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How to Lead People and Manage Your Business’s Money

The EntreLeadership Podcast

CHAPTER

How to Value a Business in Small Business

Businesses have value as a multiple. You can't mix these three valuation methods. The only book value those tenant improvements have is what they'll sell for today. Four means you're getting a 20% rate of return on my money when I go back to Nashville. Five means I'm getting or four means I’m getting a 25% rate of returns. So that's called a capitalization methodology and based on that, small business is highest risk possible category for an investor.

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