By Kevin S. Gray, CEO

Navigating the daily challenges of running a business can feel like a juggling act for most business owners. Day-to-day responsibilities and short-term strategies often take precedence, leaving little room for the essential task of long-term planning. This includes one of the most important things business owners can do, which is regularly assessing the worth of your business. 

This seemingly daunting task, viewed by many as an expensive and time-consuming endeavor, often gets pushed aside, only to be revisited when the necessity arises through death, illness, or some other unforeseen event. However, comprehensive long-term planning, which includes regular valuations, is key to accomplishing your personal and professional financial objectives. Despite the myriad of pressing obligations, business owners should view this process not as a task to be delayed or pushed aside, but as a vital tool for strategic planning and a stepping stone toward your financial aspirations. Here’s why…

Valuing Your Business Helps Your Long-Term Financial Plan

Just as a road map (or Google Maps) guides a traveler in an unfamiliar area, an accurate business valuation guides business owners toward financially sound decisions. A business valuation, particularly one conducted by a professional appraiser, serves as a benchmark for the company’s present-day worth. It allows business owners to realistically assess the present condition of their business and, more importantly, map out their financial future. 

It’s not uncommon for business owners to have inflated or diminished views of their company’s value, which can lead to misguided decisions. An impartial, professional business valuation can bring clarity to the table; use that valuation to verify any future financial plans are grounded in reality. 

Will the business, on its current trajectory, allow you to reach your financial goals? What if you expanded your service offerings or acquired other companies? If you reach the point where your business plan can realistically help you reach your financial goals, it could be a good time to consider options for selling while minimizing your tax liability.

Even if your goals fall short with the current value of your business, this process can still be helpful as it offers insights as to why your business is valued less than it could be, which provides a road map for improving your company’s value.

Gives Insight Into Areas for Improvement to Spur Future Growth

An in-depth business valuation not only provides a snapshot of your business’s current financial health, it also uncovers potential growth opportunities and areas that need enhancement. By analyzing different aspects of the business, including financial performance, market position, operational efficiency, and even industry trends, a business valuation can pinpoint where your business could increase revenue, reduce costs, or improve operations. This could be through introducing new products or services, improving operational efficiencies, or exploring unutilized market segments. 

Understanding your business’s value is not just about recognizing its current worth; it’s also about uncovering the potential it holds for future growth. A regular business valuation could be likened to a business health checkup, keeping your business in a robust state and set for sustainable growth and an attractive opportunity for future buyers of your company. 

Clarify Estate + Succession Planning

For owners, their business often constitutes a significant portion of their estate’s value. As such, an accurate business valuation is paramount to creating an estate and succession plan that is in line with your wishes—for both your company and your family.

The information uncovered in a business valuation (and long-term business plan) can help determine whether you want your business sold to an outside party, transitioned to a family member, or passed onto a key employee (or multiple employees). It can also provide guidance on issues like tax liabilities and potential estate taxes. 

Moreover, a clear understanding of your business’s worth simplifies estate settlement processes and verifies fair distribution of assets. 

Maximize Your Most Important Asset

At Veracity Capital, we know how important your business is to you, your employees, and your family members. That’s why we firmly believe every owner should use a business valuation to maximize their company’s potential and reach toward their financial goals. 

If you’re unsure how to properly value your business, we’d love to see if we can help. You can call us at (844) 508-7884 or email us at info@veracitycapital.com. You can also schedule a complimentary introductory call by reaching out to me at 972.695.3820 or kevin.gray@veracitycapital.com. We look forward to hearing from you soon!

About Kevin

Kevin Gray is CEO at Veracity Capital, and as such he is responsible for the execution of the company’s mission, vision, and success. He excels at working with clients to create independent financial planning solutions and offering guidance to clarify, prioritize, and achieve their goals. Kevin’s broad experience, which includes several corporate leadership roles at previous financial firms, provides him with an array of perspectives he applies to an ever-changing investment market. He’s motivated by the desire to figure out what’s best for each individual client, and he greatly values the trust they have in him.

Kevin has a Bachelor of Science in Agricultural Economics from Texas A&M University and an MBA focused in finance from Southern Methodist University. As a Certified Exit Planning Advisor (CEPA), he helps business owners transition their businesses. He was President of the East Dallas Exchange Club, member of SMU Cox Business and the Dallas and Collin County A&M Clubs, member of the mastermind group GoBundance, former member of Tiger21, founding member of Collective 54, and is also the Troop 380 Boy Scout Committee Chair. Kevin and his wife have two sons whose activities dictate much of their time out of the office. They enjoy traveling, golfing, or boating on weekends, and for over a decade, Kevin has maintained a hobby of making his own craft beer. To learn more about Kevin, connect with him on LinkedIn. 

Advisory services offered through Veracity Capital, LLC, a registered investment advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.