The Value of Your Business

The Value of Your Business

According to Tim McDaniel, CPA/ABV, ASA, CBA, shareholder, Columbus, you should really treat your business as an investment.

“A business interest usually accounts for more than 50 percent of a person’s net worth, and many owners do not know what it is worth, let alone have a detailed succession plan,” McDaniel said.

He recommends having a business valuation performed, and updating that valuation every two years. You should also know the return on your investment and how it compares to other alternative investments.

KEEPING YOUR BUSINESS READY TO SELL

Like Ferguson, McDaniel believes it is important to have a written plan for exit strategies, but adds: “Always have your business in ready-to-sell mode, and have a well drafted, up-to-date buy-sell agreement.”

BUDGETS AND FINANCIAL STATEMENTS

Chris Roush, CPA, shareholder, Millersburg, recommends developing an annual business budget and comparing the actual results monthly. “Use timely financial statements to manage the business and know how to read and interpret them,” he said.

At a more tactical level, Roush has recommended developing a separate LLC for ownership of real estate, then leasing the property to the operating company. He also often recommends year-end tax planning options that include Section 179 expenses, profit sharing contributions and bonuses. All of which affect the profitability of your business.

AT THE END OF THE DAY

You are the business owner. You are the one who locks the door and turns out the lights at night. You are the one who assumes all the risk. But we find it rewarding to know we have helped contribute to your success.

“The most gratifying thing about what we do,” said Roush, “is having the opportunity to get to know the goals and dreams of a business owner, and then helping them achieve those goals.”

That’s why we’ve been doing what we do for the last 70 years. To discuss how the advice above applies in your specific situation, please talk with your Rea advisor.