If you’re in business, you are probably working hard to build up your business with a view to selling at some point in the future.

This is where a solid business plan is important, as is knowing where your Business Value Gap (BVG) stands as you work towards your goal.

A BVG is the difference between the value of your business today and what you need it to be when you come to sell in the future.

A shortfall can have a significant impact on your retirement plans and may force you to reassess your desired standard of living in retirement.

In some cases, it may even mean that you can’t afford to sell your business without making a loss.

Retirement for all of us should be the best years of our life and is the time for us to reap the rewards of our hard work.

So, before you begin to approach retirement you need to look at your business and determine the BVG, and where you need to work towards in order to make the most of your business asset.

Some points to consider with looking at this are:

• What your business value needs to be at time of sale
• What you would like to make from the sale
• How many years it is until you can afford to sell at this target
• How to achieve future profit targets that provide you with a higher business value and a desired standard of living

BVG analysis is a simple process of determining your retirement income and assets, business value (current and future) and strategies to improve business profit and wealth.

If your business value gap analysis reveals a shortfall in business value, then you will need to implement business strategies to improve your profit before you sell.

For example, improving your average sale per customer will increase sales, gross margin and net profit.

Knowing what your business value needs to be means you can calculate your future profit, gross margin and sales targets.

Value gap analysis provides business owners and managers with peace of mind from understanding the direct connection between business value and a future standard of living at retirement.

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