Most business owners don’t do the math on their most valuable asset
Many small company owners don’t know what their enterprise is worth, a practice that can amount to risky business.
A whopping 98% of small businesses polled by M&T Bank over the past two years didn’t know the value of their companies. This is especially troubling, given that for most business owners, their company is their most valuable asset.
“People whose home is their primary asset want to know what it is worth. If you open up a brokerage account, you want to know how much it’s worth. You’d never give your money to a financial advisor who told you to trust them while they invest it and never report back to you on what it’s worth,” said Travis W. Harms, who leads Mercer Capital’s family business advisory services group. “Just because your business is not liquid wealth, doesn’t mean it’s not real wealth.”
Here are five points to help entrepreneurs understand the importance of valuing a business.