As you work tirelessly to meet the everyday challenges of running your own business, you may wonder why you should be interested in valuing your business. After all, valuation is something you will be concerned about some time in the future when there is "need" for a valuation. If you feel like this you will be missing an opportunity to insure that your business will survive and prosper.
The Value Management Solutions Group assists clients by doing a preliminary valuation of their business for purposes of exploring the options for a company to grow in size, vertically by increasing sales/revenue from the current base of operations or horizontally by expanding operations to new markets - understanding the factors that determine the value of any business will pay tangible dividends by focusing you on ways to increase your business' short and long-run profitability. Value management also focuses on determining if the company is on track to reach its exit goal.
The latter part, the exit goal of a business owner, is often a seriously neglected part of most small to medium size businesses’ planning. A key part of any investment made today involves the same concept - people do not invest in stocks, bonds or real estate without having a pre-determined exit strategy, i.e. sell my stock when it hits $1,000,000.00 or drops below $500,000.00. The limits are the “finish” line in the race to make money or in the latter case protect the investment from losing money. It’s no different when it comes to a business, except they do not have the S&P 500 to review for direction. Proper value management gives business owners the information they need to know regarding their position in this race. Determining if they are even on the right racetrack at all is the first step. From there, owners can decide to make changes to their business to stay on the right course and speed to obtain their goals.
The final part of value management is arranging for the transfer of ownership of the business. This can be to family members, key employees, all the employees, an outside buyer that has either a strategic or financial motivation to purchase the business, or even an Initial Public Offering (IPO) to take the company to a publicly traded marketplace. This final stage involves quite a bit of work to make sure the transfer is done under the conditions most beneficial to the owner for both control over the transfer methods used and timing for the transfer as well as the tax implications that would result from all the possible methods of making such a transfer. Business owners can transfer their business to another person (related or not related) or entity without facing immense risk or taxation on the transfer if done properly through value management planning and implementation.