From Dreams to Dollars: Unraveling Your Business's Value
Explore the transformative journey of creating and achieving bucket list goals, from personal adventures to business milestones. Discover the emotional fulfilment and lasting memories that come with ticking items off the list, along with the importance of accountability and setting realistic objectives. Join the conversation on visualising dreams and embracing new possibilities!
The Bucketlist Accountant: Because financial freedom shouldn't mean sacrificing your wildest dreams.
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Transcript
I think one of the values and benefits of, doing the work that we're doing with business owners is that we're starting from an earlier time of trying to improve their business. And so not only does it help with cashflow and profitability and achieving your goals along the way, but indirectly, uh, it's also building extra value into your business.
[: [:And For a figure and and you can put that on you may not be selling for 10 years but I think if you can target a figure that you want to sell your business for You Um, again, it starts to help to formulate a plan of the things that you need to do over the next 10 years, in that example, to, to achieve that, that business goal.
[:Between what you think it's worth, what you want to sell it for, and what's realistic to sell it for.
[:They want sort of top dollar, but, uh, the real, the reality of it is that, that, They're not going to get anywhere near that. And that becomes a difficult conversation to have because they've just made an assumption along the journey that they'll sell their business for a certain amount of money and that that will help fund their, their retirement.
Um, and if you have that conversation towards the end, it gives you very little time to turn it around and help increase the value of the business.
[: [:So I think. What people know what business owners need to do is start to become aware of what their business value is as early as possible and to reevaluate that over every couple of years or every year, even to reevaluate what their business is worth. It allows them to, uh, get confirmation that the things that they're doing in their business is working.
So that not only are they getting more money, but the value of their business is increasing. So you get a kind of a double hit. , but it also allows them to make changes along the way if things aren't quite going as well as they would hope for them to go. Sorry about that. Knowing the value of your business is important all the way along.
[:The thing about going away from your business for three months is not just about the money, but it's actually about making sure that the business can survive. without you and that's critical to ultimately a sale of a business because if you are so integral to the business Then the value of that business is less because ultimately someone's buying it and replacing you
[:Because if, if you can't, if you haven't set things in place within your business that allows you to not be there for it to still operate effectively, then as soon as you walk away, uh, that business is going downhill. It's a common problem in a lot of small businesses is that the owner is, in a lot of cases, can be the main person and, um, they don't set up any kind of systems or process that allows them to remove themselves from the business and have those processes and systems operate so that the business is still going.
Profitably as if the owner was in there As soon as someone can achieve that where they can sit back and the business still runs without them the value of their business jumps significantly because as you said someone else can then come in and they don't have to worry about the owner not being there because They've been able to show that the business can run effectively without them
[:And if it's purely around that, it's a very difficult thing to replace. And um, I guess what you don't want is a scenario where, which happens to many businesses. Where they just literally close the doors.
[:Is that potentially some businesses won't get sold. , some business, if it's a really heavy reliance on you as the business owner , and. You've determined that there's no possible way , of branching away from that, then, then it becomes more important to make sure that you're maximizing your profit and cash flow as you go along with the understanding that you may not get a business sale at the end of it.
So, so you can still build your wealth and you can still build what you need to be able to do what you want to do, but it's more along the way rather than getting a sort of a large injection at the end. So, The quicker you can realize that in the business journey, the better off you'll be at the end of the day.
[:It's planning, isn't it? You have to be on top of things.
[:But then, if you get to the point where you decide that the business will be you all the way through, then it still gives you plenty of time between then and when you want to close the business to make sure that you're maximising your return.
[:Once you have that decision and you know, What is the objective? And as you say, whether it's one year, 10 years, 20 years down the track, it does help you understand where are the best places to spend money along the way so that you do get the best return on that investment at whatever point you need to get that return.
[: [:The family have to be involved in that discussion, don't they? Because there are implications and sacrifices that might get made along the way, depending.
[:So, it becomes a lot easier to accept rather than if you're left in the dark and have no real understanding of why things are being done. You know, you can start to get a little bit of even potential resentment for why things are being done without having
[: [:to work smarter. Um, you know, you have a conversation and you meet someone and you ask them how they are and how's work. And you can't always say I'm flat out, you know, chock busy. Whereas, whereas the better result is to be, you know, have plenty of free time and your business is still running effectively and still creating profit.
Um, you know, And there's nothing wrong with, with having time off. There's nothing wrong with only working, if you can get it to that point, two days a week. If, if you've set your business up in such a way that allows you to do that, that should be, that should be rewarded, not kind of, um, frowned upon.
[:That, you know, uh, this idea that, first of all, I think there are two perspectives. One is, is that. The retirement age is getting, uh, older, uh, because we're living longer, um, and so there are lots of reasons for people just wanting to continue working, but it's also then a question of what that looks like.
Um, you know, there are many people now that effectively their involvement in their business and, and I've seen it in my, in my dad's generation where they're still technically Uh, involved in the business, but it's for, you know, Three or four hours a week they come in they've got a desk still they have a coffee They talk to a couple of their older clients and that's kind of it but there is that model isn't there in terms of um, you know an involvement that you might want to have in a business and there is a value that you can still attack and I think that's a great thing because you can still You can potentially sell a business, but still sell your ongoing value and support that might diminish over a period of time, but can still, enables you to increase that value because you're still giving some input into the business on a continued basis.
[:That's the people that have purchased your business and moving on and great for the customers as well. I think there's certainly a, uh, certainly an avenue there for everyone to get a win out of it.
[:How often do you do that sort of exercise?
[:Um, and that could be, it doesn't have to be all financial, it could be, you know, less owner reliance. You could have improved your. IT systems. There's a whole range of areas in the business that you can improve that will improve the value of the business. But it just it just validates um The changes that you've made and quantifies the fact that yes, what you're doing is improving the value of your business
