Business Valuation - How to Value a Business For Sale

RE: Businesses For Sale

If you plan to buy or sell a small business, one of the most important elements of the transaction comes to a value of the transaction. How do you feel at ease buying a certain price if you do not know whether it is good business? While public companies have a simple formula to follow in business valuation - they seek their per share online or in the newspaper - the same is not true for privateIndustry collaboration. Sell For small businesses, it is necessary to make a lot more homework before you pay the price at which you will, that determine small businesses to buy.

Seller to Buyer

With the company for sale in all sorts of areas, there are many variables to consider and clarify critical issues in order to reach a reasonable assessment. The buyer will bear a price, and it's up to the buyer, if that price correctly and accuratelyreflects what the company is worth. It is carved in stone no value - there is always room for negotiation, especially if the buyer has some tangible evidence to show why he or she feels the counter-offer is justified. Help calling in an expert, rather than a value to a company you can buy a lot of headaches, as well as provide significant ammunition to prove your opinion of the transaction. Business brokers and businesses for sale throughout the day, and many of them are specialized inIn particular, industries that strengthen their know-how. Accountants can also help a company's value, as well as bankers.

Business valuation

Whether you hire an expert, or choose to do it alone, choosing the correct valuation method - or a combination of methods - is an important step in this process. Here is a list of the most common methods, along with a brief explanation of each:

· Asset valuation - If a company has a lot oftangible assets, such as in manufacturing or retail, this is a common way to determine assessments. Taking into account the current market value of all assets (including cash) and subtracting the liabilities.

· Activation of Income - This method is mainly for companies that have few physical assets, but used a lot of value in intangible assets, such as a that sells services rather than products. Each variable is rated on a 0-5 scale, average in a single score,and then used as a multiplier against net income. For example, if a company score is 2.6 and the net annual income is $ 250,000, being the estimated $ 650,000.

· Cash Flow - The amount of money a business brings in the door is for depreciation, equipment replacement set and other liabilities, and then a loan on the outstanding amount is determined by the use of standard lending rules. The amount of the loan is the value of the company. ForFor example, if a banker is ready, $ 300,000 for the implementation of the above calculations, loans, then the deal actually worth $ 300,000.

· Market Multiplier - Consideration of the selling price of similar businesses in the same industry to compare their annual gross revenues to the price at which the company changed hands. Average this number in the course of many transactions, and then multiply that number times the gross revenue of the business you want topurchase.

· Assets - This is a common method for use with companies that have a flat or negative earnings. The firm is the value of the sum of all current assets, price on its liquidation.

It is worthwhile to apply the efforts of more than one method, either together with them to an average, or as a self-check to arrive. In many cases, the seller or his advisors have used one or more of these procedures to get the price down. One of the first questions you wantask if you are in considering the purchase of a small company: "Which valuation method did you use?" Then do your own math and see if you come with a similar value.

Make Concrete Blocks - A Business With A Strong Foundation

Concrete blocks and other concrete products are in demand everywhere. When using this product that you do indeed have a business with a strong foundation. Concrete blocks are used to build everything from a huge building to the finest barbecue. They are a basic commodity, not withdrawn from the style. They're not Here Today Gone Tomorrow element. If you manufacture cement blocks your product is always in demand. You can customers throughout North America and in the searchin fact all over the world.

Concrete products are heavy and transportation costs to distant destinations, are high. For this reason a local manufacturer has a big advantage over someone further away. Translate to savings in transport costs in very competitive prices. If you also need a small man operation working out of the garage, you have to pay any employees and no rent for the premises. You can lower priced products than its competitors and still very good.

IfYou want an excellent business development, you can start with a very small investment, you can make concrete block to a good opportunity. You can start in your garage, with the hand mold, made for only a few hundred dollars. If it can expand your business requirements, with a home built concrete block making machine, which in turn, hundreds of blocks per day.

The only thing needed to get a start are plywood and some sheet metal around the shapes to make. The plans are goodavailable, with the order to show how this has happened. You also need the basic materials, Portland cement, sand, gravel and water. You can purchase all these materials at your local lumberyard.

After the establishment of the number of forms you want, simply fill with the concrete mix and turn out of the blocks to dry. A man can easily make 100 blocks per day with hand molds. If the company grows, you want to make more blocks and a concrete blockMachine to produce required.

