Are You Treating Your Company Bank Account Like a Piggy Bank?
Picture a magic slot machine. Each time you pull the lever, you receive a multiple of what you put in. How often would you play that machine?
When it comes to your business, there’s a similar opportunity. Most companies are valued based on a multiple of their earnings before interest, taxes, depreciation, and amortization (EBITDA). This means every extra dollar of profit you generate today can significantly increase the value of your business down the road.
Want to know your EBITDA? Calculate it here!
Maximizing your profits becomes even more critical if you’re considering selling or transitioning ownership within the next three years. Most potential buyers evaluate at least three years of financial records, so improving your EBITDA now can lead to a much bigger payday when you decide to exit.
The Hidden Cost of Using Your Business as a Personal Piggy Bank
While it’s tempting to blend personal and business expenses to lower your taxable income, doing so can hurt you in the long run. Treating your company bank account like a piggy bank might save on taxes today but could reduce the overall value of your business when it’s time to sell.
Why does this matter? Acquirers value transparency. If your financials are cluttered with personal expenses or unnecessary costs, it becomes harder to demonstrate your business’s true profitability, which can lead to lower offers.
The solution? Keep your profit and loss (P&L) statement clean and accurate. This simple step can dramatically boost the value of your business when it’s time to sell.
Discover What Your Business Is Worth
Curious about your business’s value and how to increase it? Our quick and easy score questionnaire can provide a detailed assessment of your business’s qualitative value drivers.
Get started today! Click here to begin your business valuation.
At Magnus Business Group, we specialize in helping small business owners understand and maximize their company’s value. Knowing your worth is the first step, whether you’re planning to sell soon or want to build a more valuable business.
Don’t wait—discover your business’s true value today!
Thinking about selling your business? Exit planning is essential to getting the results you deserve. As your business broker, I’ll help you polish every aspect of your business, address red flags, and highlight its true value.
Schedule a consultation or take our 15-minute Value Builder Questionnaire. It evaluates your company across 8 key areas and includes a free report plus a personalized consultation.