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Digg it UP - What Is The Fair Market Value of Your Business? Part 2
FIRST IMPRESSIONS CAN KEEP YOU FROM OPPORTUNITIESMost people can identify situations in which they dismissed an opportunity that someone else capitalized on later. Often these opportunities were overlooked or rejected because they were perceived as dull, boring, or unpleasant. You may recall the fairy tale of "The Ugly Duckling." It is the story of a cast-off baby bird that is mistreated because it is unattractive to the young ducklings raised with it. Much to everyone's surprise the ugly duckling develops into a beautiful swan. Thus, what we call the unattractiveness stall prevents people from seeing potential because they make judgments based on insufficient knowledge.As you contemplate this point, it is worth remembering that if Alexander Fleming
The discussion with your client on how they want to handle the process will be after you have completed your work. For smaller clients you may actually print the bills, mall them, collect the payments and make the deposits. Although the most common means of payment process is lock box. Small clients may not want the expense of this service. For these clients you should create a spreadsheet in excel or in real time so they can post their payments when they come in mail. You may have clients who will prefer you do only the billing for them and they handle receiving and posting the payments. If you have a client who prefers you manually process their payments then increase your fees since this will take more time and cause you to spend less time on another client’s p
As a general rule, the more financial data that is available, the better. If your accounting system is sophisticated enough to produce internal Balance Sheets and P&L Statements, they are certainly helpful. Of course the best information to use as a basis is the Federal Tax Return, since when these are submitted to the IRS, any and all final adjustments have been made. Also, three to five years of returns will give the valuation analyst a better and more consistent track record of the firm’s history. For further insight and/or questions, lean on the valuator for guidance. Typically, the most important source of necessary data is the owner or CEO (or the CFO if a firm is large enough to support that position), who usually is very familiar with the “financial goings-on” and the specific applicable history.
Present Debt - A Factor?
In the context of placing a value on a business to be sold, while debt is certainly important, it generally is not something which has a direct influence on business value. Here’s why. When there is long term debt to be considered (any debt to be carried on the books for a period longer than one year), that debt is normally handled by the seller out of the proceeds of the sale. Should it work out as a part of the deal that a given amount of the owner’s long term debt will be assumed by the buyer, that arrangement is customarily a part of the buy-sell agreement as prepared by the attorneys and accountants on one or both sides.
What Should A Valuation Cost?
The fee or service charge for a business valuation/appraisal will vary, dependent on a number of factors. It can run from just a few hundred dollars for a simple “off the shelf” software program, to in some cases tens of thousands of dollars . . . should the project involve a mid-size or larger firm ($10MIL or more in sales), and if ordered from one of the major accounting or valuation firms. But for most smaller firms, with sales from say $500m to $10MIL, and you are serviced by an experienced valuation professional who does nothing but process valuations, the service fee should fall somewhere in the range of $3,500 to $7,500, dependent upon the size of your firm and the amount of work to be authorized. (In some cases extras amount to the valuation of several different years, several different divisions of the same firm, 5 year averaging, valuation proformas, etc. A valuation proforma is a valuation based upon projections of expected results) When selected carefully, a focused, verified and veteran approach can produce worthwhile accurate valuations. Which brings us to our next central point. Selecting a valuation professional or specialist to do the work for thi
So many business consultants often say that they are tired of being right all the time and wish that their clients or business associates would listen. They get upset and admit that millions of dollars were wasted because they just did not listen. One top-notched consultant from PA mentioned this to me not long ago. Indeed, as a semi-retired consultant, I must agree with her.I also caution myself and others not to always blame the client, even though it is their fault for not listening. I remind myself that I am the mentor or consultant here, my duty was to convince the client or boss of the need for a coach, plan or adding of a team member or even arrange the meeting with a suitable one, if the boss would not take the trouble to do it.It is my opini
Present Debt - A Factor?
In the context of placing a value on a business to be sold, while debt is certainly important, it generally is not something which has a direct influence on business value. Here’s why. When there is long term debt to be considered (any debt to be carried on the books for a period longer than one year), that debt is normally handled by the seller out of the proceeds of the sale. Should it work out as a part of the deal that a given amount of the owner’s long term debt will be assumed by the buyer, that arrangement is customarily a part of the buy-sell agreement as prepared by the attorneys and accountants on one or both sides.
What Should A Valuation Cost?
