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The
start of a new year is is a great time to see how much your personal net
worth has grown. If you have personal guarantees on your business
loans, your banker will probably require you to submit an annual
statement of net worth. Even if not, get in the habit of completing one
every year for your own use.
If
you know the "street value" of your company, be sure to
include it. Chances are, it's your most valuable asset. For many
entrepreneurs, it's worth more than their home. Most small business
owners haven't spent the money for a formal valuation. If you are in
that majority, here's a rough rule of thumb: Assume your business is
worth 50% of one year's revenue. Again, this is a very
rough estimate which varies widely from company to company,
and is no substitute for a formal valuation.
But, it's almost certainly a more accurate representation of what your
company is worth than the "book" value on your balance sheet.
Your company is like a car or a house ... it's worth what someone would
give you for it. Remember to subtract your debts and liabilities and
only show the company's net value on your
personal statement.
How
great it is to see your net worth growing steadily every year.
Isn't that why you went into business, anyway? You set business
targets. Also consider setting targets for personal
net worth.
Bill Collier is
a St. Louis-based business coach, consultant and speaker. He is the
author of the book “How to
Succeed as a Small Business Owner … and Still Have a Life.” His
website is www.collierbiz.com,
and his email is
bill@collierbiz.com
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