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Do you know what your business is worth?

24. April 2018 15:39

By: Jack West, Federated Insurance

Often, shop owners who are ready to get out of the business simply opt for selling off their equipment at auction and leave it at that. However, it’s important to think about this critical topic long before you are ready to move on. Ideally, you should have an exit plan established the day you start your company. That being said, if you haven’t thought about this yet it’s not too late to start the process.

So how do you set up your woodworking business for eventual sale and maximize its value? To start, you need to know what banks and buyers will be looking for; how to get it all in order; valuation methods; timelines; real-world expectations and common pitfalls. Successful business successions don’t just happen, they require planning and implementation.

Easier said than done, right?

The obvious first step is determining your overall objectives. Do you want to make more money while you own the business? Or perhaps you want to have more free time while you own the business? Maybe you are interested in having enough money for a good life after leaving the business. Or do you want to keep the business in the family?

The ultimate question is what kind of lifestyle do you need (or want) on complete retirement? This involves determining a “reasonable” budget as well as a “stretch” budget. Then you need to be realistic calculating the amount that you currently have saved and also how much more you will need to get where you want to be.

Once you’ve determined what you want, your insurance company is a good place to go next. Many insurance providers, like Federated Insurance, offer valuation services as part of their packages. They can refer you to an attorney who is an expert on the subject and can assist you through the process.

For more tips about how to sell your company, attend the IWF seminar “Building a valuable business”.

 

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