Tuesday, October 22, 2002 (Part 2)

This is a page from my book, “How I Sold My Business: A Personal Diary”

It's probably helpful to share some financial information about our company here. To keep everyone's information private, and to make this easier, I've gone through this entire book and changed the business financial values, including things like Revenue, Net Income rate, and actual Net Income.

I've documented my approach in my financial assumptions page, but as a quick summary:

  • We have fifteen employees.
  • A typical computer consulting firm earns $140K per employee.
  • Those numbers combine for a revenue of $2.1M.
  • A typical computer consulting firm has a Net Income ratio of 15%.
  • Using that Net Income ratio, our Net Income would be $315,000 per year.

We also have partner distributions at least twice a year. As mentioned earlier, if a partner owns 10% of the company, a simple way to look at it is that $31,500 would go into their capital accounts. (I'll discuss LLC capital accounts in detail later, so I'll leave this discussion here at this time.)

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