Does the Business Look Good on Paper?
Does the business look good on paper?
With few exceptions, buyers are looking for businesses that make money.
Sure, there are other factors that can make a difference such as equipment, client list, location, key employees, etc., but it is still all about the cash flow of the company.
Business owners have to constantly look at the company financials and make the tough decisions to increase margins, cut expenses, or even head in a different direction.
Showing good, solid cash flow will ulti…
Run Your Business Like You’re Going on Maternity (or Paternity) Leave
How well does your company run when you don’t show up for work?
The answer to this question has a significant impact on the value of your business. Suppose your company could survive your absence for a while. In that case, you will score well on something referred to as “Hub & Spoke,” a driver in increasing your company’s value.
To understand the Hub & Spoke value driver, visualize a big airport like Chicago’s O’Hare or London’s Heathrow. They act as a centralized routing location for the ai…
Selling a Business for a Premium Starts with Planning!
Business owners need to recognize that operating a business on a day-to-day basis is not the same thing as preparing it for sale.
There are many steps necessary in the planning process and it all starts with the AWARENESS of that fact.
It is in the best interests of a business owner to get professional advice early – business broker, mergers & acquisitions advisor, exit planning consultant or business coach – to understand what may need to be done for their business.
And the business owner …
How To Avoid This Valuation Discount
The Swiss value their independence. They don’t use the Euro even though they live between France and Germany. They never chose sides in the World Wars and avoided aligning with one geopolitical regime over the other.
That’s why we use the name the Switzerland Structure to describe a business model that is set up to be free of a reliance on a key customer, employee, or supplier.
A reliance on one customer or employee can hurt the value of your business, but its easy to overlook how one o…
Someone is Going to Throw Money at Your Business? Really?
OK, everyone has heard about a few huge deals for technology companies over the years. But business owners rarely receive a premium for their business.
Buyers will look at all the important factors such as cash flow, key employees in place, profit margins and prospects for future growth, to name just a few.
Then they will try to purchase the business for the best deal possible.
Business owners should consider having a valuation performed by a professional now and then begin preparations to…
The Power of “NO”
Business owners can be confronted with many yes or no decisions every day. Some are small decisions with not much impact, but some are critical decisions that can affect the direction of the company, such as adding a new line of products or a new service.
And many times, it can be much harder to say "no" than to just give in and say "yes" to the pressure of the moment.
A good question to ask yourself to help make that decision might be "will saying YES risk the value of the company by was…
Stop Selling Your Time
If your goal is to build a more valuable company, stop selling your time.
Billing by the hour or day means customers are renting your time rather than buying a result, which means that your business model lacks leverage. To grow, you need to either work harder or hire more people. Since it can take months to ramp up new employees, fast growth is just about impossible.
One of the eight factors that acquirers look for in the businesses they invest in is your company's Growth Potential. Simp…
Marketing programs to replace normal attrition
Most businesses will lose a certain amount of customers over time. This attrition can be caused by anything from customers who are unhappy to customers moving away.
The value of a business has a lot to do with the expectations of a buyer being able to maintain the current revenue levels (in addition to opportunities to grow the business). Buyers will want to see proven marketing programs in place that will fill that ongoing “leaking bucket”.
Protecting Against the End Run
A football defensive coordinator needs to protect against an “end run,” a tactical play where your opponent sends the running back wide around the offensive line to try to evade the oncoming tackle.
Just like in football, you have to defend against an end run coming from a supplier that chooses to go around you to get to your customers. The more of your supply you get from a single provider, the more vulnerable you are to that supplier deciding they don’t need you and instead deciding to go …
The Humble Yogi Sells His Business
This was a pretty interesting episode of John Warrillow's Built to Sell podcast.
Along with three friends, Sebastian Johnston co-founded TheAmazeApp in 2014. The idea was simple: Social media influencers could upload a picture of what they were wearing and tag the clothing on TheAmazeApp’s database of e-commerce retailers. Then, when one of their followers purchased the item, TheAmazeApp would receive a commission they shared with the influencer.
The founding team raised $800,000 through…