Lorraine said she felt complimented when people told her that Cactus & Tropicals was all about her. Over the years she realized, a business can't grow when it is all about the founder.

It is clear, the founder can't sell and walk away if the business is all about the person who is leaving.

Topic for discussion: How does one arrive at the price a buyer should pay for a business?

Answer: Lorraine said the value is what a seller and buyer agree upon. Peter said, pricing a business is more art than science. Jim said the price is about EBITDA-- Earnings Before Interest, Taxes, Depreciation and Amortization.

And all talked about the idea of goodwill. Goodwill is the amount of money a buyer will pay the seller that can't be accounted for in EBITDA. Lorraine even said she was able to create a large amount of goodwill because people could see themselves running her beautiful business. Peter talked about the intangibles of relationships which is why his payout was not all in cash upfront. Peter's buyer put in a large chunk of cash to get the business. Then the rest of Peter's money came because the business was able to keep relationships in place.

If you are like many of us small business owners, with every closing, you look at your Profit and Loss and Balance Statements, and wonder and think about this special thing called a business. We all can see if our net assets are growing. However, when you begin to calculate your EBITDA, Earnings Before Interest, Taxes, Depreciation, and Amortization, that actually may be a bellwether that you are getting close to being ready to sell.

If you know and use the term, "EBITDA," not only are you trendy, but you are probably ready to call a business broker! EBITDA is a good calculation to discern your profitability (cash earnings not cash flow) and it is one of the key figures a business broker would use to see how your business stacks up against another like it.

You think about it: Now, if you think you grasp your financials, what key critical ratios are you following? Why? Up or down this month? What is your EBITDA? Using the advice offered by Jim, Lorraine and Peter, what do you think a buyer would pay for your business today?