Are You Using Your Company Bank Account As a Piggy Bank?
Picture a magic slot machine. Each time you pull the arm, you receive a multiple of whatever you wagered. How much time would you devote to cranking that arm?
When it comes to the value of your business, you can make many bets, but only one has a virtually guaranteed return. Most companies are valued on a multiple of earnings before interest, taxes, depreciation, and amortization (EBITDA), so every dollar of incremental profit you earn in the short term will translate into a multiple of that down the road.
Since most acquirers look at three years’ worth of financial reporting, squeezing out every extra dollar of profit makes even more sense if you’re considering an ownership transition in the next thirty-six months.
The Downside of Using Your Company Bank Account as a Slush Fund
There’s a downside to treating your company like your piggy bank. Co-mingling personal and business expenses while letting other costs go unchecked may help you reduce taxes in the short term but could end up costing you more in lost value when you decide to sell your business later. Instead, keep your P&L CLEAN to jack up the worth of your business.
If you want a more comprehensive business valuation and know how your business can be sold on the market,
contact us for more details! Our score questionnaire, which takes only a few minutes, will present you with
qualitative value drivers for your business!
While business owners are often stretched for time, when it comes to discovering how much your business is worth, there’s no time like the present.
Our firm specializes in meeting the financial needs of small business owners, and business valuations are a critical step in our process.
To get started on your business valuation, click https://magnusbusinessgroup.bizequity.com/ or contact us directly!