Commercially made cement block making machines are expensive. If the money go ahead and buy one. It will pay for itself with the greatly increased productivity you can achieve. But there is another way. You can add your own concrete block making machine. Plans to build a very good used machine with auto parts and sheet metal are available. Some welding is required, but a local welding shop will do this if you can not.

Their ownMachine is not really difficult if you have a little mechanical skill. You can use a machine, which in turn made up of 800 blocks per day. A smaller hand operated machine can also be built, the simple and will turn out 200 blocks per working day. You will probably need help at this time to operate the machine efficiently. You also need space to dry the blocks.

Concrete blocks are your basic product, but you can also concrete garden ornaments, natural stone,Birdbath, sundials, garden furniture and many other products that sell very well. Plans with complete instructions for all these elements. Their small company, started in the garage or driveway, can soon be a large and very profitable company.

A Strategically Structured Outline For Business Succession Planning

One of the key questions I ask entrepreneurs: "You have a set plan or exit strategy for your company?" I also ask people: "Do you know whether a sequence plan or exit strategy exists in your company or organization ? You may be surprised to know that say, in my experience more than 90% of me, they have no succession plan or exit strategy. A 2004 CIBC Small Business Outlook Poll (conducted by Decima Research), noted that 39% of small> Entrepreneurs are planning to sell their business, and plan 15% who take over a family member. But respondents said two thirds (67% (the contractor that it is not themed, who acquire the company. For me, this result is very significant and quite frankly is a motivation for writing this article.

Succession planning is a critical factor for long term success of any business. Leadership changes in the economy on the wholeOrganizational continuity, employee retention, customer loyalty and ROI. It is important to create and implement a process of transparency, accountability and greater integration of all facets of the company creates.

To take in another article, Your Strategic Thinking Business Coach provided seven (7) strategic actions to structure a strategic succession planning. The seven (7) strategic actions are:

Strategic Action # 1: Startsuccession planning early.

Strategic Action # 2 provide: a clear and communicate the purpose, objectives and scope of leadership succession plan or program.

Strategic Action # 3: clear definition of the desired and required qualities of the new leader.

Strategic Action # 4: Develop a clearly focused strategy, develop leadership qualities.

Is Strategic Action # 5: Develop a talent take over management process, strategic thinking for specific development projectsOpportunities for future leaders.

Strategic Action # 6: Determination of future leadership candidates, which must be the development of a system for assessing the current and future leadership.

Strategic Action # 7: Identify a system for transmitting information to ensure that the leadership of the succession and / or development are integrated in line with the strategic business support.

Under preparing the list of strategic actions, it was important to develop strategically present a comprehensive overview ofstructured succession planning elements. The summary is as follows:

STRATEGIC SUCCESSION STRUCTURED Framework

I. AIMS & OBJECTIVES

Develop a vision for your company

Develop a mission statement for your company

Create a list of your core values and principles

Develop short and long term goals for your company

Identify the stakeholders for your company

Develop your personalVision

Develop your personal goals

Develop your retirement goals

Create a team of consultants for your succession planning efforts

Imagine the need for a range plan

II Exit Strategy

If you develop for your exit from your company

Check the advanced options for your exit from the business

Select your option for your exit strategy

III. Business Valuation

Obtain professional advice to determinethe value of your company

Determine the value of your company

Determine a current value of your company's assets & liabilities

Determine the intangible value of your company

IV Business Structure

Identify and quantify your company's debts

Recruit and retain productive employees

Structure to maximize business

Document key processes and procedures used in your company

V.Tax considerations

Development of financial goals

Identify your tax implications of the current business

Plan and implement tax strategy to minimize your taxes

VI. LEGAL CONSIDERATIONS

Hire professional legal

Development of a buy-sell agreement for your company

VII ESTATE PLANS

Hire a professional adviser Estate planning

Develop an estate plan

VIII SUCCESSOR SELECTION

Develop specific criteria for yourSuccessor

Recruit & select successor based on your criteria

Communication with your selection of the successor parties

IX. SUCCESSORS TRAINING

Make a list of characteristics and capabilities of your successors need

Develop a training plan for your successor

Development of a coaching / mentoring plan for your successor

Imagine planning a timetable for the successor

X. CONTINGENCY PLANS

Develop a contingency plan (based on the "WhatIfs? ")

Research and identify insurance needs (disability, personal life, critical illness, business, key person, etc.)

