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The Value of Your Business Depends on Your Timing

We all know the three most important factors in the value of real estate: Location, Location, and Location.

There are three factors that affect the value of your business the most: Timing, Timing, and Timing.  Assuming you’ve got a profitable enterprise with value outside of your own day-to-day involvement in the operations, your decision to sell the business will be most highly rewarded when three timings all line up perfectly.

  1. Personal Timing.

    What’s your Plan B?  What is it that you want to do next?  If you realize you won’t have anything to do after you sell your business, then you’ll be reluctant to give it up until you have to.  When you do have something to do, say, another investment or business or even taking a trip around the world, then you will be much more inclined to do what is necessary to sell your business.

  2. Business Timing.

    Ok, so you’re ready to sell, but is your business ready to be sold?  If you sit down with an advisor because you’d like to cash out in the next six months and they find that major changes need to be made to your operations or your financials then you either have to wait or understand that the buyer will discount their offer as a result.  Always be ready to sell!  Look at your business today and make the changes now because someday, you will transition your business.  You never know when someday will come, because of…

  3. Market Timing.

    This is the one that is completely out of your control.  It is also the reason why your business should always be ready for transition and you should always have a Plan B.  When the market is ready, you must be ready.  It’s not always clear when the market will be primed to provide you with the highest return although there is a general cycle in the United States economy, which we’ll talk about more in the next post.

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