SBA business valuation | Art of Business Valuation

The Power of Questions

by Greg Caruso | Sep 14, 2025 | Uncategorized

Ask more questions and save time, improve relationships, increase understanding.

Asking questions is one of the most powerful tools we have. Whether in our personal lives or in the workplace, knowing how to ask effectively can lead to better understanding, improved communication, and smarter decision-making. However, many people often overlook this important skill and tend to take information at face value. In a time when information is everywhere but not always trustworthy, developing the ability to ask the right questions is incredibly valuable.

For instance, when I worked in business brokerage, I questioned prospective sellers to understand the unstated thing they wanted from the transaction. (There almost always was at least one.) In one case this revealed that they wanted a strong buyer who could maintain a building they had lovingly renovated. This allowed us to speed up the selling process by qualifying the buyers more effectively.

Tips for Effective Questioning

Be Open-Ended: Whenever possible, ask open-ended questions that encourage elaboration rather than simple yes or no answers. For example, instead of asking, “Did you like the presentation?” try “What aspects of the presentation interested you?” This invites a more thoughtful response.
Tailor Your Questions: Consider your audience and the context when formulating questions. Adapt your inquiries to suit the situation, whether you’re speaking with colleagues, friends, or family members. Personalizing your questions can lead to more meaningful conversations.
Practice Active Listening: Asking a question is just the beginning. Pay attention to the answers you receive. Do not start thinking of your next question. Quiet your mind and listen. Active listening demonstrates that you value the other person’s input and encourages them to share even more. Reflect on their answers and ask follow-up questions to delve deeper.
Embrace Curiosity, Not Judgment: Approach questions with a mindset of curiosity rather than skepticism. This helps create a safe space for others to share their thoughts without feeling defensive. When people feel supported, they are more likely to open up and provide honest, insightful responses.
Be Patient: Sometimes, the best answers take time to formulate. Allow the other person the space to think and respond thoughtfully. Rushing to fill silence with more questions can stifle the conversation and prevent meaningful insights.

A few minutes of meeting preparation to have good questions ready can often save hours and hours of work. Improve your productivity, relationships, and understanding through questions.

More Competition or More Quality SBA Loans?

by Greg Caruso | Aug 21, 2025 | SBA Business Valuation and Appraisal

Fintech, or non-banks using advanced technology are entering the market for SBA 7(a) and other commercial loans. Often, the process is streamlined and at least begins more straight forward. But, will these loans and lenders provide quality credit over the long haul expanding the SBA market or will they run into default and compliance problems?

When New Kids on the Block Challenge SBA Lending: The Fintech Factor

Historically, SBA loans, with their government guarantees, have been the purview of established banks and credit unions. These institutions possess deep experience in commercial lending, understand the nuances of underwriting, and navigate the complex regulatory environment with practiced ease. They’re well-versed in assessing cash flow, evaluating collateral, and building the long-term relationships that often characterize small business banking.

Enter the fintech companies. Driven by technology and a desire to serve previously underserved markets, many fintechs have leapt into the SBA space.

The participation of fintech companies in SBA lending is a double-edged sword. It drives innovation, expands access to capital, and offers much-needed speed in a fast-paced business world. However, it also necessitates a critical evaluation of the associated risks, particularly concerning lender experience, robust underwriting, and rigorous compliance.

For traditional 7(a) SBA lenders, the challenge lies in adapting to this new competitive landscape. This means potentially embracing more technology themselves to streamline processes, while also emphasizing their core strengths: deep commercial lending expertise, strong risk management frameworks, and the value of long-term client relationships. For the SBA and regulators, it means strengthening oversight and providing clearer guidance to ensure that all participating lenders, regardless of their background, are equipped to uphold the integrity and minimize the risks within these vital small business programs. The goal, ultimately, is to ensure that small businesses continue to have access to the capital they need, from lenders that are both innovative and responsible.

The Future of Business: Dynamic Risk and Hyper-Efficiency with AI

by Greg Caruso | Jun 24, 2025 | ESOP Business Valuation, Estate and Gift Tax Business Valuation, Exit Planning Business Valuation & Growing Business Value, SBA Business Valuation and Appraisal

AI can be a powerful co-pilot in navigating risk and boosting efficiency by processing vast amounts of data, identifying patterns, and automating tasks that would otherwise be time-consuming or prone to human error. But humans must review and refine the results. From time to time, AI does make mistakes, just like any other tool or person.

The key is to view AI not as a replacement, but as an intelligent assistant that amplifies your capabilities.

Let’s break down how AI can help you with both risk navigation and efficiency.

