Business Value Gap Analysis
Do you know what your Business Value Gap (BVG) is? This is something all small business owners need to think about.
BVG is the approximate gap between what your business is currently worth and what it needs to be worth to fund your retirement.
This is not a substitute for a formal Valuation – something more comprehensive, and for the purposes of internal management planning only.
Most business owners are relying on the sale of their business to fund all or part of their retirement. They do not know the value of their business nor how to increase the value.
With over 800,000 businesses in Australia expected to change ownership over the next 8 – 12 years, there will be downwards pressure on valuations. This results in only sustainable, profitable and unique businesses having a chance of optimising their sale price.
Here is a very sobering fact:
$1m invested in fixed term deposits will currently give a rate of return less than a single aged pension!
There are 5 very important questions that need to be asked:
- What is your estimate of your business’ current value?
- What business value do you need at time of sale?
- When can you afford to sell?
- What is the profit target you need to achieve to reach the required value?
- Any growth and improvement strategies required to increase value?
Acvisory will work with you on profit and value improvement strategies to bridge the gap. We will calculate the annual growth required and the number of years that it will take.
Engaging a Financial Planner to work with you will maximise the returns from your superannuation, current investments and sale proceeds when realised.
We suggest risk strategies such as Life, Trauma and Disability Insurance in case of involuntary early departure from your business.
Do you need help analysing Business Value Gap? Contact us for free consult.
General advice warning: The advice provided is general advice only as, in preparing it we did not take into account your investment objectives, financial situation or particular needs. Before making an investment decision on the basis of this advice, you should consider how appropriate the advice is to your particular investment needs, and objectives. You should also consider the relevant Product Disclosure Statement before making any decision relating to a financial product.