Leadership

Is $13.25 A Reasonable Price For A Cup Of Coffee?

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Executive Summary

Now $2.65 for a coffee may not sound like a big deal - but when it comes time to sell your business, that coffee may be costing you three, four or five times that amount. Here's the math: when you sell your company, the buyer will likely use a multiple of your pre-tax profit to value your business. If you can get five times pre-tax profit for your company, a $2.65 expense will end up costing you $13.25 in terms of money you would have received when you sold your business ($2.65 x 5 = $13.25). In essence, that coffee is dragging down your profits by $2.65 in the year you sell.

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