Why ROA is so important when managing your company

When selling your company, what’s better: to sell the assets or to sell the return on those assets?

All things being equal, you want the return on your assets to be worth more than the assets themselves.

That doesn’t happen without good management.

A business that will sell for a nice multiple will tend to have:

• Scalability: growing and is capable of handling growth
• Sustainability: the company won’t suffer when a key person leaves, when the owner sells or when a big customer is lost
• Predictable, growing cash flow.

Sounds good, doesn’t it? Sound like a company that you’d like to run for as long as you want? The benefit of designing a business like this is that your business can actually get a real CEO (you!) and you’ll have time to watch your kids’ soccer games. Heck, maybe you can even coach the team.

Determining valuation

One of the tools to help you see how well you’re doing with managing your company’s value is...read the rest at The Business Journals.