Using AI to Understand Your Company and Market Risks

AI offers a powerful solution by enabling dynamic risk assessment. This should be integrated into your planning and forecasting process. Here’s how it works:

Continuous Data Ingestion: AI algorithms can constantly ingest and process vast amounts of real-time data, including:

Financial Market Data: Interest rates, bond yields, equity market indices, volatility indices.
Economic Indicators: Inflation rates, GDP growth, unemployment figures, consumer confidence.
Industry-Specific Data: Commodity prices, regulatory changes, technological disruptions.
Company-Specific Data: Stock prices (for public companies), credit ratings, news sentiment, social media activity.

Intelligent Pattern Recognition: Machine learning algorithms can identify subtle patterns and correlations within this data that human analysts might miss. This enables a more nuanced understanding of how various factors impact risk.

Using AI to Increase Efficiency

AI also excels at automation, optimization, and personalization, freeing up your time and mental energy.

AI-powered search engines and tools can quickly find, filter, and summarize vast amounts of information from the web or your documents. Instead of sifting through articles, you can get the key takeaways in seconds
AI writing assistants can help you draft emails, reports, marketing copy, and even creative content much faster. They can also proofread, correct grammar, improve clarity, and adjust tone.
AI-powered scheduling assistants can find optimal meeting times, send invites, and set reminders without manual effort
AI tools can transcribe meeting audio in real-time and even summarize key discussion points and action items, saving note-taking time.
AI can act as a brainstorming partner, generating ideas, concepts, or solutions based on your prompts.

The Human Element Remains Crucial

While AI offers immense potential in dynamic risk assessment and efficiency, it’s crucial to remember that human expertise remains vital. AI provides the powerful analytical engine, but valuation professionals bring the critical thinking, industry knowledge, and qualitative judgment necessary to interpret the results and ensure the model’s assumptions are sound.

By strategically integrating AI tools into your daily routines and decision-making processes, you can significantly enhance your ability to anticipate and mitigate risks while simultaneously achieving unprecedented levels of efficiency in both your personal and professional life.

The key is to view AI not as a replacement, but as an intelligent assistant that amplifies your capabilities.

Colorado Boosts Employee Ownership with New Tax Incentives

by Greg Caruso | Apr 10, 2025 | ESOP Business Valuation

Colorado is making significant strides in promoting employee ownership with a new bill that introduces substantial tax benefits and expands existing programs. Starting in 2027 and running through 2037, the legislation offers two key income tax subtractions:

Capital Gains Subtraction: Taxpayers who convert at least 20% of their qualified business to employee ownership can subtract the state capital gains realized from this conversion.
Worker-Owned Cooperative Subtraction: Worker-owned cooperatives can subtract their federal taxable income, up to $1 million.

Furthermore, the bill extends and enhances the existing tax credit for employee business ownership conversion costs. Key changes include:

Extending the credit through 2037.
Increasing the credit percentage from 50% to 75% starting in 2026.
Adjusting the annual aggregate credit limits to $3 million (2026-2031) and $4 million (2032-2037).
Expanding eligibility by revising definitions and allowing qualified support entities (nonprofits aiding conversions) to claim the credit.

These changes aim to incentivize business owners to transition to employee ownership, empower workers, and strengthen local economies by fostering a more equitable business landscape.

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Plan, Lead, Flex, Repeat

by Greg Caruso | Mar 18, 2025 | ESOP Business Valuation, Estate and Gift Tax Business Valuation, SBA Business Valuation and Appraisal

Running a business during uncertain times can be challenging, but it’s not impossible. Changes in the economy, politics, unexpected events, and new technologies can make planning and successful operations hard. However, businesses that stay flexible and adapt quickly have a better chance of surviving and growing. To do this, business owners must be ready to change their plans and respond to new situations rapidly.

One key strategy is to review and adjust business plans regularly. This includes thinking out contingency plans for unexpected but possible change. Markets and customer needs can shift quickly, so businesses must keep an eye on trends and be ready to pivot (and you thought pivot ended with Covid) when needed. Being open to change allows companies to take advantage of new opportunities while limiting potential risks. Staying informed and making small adjustments over time can help businesses remain stable and competitive.

Another important factor is building a strong foundation. This means planning, building your balance sheet to survive emergencies, and ensuring business operations can continue even when problems arise. Building a management team that works together provides resilience and internal forums for problem-solving. Companies should also have a variety of suppliers and customers to avoid concentrations that increase risk and can quickly put a firm out of business. Planning can help companies to stay strong, even when unexpected challenges occur.

Finally, good leadership is crucial during uncertain times. Business owners and managers should communicate openly with their teams and encourage problem-solving. Employees who feel supported and valued are more likely to stay motivated and help the company succeed. Leaders should also take care of themselves, as making good decisions under pressure requires a clear mind.

With the right mindset and approach, businesses can not only survive tough times but come out stronger.

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