Why did you start your business? Most of us start a business to make some income. We either need some additional cash or maybe we want to replace some income now or in the future. Either way, it’s all about the current cash.
There is one other big difference with having your own business and working for someone else. When you work for someone else, you are building an asset for them. When you work for yourself, you have the chance to build an asset for yourself.
You’re only building an asset, though, if you are paying attention to the long term sustainability of your business. Some of the items to watch include:
- Regular, consistent financial statements with analysis of what works and why,
- Written systems and training guides,
- Accurate ROI calculations and predictions, and
- A business that is bigger than just you.
There are a couple of ways to build a business value. You may simply be building a business that provides income now and that down the line can be sold. Perfect! You have an exit strategy.
Or you could be a business starter, who then goes on to sell businesses. I recently had the opportunity to talk to some business owners whose business was building and selling businesses. In other words, their business was making businesses. In this case, the businesses were all online ones. It seems that anything can be done faster and bigger online. One guy builds out businesses for 3-4 months and then sells them for $50,000. Another couple starts a new business every month, builds them for 6 months or so and then, from inventory, sells a business month – again, netting between $50,000 – $100,000.
It’s an interesting model and capitalizes on one thing I see so many small business owners forget. Your business has value. If you build a business to provide income now and a sales price later, you will be building the best of all worlds.