Welcome to your find The Gaps Calculator!
This tool offers essential insights into your business’s financial health. Simply input key data, such as revenue and expenses, to gauge its value and profitability. Start now to make informed decisions for your business’s future.
He’s a successful entrepreneur who’s actively planning for the future. Just like Jim, you have financial goals and aspirations for your business. Using our calculator, like Jim, you can gain insights into your business’s value, profitability, and potential gaps. Understanding these figures empowers you to make informed decisions and strategize effectively for your future.
Don’t wait – take control of your financial destiny like Jim, and start using our calculator today to see how even the smallest changes can drastically improve your chances to Sell Wealthy!
Portfolio Gap (PG) = Required Amount Upon Exit (RAUE) – Portfolio Value Upon Exit (PVUE)
Calculate the portfolio gap to determine the financial shortfall between your current portfolio value and the amount needed for your desired lifestyle after exiting your business.
The Business Value Gap (BVG)= Portfolio Gap (PG) – Current Business Value (CBV)
Calculate the business value gap to determine the difference between the current value of your business and the desired value needed to close your portfolio gap.
Business Profit Gap (BPG) = Potential Annual Profit (PAP) – Current Annual Business Profit (CABP)
This calculation helps identify areas where you can improve profitability to close the gap and enhance your business’s value.
The portfolio gap represents the financial shortfall between the amount you need or want upon exiting your business and the estimated value of your financial portfolio at that time. Closing this gap is essential for a successful transition post-exit.
Required Amount Upon Exit (RAUE): Enter the amount you need or want to fund your lifestyle after exiting your business.
Portfolio Value Upon Exit (PVUE): Enter the estimated value of your financial portfolio when you exit your business.
Take a look at Jim as an example: E.g. Jim’s FP calculates that his portfolio will be worth $5M when Jim exits his business in three years. Jim’s FP also calculates that Jim will need $10M to fund his retirement and the other “things” Jim wants to do in his life. Jim’s portfolio gap is calculated using the following:
Jim now understands that in order to close the portfolio gap by solely exiting his business, he needs to obtain at least $5 Million. The portfolio gap is determined by your financial planner (FP) and tax advisor (TA).
The business value gap represents the difference between the current value of your business and the desired value needed to close your portfolio gap. This calculation helps you understand how much you need to increase the value of your business to achieve your financial goals upon exit.
If your financial planner hasn’t accounted for the growth in business profits, you can include it in the calculation to adjust the business value gap accordingly.
Portfolio Gap (PG): Enter the portfolio gap, which represents the financial shortfall between your desired post-exit lifestyle and your current financial portfolio.
Current Business Value (CBV): Enter the current estimated value of your business.
Example: Let’s continue using Jim’s scenario:
Result: Jim’s business value gap is $2M. This means that he needs to increase the value of his business by another $2M when he exits his business to close his portfolio gap.
If Jim’s financial planner didn’t include any growth in business profits over the next three years, but Jim has the opportunity to increase his profits by $250K per year for the next three years, then Jim can adjust his calculation accordingly to determine the revised business value gap.
Calculate the business profit gap to determine the difference between your current annual business profit and the potential annual profit you could be making compared to others in your industry.
Current Annual Business Profit (CABP): Enter the current annual net profit of your business.
Potential Annual Profit (PAP):Â Estimate the potential annual profit you could be making if you improve your business’s performance.
Example: Let’s use Jim’s scenario as an example:
Result: Jim’s business profit gap is $1,000,000. This means that by improving his business’s performance and increasing his net operating profit by 10%, Jim has the potential to earn an extra $1 million annually. Closing this profit gap could significantly contribute to closing his portfolio gap more quickly and enhancing the overall value of his business.
Â
The Business Valuation Calculator provided herein is intended for informational purposes only and should not be construed as financial or investment advice. The calculations and results generated by this tool are based on the information provided by the user and certain assumptions, and may not accurately reflect the actual financial situation or future performance of the user’s business.
Please note the following:
1. Estimations and Assumptions: The calculations performed by this calculator rely on estimations, assumptions, and inputs provided by the user. These estimations may not accurately reflect the real-world circumstances or market conditions. Users are encouraged to consult with qualified financial advisors, business valuers, and tax professionals for personalized advice tailored to their specific needs and circumstances.
2. Limitations of Data: The calculator does not consider all possible variables that may impact the valuation or financial performance of a business. Users should exercise caution and consider additional factors not accounted for by the calculator when making important financial decisions.
3. Competitive Analysis: The Business Profit Gap calculation relies on estimations rather than competitive analysis. While competitive analysis can provide more accurate benchmarks, the estimates provided by the calculator are based on user instincts and industry knowledge.
4. Consultation with Professionals: Users are strongly encouraged to consult with qualified professionals, including financial planners, business valuators, scaling and succession advisors, and tax advisors, to obtain comprehensive guidance tailored to their unique circumstances and goals.
5. No Guarantees: The results generated by this calculator are not guarantees of future outcomes. Actual financial performance, business valuation, and market conditions may differ from the estimates provided by the calculator.
By using this calculator, you acknowledge and agree that the results are provided on an as-is basis and that no warranties or representations are made regarding their accuracy, reliability, or suitability for your specific circumstances.
Subscribe to our newsletter to stay up to date on industry standards and connect with our experts!
"*" indicates required fields
"*" indicates required fields