How do you value a business, interest rate, cash generation, profit, growth, potential, synergy, social good, innovation, assets, resources, client base and no doubt lots of other factors? The mail I get about this subject always starts with the question do you want to sell your business and quite often I get distracted into thinking about it.
Value is an emotional term and it depends on whose emotion it is. As an owner I have many value factors that influence my point of view but I tell myself that the strongest is income now and anticipated future income. This value is tempered with the intimate knowledge of the effort and uncertainty of achieving that future income. The potential to sell now and realise some of that future value today and thereby pass on the uncertainty and the effort to somebody else feels very attractive.
Based on this logic it should be simple to set a value on my business. However the moment I try and quantify what the value of my business is I become confused by many factors that are not the ones I tell myself are the strongest. So why is it so difficult to put a value on a business? I think that a large part of the answer is that value is far more complex than setting a price your willing to sell for. The value of my business is bound up in who I am, what I could be, my place in society and my feelings of self worth. It’s one of my children and I live its success and failure every day of my life. I love it and I hate it but it’s hard to imagine a world without it.
How can I put a value on such an emotional object? I believe Ihave to first cut off all emotional connection to enable me to make the decision that I am willing to sell this business and Imust mean it. Then and only then will I be able to focus on the commercial issues of trying to value the business and only at that point will I be willing to accept that my business is worth as much or as little as somebody else thinks it is and even that is irrelevant unless they are willing and able to buy it. So on reflection I am glad I am not selling now!
We differentiate our business from our competition by offering a customer service that stands out more than Jordan’s boobs (we are of course absolutely genuine!). Occasionally we make mistakes but we take full responsibility and resolve these. Sadly, however hard we try, we will never please all our customers.
