How to Improve Small Business Evaluations

How to Improve Small Business Evaluations

How to Change the Valuation of Your Business

Developing an Outcome Driven Strategy

How Do We Define the End? (Part 2 of 4)

What is the ‘End’?  Is it money?  Is it recognition?  Is it a feeling of accomplishment?  Is it a transition to doing things you’ve been putting off for decades because of the demands of owning and running a business?

It could be any, some of, or all of these things and more.  What’s important to improve small business evaluations is that you have a clear idea of what ‘End’ you want.  As I mentioned last month in my post on ‘Processes for Coping with the Emotional Barriers’, if we don’t really define clearly what an ‘End’ should be, we risk putting ourselves in a situation where we become paralyzed and fail to take any action!  This leads to our ‘Ends’ being dictated to us and that almost never is a situation that is going to leave us happy.

I believe some ‘Ends’ are easier than others to figure out and tell my clients to start with them.  Generally speaking the financial ‘Ends’ fit in this category.  Figuring out budgets for post-ownership life, the kinds of expenses the business use to pay for and now will be paid personally, additions for things like travel or gifts to family.  All these can come from your existing financial information.  Working with Financial Planners can give you some well-needed objectivity and insight into expenses you might not have anticipated.  All of this calculation will lead a defined ‘End’ – the amount you need to get from your business to fund your post-ownership life.

The desire for legacy is an important ‘End’ to consider.  If it is on your list, it will have a significant affect on the strategies available to you.  Other ‘soft Ends’ that can have a significant affect on strategies include:

• Desire to keep working
• Desire to eliminate risk
• Feelings about partners and employees

‘Ends’ can require strategies that may conflict with one another.  This can be a great source of conflict and frustration to owners resulting in their making no decision at all!  This is the worse possible situation.

When you’re considering your ‘Ends’, consider just how important each is.  Are there some that are more important than others?  Being able to rank your ‘Ends’ allows you to make compromises and get out of frustrating situations that paralyze you.