When we talk of the value of a business, we don’t only look at it from the economic point of view, but also viewing it from the point of view of the health and well-being of the company. When you have a business, you have a common goal which everyone involved does their best to achieve and this determines the health and well being of the company that you cannot measure in monetary terms. When we speak then of the value of a business, it looks at several aspects like the value of employees, customers, suppliers, alliances, partners, pipeline partners, managerial value and societal value. What this means is that when we speak of business value, it does not only mean money, but it includes the intangible things like the intellectual capital and the blueprint of its business model.
The healthier the business the bigger its score will be. However, despite the numbers, foretelling its future always involves risk because the longer you hold on the that business and especially the bigger it gets, the more delicate it becomes and the more susceptible to failure. Logic tells that anytime you have an opportunity to encash or get liquidity from your company, you can sell either a piece or all of your company to a potential buyer.
It works this way, when your business is still small, its economic as well as its intellectual capital is also still small. At this stage, it is not so dangerous to take risks. In fact, taking chances are essential and beneficial if you want to grow your business further. Hard work and hurdling risks are essential to business growth which increases the value of the business. However, it is only natural that the owner of the business starts to become more and more conservative concurrent to the growth of the business value. Owners who no longer want to exhaust their time doing damage control or fixing bad strategies might as well want to encash their business value. Not because the company that they own is in a bad shape but because this is a smart decision.
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If you are one who are good at taking risky challenges, then you don’t have to do this on big stakes when you business lifecycle is on the latter stages, but on the first few stages of the business lifecycle. This may be a great time to liquidate an existing company and have enough capital to start a new venture, a more interesting venture, or a venture with higher potential.
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Many business owners who are considering the sale of their business will need someone to broker or market the business that they are selling. If you hire a broker, make sure that everyone is involved in its sale including your attorney, accountant, mentor and financial advisor.