuation. Here are several others:

• Increase value. What is measured improves, and valuation is no different than establishing and overseeing a sales quota. A comprehensive business valuation will provide owners with a clear explanation of the value of the business along with evidence to support the result. It can tell an owner if efforts need refocusing, or even better, if the company is headed in the right direction. The data helps guide strategic decisions and business development plans and can even help an owner determine whether the right people are in place to support long-term goals.
• Capital infusion. Outside investors and lending institutions will evaluate the business plan, shareholders’ agreement, investment memorandum, and valuation before investing or loaning capital.
• Mergers, acquisitions or share-swaps. A business valuation facilitates a negotiation between entities entertaining a possible merger, acquisition or share-swap.
• Dissolution of partnership or partial exit by an owner. When a business partnership goes bad or partners agree to part ways, the parties have to find a fair and equitable split of interests. Whether the weighting shares changes, one partner buys the other out, or the partnership gets dissolved, a business valuation will facilitate the process.
• Divorce. Business interests represent marital assets and could become part of an owner, partner, or shareholder’s divorce settlement. Both spouses may approach the settlement proceedings with independent business valuation reports, so historical valuations could provide valuable insights.
• Tax strategies. A valuation report can lead to tax benefits an owner might not otherwise claim. A current valuation is also required for estate tax settlements, to calculate capital gains tax liabilities, and for income or property tax disputes.
• Employee incentive programs. A company must disclose its value to employee to satisfy annual requirements for Employee Stock Ownership Plans.
• Insurance planning. Nearly three-quarters (70%) of small businesses do not have adequate insurance coverage. When an owner doesn’t know the value of his/her business, it is challenging to determine how much insurance is needed. Also, if an owner is injured or wrongfully distracted from business, a historical valuation could help recover losses.

The real reason most business owners put off knowing the value of their business could have less to do with timing than an error in perception. Traditional business valuations involved an extensive, expensive, and seemingly invasive process. Thanks to innovative technology, however, those barriers no longer exist. An online valuation cost a fraction of what traditional business valuation specialists charge, and can be completed in minutes, not weeks.

While business owners are often stretched for time, when it comes to discovering how much the business is worth, there’s no time like the present.

Act Now – There’s No Time Like the Present
Our firm specializes in meeting the financial needs of small business owners, and business valuations is a critical step in our process.  We have been providing complimentary valuations to our clients and prospective clients since 2016.    

To get started on your business valuation, simply go to:
https://1847financialohioandpittsburgharea.bizequity.com/

Source: Exit Planning Institute, State of Owner Readiness Survey, 2023

Business valuation services offered through BizEqutiy are furnished as a complimentary service and should not be relied upon as a certified valuation and are provided for informational purposes only.

Penn Mutual and its agents does not represent or endorse the accuracy or reliability of any advice, opinion, statement or any other information displayed or distributed through Biz Equity. The estimates and data derived from information provided are made using publicly available information and data, and rules of thumb for different industries. Penn Mutual has not audited or attempted to confirm any information for accuracy or completeness. Any reports should not be used to obtain credit or for any other commercial purposes. Any reports are the intellectual property of Biz Equity and the information provided is provided for your internal use only and may not be copied or redistributed for any reason. Your use of any report and the information provided is also subject to Biz Equity terms of use and privacy policy of Biz Equity.  Penn Mutual and Biz Equity are unaffiliated.  Trademarks belong to their respective owners.

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