Ask what your business is worth and you might give a rough estimate based on profit and revenue. Well, that’s what your accountant, bank or investor would do as a starting point. Take other factors into account such as patent ownership, dependency of the business on you the owner and you should have a good idea of how much your business is worth, yes? Well, no.
This is only part of the calculation – the calculation a buyer or investor would make. But to you, your business is worth this and so much more besides. Your business is actually worth the life it can give you and the life you want to avoid.
What kind of life do you want for you and your family? What are your dreams? In however many years time do you want to be sitting in the garden of the holiday home you’ve just bought in France? Do you want to be able to fly to Dubrovnik and take your yacht out and sail around the Adriatic islands for a couple of weeks? Do you want to own and race classic sports cars?
Whatever your dreams are, it’s not the lottery that can make them real – it’s your business. And just as your business can make your dreams come true it can even more easily smash them to pieces.
A failing (and failed) business can wreck havoc not just on your financial health but on your physical and mental health too. It can destroy families, break relationships and kill friendships. You should not start a business without fully understanding the potential consequences.
When my first business failed with the economic crash of 2008, it left me close to 6 figures in debt and I almost lost my house. Physically and emotionally I was a wreck. It took me much of 2009 to start climbing out of the deep hole I was in and a couple more years to finally pull myself out of it. It was hell and nothing I would want anyone to have to go through.
So, imagine the life you could have as your business grows – more freedom to work when you wanted and to do more of the other things you would love to do. Imagine the emotional wellbeing that increased financial security will bring and the physical wellbeing that having more leisure time will bring. Add the passion you have for your business and the satisfaction of running and growing it. Add this to the monetary value of your business.
Imagine too your post-business life if you intend to eventually sell your business – doing more of what you love, travelling anywhere at anytime with little or no stress for the rest of your life. Add this to the value of your business.
But what could happen to you and your family if all went wrong with your business?
This is also part of this value-adding equation – you need to put a value on the life your business could prevent. Imagine the life you could avoid – commuting to a job you hated, limited to 30 days holiday a year, never having enough money to do all you wanted and having to report to someone else. This too has a value – a value based on avoidance, so add this to the value of your business.
All that you could achieve and all that you could avoid – your dreams and nightmares – all have huge value outside of monetary value. And as the financial value of your business grows and you think about what it could eventually give you and your family, think too about the help it can give the younger generations in your family. And add to that the difference you could make to others such as those you employ, guide and mentor and to charities you donate to.
Do this and you will have a true value of your business and hopefully see that its success is worth far more than its monetary value alone.
So, how much is your business really worth? Can you afford for it to not succeed? If you can’t then are you doing all you can to make sure that it does succeed?
For your business to succeed it must be as strong as it possibly can.
It must be strong enough to be able to get to wherever you need it to be and to be able to weather the storms it will no doubt encounter along the way.
Have you done all you can you can to make your business this strong? If you have any doubts then check and if you don’t know how then download my free report, How Strong Is Your Business? which will guide you, test you and help you strengthen any weak and vulnerable areas.
What are the dreams you want to make real and the nightmares you want to avoid? Write them down, draw pictures, visualise them, feel them and use them to help you keep going and grow the business you need in order to have the life you want.