Rule #1: Never lose money

Today in 2 minutes or less, you’ll learn to spot the number one red flag 🚩 that signals when the value of your business may be dropping.

Rule #1: Never lose money. 

Rule #2: Never forget rule Number 1.

– Warren Buffett

Let’s not overcomplicate this. The best way to be worth more today than you were yesterday? Don’t lose money. We call that framework loss aversion. It feels more painful to lose money than it does to gain it.

So, our entire article today is about one thing: Not leaving money on the table when you go to sell your business.

🚩 Businesses are valued based on how much value they provide to their owners (yes, other factors matter too, but none as much as profit).

So, let's kick this off with the elephant in the room... the red flag 🚩 of all red flags: declining profits 📉.

Nothing will drop the value of your business faster than a decline in profits. Every dollar of profit you lose over a year compared to the previous year could shave $2 to $3 off the market value of your business when you go to sell.

How to avoid this? Spreadsheets, of course!

What gets measured gets managed. How often are you looking at your P&L (Profit and Loss statement)?

Keep your books up-to-date on a weekly basis, and you should be able to tell right away if sales have dropped or expenses have gone up.

Either one of those things is an early indicator that profit may be going down. The minute you spot it, find out why, and fix it.

Now, this whole profit thing works both ways. Every extra dollar of profit you generate this year compared to last year will ADD $2 to $3 to the market value of your business when you go to sell.

So, your number one task is to ensure profits stay stable (Rule #1: Never lose money), and your second task is to grow them!

Protect the house… then build the castle.

An extra $50k in profits could add $100k to $150k in value when you go to sell the business

So, if you want to extract the highest possible value for your business in a sale, there's nothing better you could be doing with your time...

Remember, in the world of business sales, profit is king. Protect it fiercely, grow it diligently, and watch your business value soar.

For an up to date appraisal of your business value, reach out to us today.