Many business owners and entrepreneurs want to know how much money they can pull out of the business (and how little they can pay in taxes!) each year. This strategy can make sense... however, what if you’re walking over dollars to pick up pennies? Today’s episode is all about how to shift your mindset away from solving for annual income to focusing on growing the long-term value of a business. 

 

What You Will Learn In Today's Podcast Interview

The difference between annual income and long-term value creation mindsets.

How to weigh short-term decisions to pull cash out of the business vs. reinvesting to grow its enterprise value.

The benefits of regularly tracking normalized EBITDA and how that helps keep your mindset focused on long-term value growth.

How to use the financials to forecast the value of a business.

Why higher net income and more revenue aren’t always the top metrics for measuring value creation.

How your mindset impacts where you spend your time, money and energy.

What the J-curve is and how to use it like a private equity firm to create a more valuable business.

How to use your business’s financials to tell the past and future stories of your company.

What to do with your “extra” money every year.

Why creating a sustainable, predictable and transferable cash flow gives you the freedom of more choices.

How your why (ultimate purpose) influences your pain points and drive.

The importance of crafting a narrative that frames your financials to a buyer.

How to tap into the financial value of your business without selling out. 

 

Are You Growing The Value of Your Business

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Podcast Summary

"How much can I pull out of the business this year?" "What are ways to pay as little in taxes as possible?"  

Do these questions sound familiar?

There is nothing wrong with maximizing your take-home dollars from your company. However, what if you are stunting the long-term value of your business and, therefore, limiting the number of choices you'll have with it down the road?

Having choices is another way of saying freedom. Choices are a result of having a valuable business with sustainable, predictable and transferable cash flow. Making the right decisions comes from understanding what you ultimately want from the business (and why) and what all your choices are. . 

If you’re currently solving for annual income (salary, perks and distributions) rather than focusing on creating a more valuable business, you’re potentially trapped in a mindset that is limiting the future options you have with the business.

In this episode, Pat and I discuss how to compensate yourself properly from your business while also reinvesting in strategies that increase the value of potentially the largest financial asset you own (your business).

It’s crucial to understand the very real tug-of-war between the desire—or need—to take most of the distributions out of the business and the one to reinvest that cash back into the business.

Pat and I break down what creates value and how to measure and forecast that value (and net proceeds) into the future of a business, all without selling. 

We believe this clarity can help shift an owner’s