Have you ever heard a business owner say something like the real-world quotes below?
“I read an article that said my business is worth two times revenue.”
(i.e., Sales are the real value of the business, not profits)
(My sacrifices must have created value)
“My sweat equity alone is worth more than that.”
(i.e.My hard work must have created value)
“I’ve invested 20 years building the business.”
(i.e., Longevity creates value)
“This business has a ton of potential for the right person.”
(i.e., I can’t realize the potential, but I’m sure you can)
“I’ve sold this product in 22 different countries.”
(i.e., Market penetration not reflected in the income statement must have value)
It may feel like these things create value in your business, but here’s the inconvenient truth:
For most small business owners, a buyer will only pay for the actual, tangible, reflected in financial statements, results your business has created.