Economic Value: How to Know What Your Business is Worth to You
- Knowing the economic value of your business helps you identify when the business is underperforming, what price it should sell for, whether or not you should keep it, and how to structure an offer for shares.
- The economic value of a business is typically based on the last three years of pretax profit plus the equity in a business.
- This approach takes into account not only the economic activity of the business, but also how well it is capitalized.
- The valuation will be lower if the business has a lot of debt.
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This book teaches the fundamentals of owner compensation, profit targets, labour productivity, cash flow, and data reporting. Clear explanations and helpful illustrations throughout make it a must-read guide for small business owners looking to achieve higher profits.
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