Posts tagged with: no exit strategy

New Survey: Same Static Market Position Increases Business Value Risk

A survey from M&A Today reports that 85% of all business owners have no exit strategy

The average private business owner has over 75% of their net worth tied up in their business. That’s an illiquid asset. It’s also a business value risk.  Indeed, it is a commitment to the business they built and a confidence in the future of the business as being a good bet.  Illiquid business value is not a healthy distribution of your wealth portfolio for security, growth, liquidity or balance.

The survey also says 65% of all business owners do not know the value of their company. I’d say that number is low. Owners know their revenue and profit numbers but not their market value. Unless they are looking for capital or seeking liquidity, it’s not a metric they use to make every day decisions. Yet, when you look at business value in your space, in your industry, you can use it to make decisions that reduce risk, identify operating efficiencies, as well as grow both revenues and profits.

Without this understanding of your business value and business value risk:

  1. How can you plan for growth for next year? Where do you start?
  2. How can you realize that true value if you don’t have a handle on today’s value as a baseline?
  3. How could you leverage that value to open new markets or extend your product line?
  4. How can you monetize the business you built to afford the retirement of your dreams?

According to a survey by the Rasmussen Group, as many as 42% of all small business owners have no plan or path to retirement. Without a plan, 22% of the owners surveyed, said they’ll just close the business. That means that they are willing to walk away with no return (nothing!) for the time, equity, risk, and commitment they invested in the business, rather than focus on the value opportunity latent in their business and achieve a liquidity event to fund and secure that retirement.

Do you want to be part of the status quo, the 85% who do nothing and when you can’t continue, just walk away with no return? Or do you want to develop your own roadmap, maximize the value of your business and command a higher premium for the business you built before transitioning to that retirement?

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