Select & train to incorporate a key employee in emergencies or unforeseen events

Communicate your plan to stakeholders and consultants

XI. IMPLEMENTATION PLAN

Document the roles, responsibilities and expectations concerning the transfer of ownership

Identify facilitator to ensure that the process is the successorout

XII. SCHEDULE

Identify your schedule for the changeover in management

Identify your timeline for the transfer of ownership of your company

Identify your timeline for full withdrawal from your company

XIII. COMMUNICATION

Document the succession plan

Document, such as going with the succession plan in the event of an unforeseen event (accident, sickness, death)

Document of the transition or exit strategy to inform families,Employees, customers, suppliers, community and all stakeholders

How to Select New Accounting Software

The choice of new accounting software is not a decision to take lightly. History is full of cases where a company opted for a piece of software, only to find months later that they would probably have been better to have a choice.

For many entrepreneurs, they begin the process of selecting new software on the wrong track. There is always a temptation to first look at the market to see the kinds of software. This opens up the decision-makers to the influence ofManufacturers and sellers can result in a premature decision. Instead of wasting time listening to vendor sales pitch, the best way to spend your time in advance at what you need from a new accounting software. Of course, you want to ensure that it meets all the standards you must follow. Some of the other things you might look at you are listed below.

Consider first the structure of your company. How many employees do you have? Expect to grow inthe near future? How complicated is your income? You will need software with payroll skills?

Please Consider who will use the new software. When will you begin to use, but the reins to someone else soon hope to examine the availability of training.

If you are a small business owner, consider what type of operating system you have. Much of the new financial software has web-based features that allow operation on mostSystems, but some applications run better on Windows, Linux, Mac OS, etc. than others. Check accounting software reviews for further information in this area.

First steps towards the cause of the new software, it is very important that you do, what kind of modules / features you need to consider, from your new software. All accounting software will make a thorough accounting job, but that is all that is what each solution is common. Some of the features that you might not be mentionedbelow.

Some software makes invoicing easier than others by the need to re-enter. Paper or less "green" Billing is also more and more popular and software available that can be integrated with e-mails, allowing you to create and an invoice via e-mail in one easy step.

If your company allows customers to buy goods on credit, the Credit Monitoring definitely a feature that you need. Clicking it will show you who owe money, how much theyliable if it is due, and so on.

For growing companies, there comes a time when it makes sense, because payroll manually, automatically with a software switch to make it for you. Accounting software with payroll taxes and insurance functions, employees can handle without the user doing a lot of work.

One of the biggest advantages of a separate accounting software package (as opposed to using a spreadsheet), the reporting functions. Accounting Softwarebe able to make quick and accurate snapshot of what parts of the accounting pie you want it. Prior to the investigation to determine new software, what kind of reporting functionality you on your next startup.

Finally, you see your business revenue cycle. If you are a client-based service business with very few customers, chances are you will get money a few times a month and do not have too many expenses, so that a generic system could work for you. On the otherHand, if you are a retail store or e-commerce business, which always has the money changes hands, and come and go can be a inventory system more complicated, your best solution. By considering all these factors before you check what type of software is out there, so you can save time and money and above all, you find the right accounting software for your business visible.

Buying & Selling Industries

In times of the subsequent recession, many industries begin registering poor performance in terms of losses in the economy, over-production of inventories due to lack of demand, leading to industries becoming sick, and finally the closure of business. I to overcome the losses, offer diverse and exciting industries to purchase it themselves or purchased, which in turn start-up costs of the buyer time to save money, energy and benefit from existing inventories and receivables.However, the purchase or sale of an existing profitable business is a difficult task because there are many obstacles and pitfalls on the path that must be overcome. This problem can now through the services of many consultants that these buyers, sellers and franchising, are considering to buy or sell services for sick units offered help solve.

These business consultants provide an online platform for buying and selling of industries and companies, as well as the strategicand operational assistance for the purchase and sale of running and sick industries. It helps when buying and selling industrial runs, sick industries under construction systems, etc. These services help buyers huge savings in terms of effort, time and energy, together with access to an existing customer base and goodwill benefit. On the other hand, they help for sellers by providing them with a large number of interested parties that can take on their growing business. They helpfind a buyer for his dream company and help to leave a provider for his business at a good price.

