How much is my business worth? That's the question I got from one of my clients just two days ago. If you want to know how to value your business, you've got to join us for this episode of The Inside BS Show. Hey now, it's Dave Lorenzo, I'm the Godfather of Growth, and you've got a family business, and you're thinking to yourself, I'm going to pass this business on to my kids, I need to take some money out of the business, but first I need to figure out what it's worth.

Or, you want to sell your family business, and you need to figure out what it's worth. There is only one way to figure out what your business is worth, and that's to put it on the market and to see what people will offer for it. I know, I know, you're thinking to yourself, I don't want to sell my business, Dave, I want to pass it on to my kids.

You need to figure out what the tax basis is going to be, and the only way to do that is to do a true valuation of your business. You could hire an accountant to do a valuation. In fact, if you want to find an accountant, call me, I'll connect you with the accountants we use, and they will do a valuation of your business for you.

But the only real way to put a value on a business is to field offers for that business. Now, the best way to do this is to have somebody come in and help you clean up your business, you fix your books up, you put your standard operating procedures together, you make sure that all the blemishes, all the warts are smoothed over, and then you put your business on the market and you hold an auction. If you don't like any of the bids, you don't accept any of the bids, but you know what the market values your business at.

This is the true way to sell a business. Now, when my client asked me this, he owns a family business, when he asked me, Dave, I want to know how much my business is worth, when he asked me this, he was asking me because he got a phone call, an unsolicited offer from a really big competitor, and that's what we would call a strategic sale. The big competitor wants to buy him to increase its share of the market, increase its market share.

That's a strategic sale, and that will be a strong offer usually, unless it's the only offer that's received for the business. Now, private equity funds are known for also making unsolicited offers, and many times these will be what we call exploding offers, where the private equity fund will call the business owner, and they'll say to the business owner, we want to give you $10 million for your business, take it or leave it, and you got to let me know by a week from today. That is crazy talk, because when you get an offer like that, the first thing you should do is you should call a business broker or an M&A intermediary, or you can call me, and they'll put your business on the market for you, and they'll put your business on the market to field legitimate offers, multiple legitimate offers for your business.

Now, you will get more, almost always you'll get more than that unsolicited offer, because anybody who's calling you on an unsolicited basis, especially if they're making an exploding offer, is low-balling you. So you're going to get a higher price if you really want to sell if you put your business on the market and you hold an auction. Now, here's the deal.

It's not like you're going to put your business on the market today and 50 people are going to bid on it. The reason you go with a business broker or the reason you go with an M&A intermediary is number one, a lot of times they know people who buy businesses like yours. There's a good chance they work in your industry sector.

They're familiar with three or four different buyers who buy businesses just like yours. They know what they're looking for. So that's the first thing.

They have contacts they can reach out to to get offers for your business. The second thing is the M&A intermediary or the business broker will put together a comparative market analysis. They're going to look for comparable businesses like yours that have been sold in the recent past.

They're also going to look at your specific geography and if they have a database of these businesses in your geography, they will know what the price of these businesses was, what the sale price of these businesses was. So they'll know what the market value is about what the market value is. And then they'll be able to make some recommendations for you on things you can change in your business in the short term to make your business look better.

In a way, it's like selling a house. You call somebody and they come in, they give you comparative market analysis and then they tell you what you need to do to spruce your house up in order for it to sell for the most money. Well, a business broker or an M&A intermediary is going to come into your business, they're going to look at your books, they're going to walk around and look at your business, they're going to make recommendations on things you can do to make your business more appealing.

Now in a business, it's more difficult to make these changes because most of the changes will take time. Going back and fixing your books may take a month or two. Going around your warehouse and cleaning it up, painting your warehouse, putting your people in good uniforms, getting rid of excess inventory, that may take two or three months.

So it may take you a few months to get your business listed and to get your business ready for sale. If you're serious and you want to get maximum dollars, that's where we come in. Exit Success Lab gets involved 18 months to three years before a sale.

And we will help you restructure your team, restructure your business, fix up your business model and stake out the most advantageous position in the market. We'll put together a strategic plan for you 18 months to three years in advance. We'll help you execute that plan and we'll bring in our tax specialists to make sure your business is positioned appropriately from a tax perspective so that when you sell it, you get the maximum amount of dollars and you're doing it in as efficient and effective a way as possible.

We get involved anywhere from 18 months to three, sometimes even five years in advance of a sale to fix the business up, to position the business better. Our focus is on doubling, tripling or quadrupling the value of the business during that time horizon. So short term, you want to sell, call me, I'll connect you with a great business broker who will list your business or I'll connect you with an M&A intermediary or an investment banker who will get your business ready for a sale in the short term, in the next six months to a year.

Long term, call me and I'll get your business ready for sale and then you can put it on the market when it's ready to go for top dollar. All of these things involve positioning your business to get multiple offers for your business. You never want just one offer, you never should accept the only offer you get.

You should position yourself to take maximum advantage of the opportunity to sell your business. I'm Dave Lorenzo and I'm here with a family business podcast show for you every day. Join me here and subscribe.

Go to getinsidebs.com, getinsidebs.com. Subscribe there. When you opt in for the daily email that accompanies this show, you get special invitations to join Nicola Gelarmino and me for webinars and special events that are only available to people who subscribe at getinsidebs.com. I'll see you back here again tomorrow at 6 a.m. Until then, here's hoping you make a great living and live a great life.