There are questions that almost everyone asks at some point in life. But for many successful families, it isn’t really a question about money anymore. It’s a question about purpose.
What Is My Business Worth Today?
The first number is your current enterprise value. In simple terms, what is your business realistically worth today? Not what you hope it’s worth, not what your friend sold their company for, and not what someone told you years ago. The real question is what a qualified buyer would likely pay for your business in today’s market.
This number establishes your starting point. It’s the current value of one of your most important assets and serves as the foundation for future planning decisions. Yet many owners spend years building successful businesses without ever obtaining an objective assessment of value. Before you can determine where you want to go, you need a clear understanding of where you are today.
What Do I Need My Business to Be Worth?
The second number is the capital required to fund your life plan. This may be the most important number because it shifts the focus away from the business and onto the life you want to create.
Think about what your ideal future actually costs. What level of income will you need? How much do you want to travel? Do you want to support family members? Are charitable giving or legacy goals important to you?
When we work with business owners, we don’t start by talking about the business. We start by talking about the future they want because your business should support your life, not the other way around. Once you’ve defined what that future looks like, you can calculate the capital required to make it possible. That number becomes your target.
In other words, this number answers a more important question than what your business is worth today. It answers what your business needs to be worth to support the life you want tomorrow.
What Will I Actually Keep After a Sale?
The third number is the amount of proceeds available after taxes and costs. This is where many owners are surprised. Even if you know what your business is worth, that doesn’t mean it’s what you’ll ultimately keep after a sale.
Taxes, transaction costs, debt repayment, and other obligations can significantly reduce the amount that actually lands in your pocket. As a result, the value of the transaction and the amount you keep are often two very different numbers.
That’s why understanding after-tax proceeds is so important. At the end of the day, it’s not what your business sells for that matters most. It’s what remains available to fund the next chapter of your life.
Knowing these three numbers won’t answer every question, but it will help you ask the right ones. When you understand what your business is worth today, what you need it to be worth, and what you’ll actually keep after a sale, you can begin making decisions with greater clarity and confidence.
If you’re curious about the first number and want a better understanding of what drives the value of your business, we’ve included our guide, What Is Your Business Worth?, you can download through the link in the description below.
Because understanding what your business is worth today is often the first step toward building the future you want tomorrow.
The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Aristata Financial and not necessarily those of Raymond James.