These services help you with the entire process of buying or selling a business or industry, including business valuation when negotiating the purchase and sale agreement, upon arrival a question / tender price matching buyer and seller of companies, completion of the transaction , marketing services, by taking concrete strategies for the marketing of services for buyers andSellers of businesses that deal with the parties involved. They also offer free information on tenders, employment, financial and other sectors of the economy. They also help in the preparation of the legal structure of companies purchase and sale transaction. They are a business or industry for the purchase or sale in its "best light" without any misrepresentation of all the important facts about the company or the industry. They also help in assessing the value of thetangible and intangible assets of a company.

Theses online portals also carry a list of buyers and sellers Define differentiated in terms of the categories, criteria and circumstances of the industry that can help you further your search. This helps in sorting out the large number of potential non-qualified buyers or sellers and get the most potential buyers or sellers of businesses. Finding Aids screening criteria in the database for companies in which the needs of buyers whoCategory search screens the database for businesses in the selected category, while the search for location of the database screens show you all companies in the selected location.

These sites also lead reliable, up-to-date information, in addition to ethical, legal and confidentiality note, how to buy or sell, industry and economy. They give tips, ideas and strategies on the packaging company for the purchase / sale process to maximize the form of the transaction. Some of theseWeb sites also offer membership for individuals, partnerships and companies in certain industries and consulting and advisory services in relation to technical, legal or accounting advice.

Building and Strengthening the Structure of Your Small Business - Part 3 - Market Your Business

Marketing also takes the privacy of your message into the world and is even more important than the mastery of your profession or skill. One of the things that I will be consistently followed by the women I coach, if they want to grow their businesses, "Perhaps I should get additional training in listening skill, for example, herbal remedies, or a specialized psychotherapy, or whatever additional skill or technique to their field . I would advise them to pause for a moment and realize how talented they already are, and whatreally needed is more training in how to use their talents and skills market.

More than likely, you never learned how to market, if you learn your trade, profession or trade. Becoming the marketer of your business - and not just the practitioners of it - is a paradigm shift is required.

And if you are a writer, an artist or a small business owner or independent professional, marketing is what brings you a steady stream of customers,Clients or patients.

In today's world, marketing your business requires both offline and online strategies. Some of the main principles of marketing are: target your market by defining who you are used to develop a relationship with your audience and stay on your target audience to make the connection stay top of mind

Target Your Market: Defining Who You Serve

Knowing exactly who you are your product or service supercedes marketingMeaning that the actual product or service this. is a revolutionary concept for many people ... after all, the product or service should be the "raison d'être" of a company.

You can have a really excellent product or service, but if you do not know the right market, which offers one that is receptive to buying from you or your services again and again, it really does not matter how good is it!

Large companies may well saythose who are targeting their marketing of ... "who" they sell. These companies have distilled it to a person.

Focus, which you really want to serve and develop your products and services that are the ultimate service in this market. Many people fear that when they narrow their focus too much, he is cut off by the number of potential customers and clients that they can have. But the truth is ... marketing for everyone dilute your message. The more you try to appeal toeveryone, the more invisible you become. You can still serve others outside that target, but all your marketing efforts will be geared to that very specific segment of the population (e.g., midlife business women). 

Now once you have your target market identified…go deeper. Distill your target market down to one person…the person who would be your ideal client. Describe that person by: 

Gender
Age
Marital Status
Education
Profession
Income
Number children if all
If the person lives
Where a person who loves to shop
What does this person?
What is his / her problem you can solve

Make this person as real as you can. Give them a name (and give them a face to find a photo of one of the online graphic service).

If you distilled your audience to a person, it becomes much easier, not only your products and services, but also your marketing messages, your advertising and design yourPromotional products. How do you write and design each piece, you will imagine, talking to her. That will make the process of marketing so much easier.

Develop a relationship with your target market

Many people confuse marketing with sales. Marketing is not sales, but it is what fuels your sales. More recently, the trend toward building relationships and not only try to sell to someone is.

