Business Valuation

Pick Your Stocks or Your Business

Let’s say you have a choice.  You can keep your business, or you can keep your stock portfolio.

Which would you choose?  The most valuable, I’m sure.

What are your stocks worth today?  You check them every day, right?  Almost everyone does.

What is your business worth?  You check it every month, right?  Virtually nobody does.

Why is that?

 Why can most business owners tell me what their stocks are worth, but not what their business is worth?

This wouldn’t be true if they managed their business like an investment.

It’s a matter of focus.

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Investing 101: Buy Low, Sell High

Investing is easy, right?  You just buy low and sell high.  It’s a simple concept, easy to understand, but hard to execute. 

The reason it is so hard to execute is that you typically have virtually no control over the growth and value of your investment after you purchase it.

There is an exception to the “no control” problem.  It is your own business.  But most business owners don’t look at their business as their investment.  They look at it as their job.

Sure, it’s a job, but it’s also an investment.  It is an investment of time, effort, money, hard work, and family sacrifice.

I’ve worked with and advised business owners for many years, and the number one reason they give me for wanting to be in business for themselves is that they can control their own destiny.

Guess what!

The number one complaint I get from business owners is that they feel trapped, not having enough time to do all that needs to be done. 

They have to work all the time, and their personal life and their family life suffers.

What’s wrong with this picture?

This is what’s wrong: Business owners are so busy at their job, that they fail to manage their investment.

I look at thousands of businesses every year, and more than 80% of those businesses cannot be sold for any price. 

In essence, they’re worthless as an investment. 

Would you hold an investment for 10, 20, 30 years or more of your life if you knew when you wanted to sell it or were forced to sell that it would be worthless?

Chances are 4 to 1 that you’re doing just that, unless you now, or will in the future, manage your business as an investment.

 

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