Let’s say that you owned a gift shop, a restaurant, or a clothing store for five years. Wouldn’t you WANT to know what the financial value of your business is? Of course, you would. But most small business owners have no idea what their business is really worth.
Joe Ritz (pictured below), who owns the Sports and Collector Car Center in Tempe, Arizona, does. Ritz uses computer software that enables him to obtain a current estimate of the financial worth of his retail business.
As Mark Cohen reports for the New York Times: “What he [Ruiz] did not know when he first tried to buy his own repair shop several years ago was how difficult it would be to pin down shop owners on the actual value of their businesses. Few owners seemed even to know how to make a good guess. ‘One guy I talked to about selling said the business had to be worth $1 million, because that’s what he needed to retire on,’ Mr. Ritz said. ‘Another was like, well, let me see, my alimony is $4,500 a month. It was ridiculous. I finally just gave up and decided to start my own shop. Today, that shop has four mechanics working on roughly 20 cars a month, and Mr. Ritz can tell you exactly what he thinks the business is worth. All he has to do is check the latest figure on a cloud-based computer program that synchronizes with his regular accounting software to give him a real-time estimate.”
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Photo by Joshua Lott for the New York Times