A descriptor that is often used is that every personbe placed in their own radio station "WIIFM" - "What's In It For Me?" While this may be true, the greater the truth is that people want to solve their problems. And just as important, people want to be heard. You can use the person who does not listen and who will solve their problems, but first a relationship with them has created and promoted.

People have to grow to know how and trust you before they buy from you or use your services. This meansprovides information that your knowledge must be built up and give us the visibility on an ongoing basis.

One possibility is that something as free as a way to make people familiar with the offer what you do - for example, a special report on that gives good information that the reader can use for example, if you are in a health area, You could offer report entitled "Five Immune System Building Foods that are part of your diet." And the people who make it right Should Be could you have a message on the backYour business card that tells them how it's done. Make it easy for people to reach, if devoted to this report, either by an opt-in box is available via a website or a special e-mail address to take requests for your report.

Another advantage of the free with a report easily accessible on your website that if there are ten competitors that come up in an online search will have your company stand out in memory the view, because the report. Your report will bebuild your credibility in the eyes and a connection, even before the person calls you for more information.

Another way is to offer your know-how through audio or video. Take your free report and put the contents on a CD or a podcast. Make a video of you deliver your free content to report. Post it on You Tube and on your website.

No matter what you do to develop this relationship, how to get your message to the market ... Your message will have congruentof your brand. Do you have what other match on the outside, which on the inside ... You will see your passion, purpose, enthusiasm and values. If everyone is a part of you aligned with your vision for your company, you are your ideal customers.

Stay connected with your audience in Order to Stay Connected "Top of Mind"

It is said that your name put out of operation for at least 9 times before the public begin to recognize your name, let alone what you have . offer Some studies say that up to 27 May to put before someone actually buys from you.

For this you must have a mechanism to keep your name out there consistently, regularly and repeatedly to be ... "top of mind" - the name, the first one, when you are waiting for a given product, someone comes.

Advertising is a mechanism to hold in public, but may, as an ad run several times, it may be too costly for many small > Entrepreneurs and freelancers.

It is important then to a variety of no-cost, low-cost "keep in touch" strategies ... to have both online and offline.

An ezine (electronic journals or e-mail newsletter) is a free method of reaching your target audience on a consistent basis. This e-mail messages can range from a simple "tip of the week" format in order) complex content format that is rich (in your niche area and has support sections that your> Business Products and Services
A blog, which updates are delivered via RSS
E-mails to your clients / customers, with links to audio you have created
Doing a show on a free Internet radio station (eg BlogTalkRadio)
Social Networking (Twitter, Facebook, LinkedIn)
Monthly Teleseminars with an assessment of experts, invite listeners via e-mail
Start a discussion group with Yahoo
A channel of great information, share links, resources
Postcard campaigns for clients andCustomers and former customers and clients
A newsletter sent out
Birthday cards or Christmas cards - send for the less celebrated holidays as a way to stand out, thank you letter
Host a monthly networking event at a free place like a coffee shop
Call - just to stay in touch

In the next installment of this series, I will discuss fueling your business by generating leads to your pipeline full.

Price Earnings - Business Valuation Method

The value of a company under the price / earnings valuation method is based on the assumption that the enterprise value should be similar companies whose shares are traded based on the exchange. The company is the value of the future profits of the company and the industry average P / E or P calculated / earnings ratio of other companies with similar business profile.

The formula:

Company Value = [Profit in year i] * [Comparative P / E]/ (1 + r)

Business Valuation - Price / Earnings Method

Where:

Profit in year i = Net income chosen in each year (I)

Comparative P / E = P / E of public companies or industry averages

r = Discount Rate
This value is discounted to the beginning of the forecast period.

Steps:

Step 1

Enter the PE-factor - the average PE of the PE of the industry or a similar company. If the PE is not available or is so high becauseseasonal high growth rates in the stock market, it is advisable to use a PE of 7-12.

Step 2

Enter the discount rate. This sentence is in the free risk interest rate on the market (eg government bonds) is based with a market risk premium, so much as the risk that is involved in the economy, or as much as the uncertainty in the company to grow, its products and their markets.

Step 3

Profile of the company's value, as they changed during the planPeriod.

Note:
This article is one of four articles on the valuation of companies commonly used methods. You can get more information by reading the additional articles about: Free Cash Flow Business Valuation Method, salvage business valuation and EVA Analysis Business Valuation Method.