Understanding the Importance of Net Revenues

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Why are net revenues important to your business?   Net revenues can help your business in three areas:

1) Selling your business
2) Obtaining financing
3) Building reserves

When you want to sell your business, most buyers will want to acquire a business that has healthy net revenues.  Many times a business is valued by multiplying net revenues times 3 times or even as high as 8 times to determine the value.  Second, net revenues are important if you are seeking long-term financing with a bank.  Last, net revenues can help you build reserves for your business so you can save and have an emergency fund.

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