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Did You Know Less Than 2% of Businesses Value Themselves Annually?

Why establishing your business valuation is key to success

Many people have a set habit of what and how they save — whether that be a payroll deduction straight into an employer-sponsored retirement plan, a contribution to an Individual Retirement Account (IRA), or a deposit into a personal savings account of some sort. The success of these actions is measurable either by investment performance or accumulation of savings. Over time, these practices are intended to build wealth or in planning for a special purchase or event (i.e. home down payment, educational needs, retirement trip, etc.).

For business owners, there is another form of saving and investing that is equally as important but may be more difficult to measure in terms of success…investing in your business! It’s no secret that for many businessowners and entrepreneurs alike, their business is their greatest asset. Not only do they invest their time and talent into growing their business, it takes significant capital too. But did you know less than 2% of businesses actually take the time to value themselves annually? Whether it’s simply due to a lack of time or expertise, business owners are not taking that deep-dive analysis into their businesses every year, which may contribute to the national statistic that 40 percent of today’s businesses are undercapitalized*.

So where do you start? Long-term planning is just as essential for business owners as it is for individual retirement planners. Embracing sound processes around the valuation of your business is key — but you don’t have to go it alone. We know a business owner is usually well-versed in understanding how their business works, but they can often benefit by having a professional financial advisor help them translate their business’s worth in the scheme of their total financial picture.

At McKinley Carter, we have specific in-house expertise in business valuations, tax planning, and succession planning. Additionally, our advisors have access to robust tools and knowledge to help our clients clearly understand the true value of their business, from consulting firms to contractors and everything in between. If you need help launching a detailed valuation of your business, reach out to us today.


*Source: https://www.bizequity.com/

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