The fee or service charge for a business valuation/appraisal will vary, dependent on a number of factors. It can run from just a few hundred dollars for a simple “off the shelf” software program, to in some cases tens of thousands of dollars . . . should the project involve a mid-size or larger firm ($10MIL or more in sales), and if ordered from one of the major accounting or valuation firms. But for most smaller firms, with sales from say $500m to $10MIL, and you are serviced by an experienced valuation professional who does nothing but process valuations, the service fee should fall somewhere in the range of $3,500 to $7,500, dependent upon the size of your firm and the amount of work to be authorized. (In some cases extras amount to the valuation of several different years, several different divisions of the same firm, 5 year averaging, valuation proformas, etc. A valuation proforma is a valuation based upon projections of expected results) When selected carefully, a focused, verified and veteran approach can produce worthwhile accurate valuations. Which brings us to our next central point. Selecting a valuation professional or specialist to do the work for th
A newsletter is a powerful weapon in your marketing arsenal. Do you have a personal newsletter you send to past, present, and future customers at this time? Probably not. Most salespeople do not use newsletters. This is a serious mistake.A simple newsletter is a very powerful tool to keep you in front of your past customers and build trust and credibility with your present and future customers. In one year's time a newsletter can double your business and income by itself. They are that powerful!You do not have to be a great writer to produce an interesting newsletter with valuable and useful information and send it to your customers and prospects. If you have information they can use and appreciate they will look forward to reading it. It can
What Should A Valuation Cost?
The fee or service charge for a business valuation/appraisal will vary, dependent on a number of factors. It can run from just a few hundred dollars for a simple “off the shelf” software program, to in some cases tens of thousands of dollars . . . should the project involve a mid-size or larger firm ($10MIL or more in sales), and if ordered from one of the major accounting or valuation firms. But for most smaller firms, with sales from say $500m to $10MIL, and you are serviced by an experienced valuation professional who does nothing but process valuations, the service fee should fall somewhere in the range of $3,500 to $7,500, dependent upon the size of your firm and the amount of work to be authorized. (In some cases extras amount to the valuation of several different years, several different divisions of the same firm, 5 year averaging, valuation proformas, etc. A valuation proforma is a valuation based upon projections of expected results) When selected carefully, a focused, verified and veteran approach can produce worthwhile accurate valuations. Which brings us to our next central point. Selecting a valuation professional or specialist to do the work for th
For those of you who have always wanted to try the making money online thing, but have thought it would be too hard or didn’t know where to start.I am new to the internet and was looking to make money at home on the computer; at first I tried the paid survey thing while it did bring in some cash. It also bought a lot of junk mail and to get the best paid surveys you had to pay to signup.” Well that was a waste of time.My mail box was filling fast with heaps more junk, and every survey I was invited to participate in, I would get “you don’t qualify for this survey”.Then in one of the Emails I found a lead to a website that was fully stocked and setup. I thought this doesn’t look real bad, after all I had nothing to lose and everything to gain
Small businesses thrive when productivity is maximized. The best way to maximize productivity is through efficient technology. Business success is based on having the right product or service at the right price at the right time and in the right place. Efficient technology for small businesses probably will not create the next great product or service, but it will help you with everything else your company must do to get that product or service to market and to deliver it to the customer.Many small businesses fail because they do not utilize technology adequately or efficiently. Key elements of business technology must interface, function properly and make employees more efficient in serving customers. Critical efficiency areas for any business are in
How To Select A Valuation Service
A story comes to mind which occurred several years ago. When asked who would be doing the required valuation, the client replied “I have an excellent accountant who will be handling that for me.” It was then suggested that the client check to learn how many firms the accountant typically values over the course of a year. I was learned later that the accountant referred to had valued one firm about 18 months ago. Needless to say, the client decided to go with another firm which had more significant and current valuation experience. And please don’t misconstrue my intent, as this is not a poke at accountants. Most of those with which we are familiar do a competent and professional job at accountancy and some even have respectable valuation experience and activity. This accountant just did not have substantive valuation experience. The following check list will help with the selection process.
Valuation Firm/Practitioner Check List
• Length of time the valuator’s “system” to be used has been in place
• Printed literature and/or data sheets describing the process to be used
• Variety and size of firms valued in the past
• Frequency of valuation projects
• How final numbers can be verified
• Are comparables of other similar firms provided?
• Lists of prior clients as references
• Testimonial letters from prior valuation clients
• Articles published on business valuation/appraisal
• Ability to provide expert testimony in court if required
Please notice that the above list does not include certification as a selection criterion. Certification by one of the major business valuation associations is a fine badge to carry, but is no guarantee that the final numbers produced will be more accurate or realistic then those produced by a non-certified valuation professional. The key here is track record, track record, track record! Also, the price you pay for a valuation is no sure bet indicator of the accuracy of the results. A few years ago one of the major business magazines published an article featuring a valuation “expert” which detai
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