What All Business Owners Ought to Know About Getting a Return on Their Investment
Some plain talk about a simple process that sounds confusing and complex. But it doesn’t have to be. Which is why we are publishing this information.
We grow companies to the next level and turn them into highly valued businesses… if that is important to the owners’ end game.
Here, in brief are 19 of the things we have learned that owners never find out until its too late to do anything about it.
1. You invest in assets (real estate, stocks) because you want a return on your investment. That’s how we build the nest egg, right.
To make your money grow, you have to sell the asset at some point.
2. The trick is, you have to time it right. Remember when Apple stock hit $700 per share? If you had bought at $350 and SET a GOAL to double your money, then the smart investor would have hit the sell button on September 19, 2012.
3. As soon as you had, you would have doubled your original investment. And had a lot more money in your nest egg. Just from being prepared. If you had waited and held the stock you would have been in for a big disappointment.
4. If you had NOT SET a GOAL you would have felt your stomach knot up watching Apple drop to $535 in a matter of days and to $390 six months later.
5. Your time to sell evaporated. Your 100% goal and your potential return that was going to fund your nest egg melted away because you didn’t follow your intention.
Why are you in business? What’s Your End Game?
6. Your business could be an asset in your portfolio. Was it your intention that your company should be an asset giving you appreciation and return like your stocks and your real estate? If so then your business should always be operated and growing in a way that adds the right value so it is a saleable asset.
Is your company a saleable asset today?
7. Many companies even with multi-million dollar revenues are not run to be a transferrable. Therefore they are not saleable assets: A buyer couldn’t easily take over from you and your partners without you there and make more next year… which is their investment goal. These smart investors have big goals.
8. As an owner, to get a return to build up that nest egg, know what your company is worth today and to whom. You should always know this ball park number and why it is worth only that amount.
9. Why? So you can make it worth what you want to sell it for long before you want to (or need to!!) exit.
10. This strategy gives you far more control over your financial future than waiting for a stock to go up (or down!) in today’s volatile public markets.
11. So the question to ask yourself is:
“How much financial control do I want so that I can take care of my family, my employees who helped me build this company and the people who depend on my business?”
13. Build a saleability blueprint so you know what to change inside your operation to make it worth what you want to sell it for.
14. This transformation into a saleable is asset is vital if you want the same lifestyle you enjoy now later on. Unless you have been able to save a few million. Think about this fact, courtesy of Jamie Ferguson, at RBC Wealth Management:
For every $1 million saved, you can expect to have an income of $40,000 per year.
15. You may need a bigger nest egg than you thought. How to get it? Make your business saleable OR start saving a lot more now.
16. If you don’t want your family to wait and wonder whether your financial future will be secure, you will want to make sure your business is growing and predictably profitable 2-4 years before your exit.
17. Warning: Assets melt. Apple did. And spent two years and millions building itself back up. You and/or your industry, might not have that kind of capital and stamina.
90% of Owners Fail to Find Buyers Even After Three Years on the Market
18. 90% of owners today are failing to find buyers because they never knew these facts so did not have a saleable asset when the ideal buyer was looking… even though these owners have successful companies and a super lifestyle… today.
19. Be ready for your uptick otherwise you may be waiting a very long time to get the value back so a return on your investment is even possible.
ACG says Private Equity Buyers have more than $300 Billion to spend but find few prepared sellers.
Strategic buyers and Immigrant Investors have $9 Trillion waiting in the wings.
The money is waiting. Will your business make their top 3 list?
This list is not all we know.
These 19 facts apply to most businesses between $4 million and $80 million in revenue with inconsistent profitability.
Spirit West Management has worked with more than 100 business owners in twenty different industries resulting in double digit top line growth with 100% increase in bottom line profits within a year or two of working with our team.
How to turn a business into a saleable asset (which becomes far more predictably profitable now and easier to run long before exit day!) is special knowledge we reveal to our clients.
Want to know how to enjoy better profits sooner and get your company into saleable condition? Call 604-306-7707. You might also like “How to Increase the Value of Your Business BEFORE You Sell… and Make it More Profitable Now“.