What Is My Small Business Worth? 3 Easy Steps

Grrrrrr.  Another great example of what drives us crazy. Wealth Pilgrim’s blog post What Is My Business Worth?  3 Easy Steps to Find Out. Well written, a great and straightforward overview of how to come up with your seller’s discretionary earnings . . . and then it goes off the rails:  

Video: WE SOLD THE BUSINESS!!

Note: There’s the how-to, the financial considerations, and the impact on the owner, but there’s more to it.  Interesting to see how this teen reacts to the sale of his Dad’s business.  Obvious pride.  A unique reminder that family gets impacted by the sale.  

Determining Your Company’s Value: Multiples and Rules of Thumb

Note:  Last year’s multiple average was around 2.5.  This article is as straight-forward as we’ve seen.  Most articles you’ll see about business multiples are way out of whack. The meeting continued to hum along nicely as the seller recounted the history of his company and listed its biggest customers and possible buyer candidates.

What Is Seller’s Discretionary Earnings?

Note:  A very solid effort at defining Seller’s Discretionary Earnings — probably the single most important thing to understand for most business owners. What is Discretionary Cash Flow? A seller’s discretionary earnings are the pretax and pre-interest profits before non-cash expenses, one owner’s benefits, one time investments, and any non-related income or expenses.