The Case for Business Ownership - Build Systems Not Buckets

How much can you sell your job for? Better yet, who has control over when your job is sold and bought? Your employer, right - you're either hired or fired.

After 20 years, how much can you sell your job for?

If you own a business, how much can you sell your business for? Either your accountant or the Small Business Development Center can tell you, correct?

If it involves a building that your business has purchased for you over the years you can perform a comparable market analysis to determine the value.

If you are selling a cash flowing business then the computation used is the earnings approach ... the accounting net profit plus excess owner's salary, plus depreciation/amortization expense, plus discretionary and extraordinary one-time expenses divided by a capitalization rate. (the equivalent to the required return on investment on earnings which can range anywhere from 20% to 40% for small business.)

After 20 years, how much can you sell your business for?

Also, where does one receive favorable tax treatment - as an employee or business owner? Robert Kiyosaki author of Rich Dad, Poor Dad provides us with this simple quadrant:

On the left side we have Employees and Specialists or Small Business owner's. On the right we have Business Owner's and Investors. To get favorable tax treatment and to accelerate your wealth building capabilities, you want to be on the right side of the quadrant in the B's and I's. An employee is taxed off the top and then spends what is left over. A business owner receives an income, spends and is then taxed on what is left over.

The quadrant brings up another point - what is the difference between a Business Owner and an S or Small Business owner? The Business Owner owns a system as illustrated by this simple analogy:

A small town in need of water identifies a quality source, a large lake one mile away. Two budding entrepreneurs start a business to deliver the water to the town. The first gal gets a bucket on day one and starts tenaciously hauling, making about a $100 a day. The second gal plans for 6 months, visits the Small Business Development Center, writes a business plan, incorporates, secures financing from her banker, meets with the zoning commission, buys insurance, hires employees, builds a pipeline and starts pumping water to the town for about $1,000 a day.

The first gal seeing this starts hauling two buckets a day, hires her son into the business, starts working 12 hours a day and after 12 months of this, folds and goes back to her day job.

The point is - build systems, not buckets. We can help with this - visit our website and fill out the form under the coaching tab to get queued up in our scheduling system - click here!