A question we are often asked is: ‘What is my company worth’?
Good question, and an answer not easily answered for a number of factors – but one that can be easily resolved is – ‘well, what do you plan to sell, build, acquire, in the next year?’
It is striking how many small businesses have no idea what they will sell or buy in the coming year. The old saying; “if you don’t know where you are going, you will never know if you’ve arrived” definitely applies. There’s a reason they keep score in hockey games. And bankers and investors alike all what to know what your company is capable of doing.
The answer is to prepare a Proforma plan on your business. A forward looking document, plan, or budget that outlines the financial performance expected from your business in the coming year, two years, three years, etc. – you get the idea. Having a proforma plan takes the ‘hope’ out of business and creates a mind-set of achievement.
Riata has put together several proforma documents for many clients. These are excellent for informing your banker of what your plan is in coming period. Sometimes the outcome isn’t always positive – but as we’ve all learned banks don’t appreciate surprises. They can live with good news (obviously) and even bad news provided they know the business has a PLAN. What’s your plan?
Give us a call. We can help you develop one.