Archive for the ‘EBITADA’ Category

Did you know if you earn one dollar from sales you have made around three in business value. Often times we lose sight of business value. You already have heard of financial ratios, Google rankings and advertising frequency and reach. Have you used business value metrics? These types of metrics really get to the back pocket.

Considering that a “good” business sells on the average about every three to five years it makes sense to follow business value. If you haven’t used business value metrics think again. Financial ratios get to basic areas but often overlook marketing or employee activities that could be key to the success or failure of maximizing business value.

Business value metrics begin to identify value pillars and drivers of a concern. Often times value pillars are more valuable than equipment or machinery. Once they are discovered and discussed we apply principles and laws with an earnings move. Read more about an earnings move along with principles and laws of business value in “14 Immutable Laws of Business value”.

Usually value pillars and drivers are at the core of the Business. However, typical Consultants look over these drives and use a productivity, technology or sales recommendation that does not effect business value. What are your concern’s value pillars and drivers?

Is 2012 going to be profitable for your business? You could be getting the order or close but are they making you money? After a complimentary review we begin the process of applying over 14 principles and laws of business value. Don’t try to do this on your own. Ask for a complimentary business value review.

Do you want to get ahead of 99% of marketers that are dedicated to do whatever it takes to get a top ranking?  Di you know that if you earn one dollar from sales then business value goes up three dollars-if you know what you are doing. It is a fact that leveraging equity gets you ahead faster than a top ranking.

Most programmers, website gurus and internet wiz kids fall into a common trap;  focusing totally on getting sales and ranking. They end up with putting a lot of time and energy into a great idea and then little if nothing left in three to six months but some code.  If they would only start with the end in mind.  Savvy business buyers learn to use equity early-on for building wealth.

Following the principles and  rules of business value keeps you away from this common trap.   Most online programs and courses out there teach sales and marketing.  Maybe you will make some money from one of the online coaching or webinars programs.  But in the long run, applying real rules of business value you will not be where you started but have a business.

Take your first step for online success by building a business not just a website.  You’ll find in the introduction of “14 Unalterable Laws of Business Value” ways to stay away from the trap. <a href= “http://www.growthconcepts.org/index.php/2011/08/ideal-business-model/”>Click for a guide for newbies and seasoned webexperts to focus on what is real-equity.</a>

Sometimes things just do not go right. Maybe you hired an analyst or financial consultant that did not have the right answer at the time-it happens. You know better after looking back, but, you’re in it. You want to know what your company is worth, right now.

A constant reminder rings in the ears of Business Owners, “What is my company worth?” Typically this is ignored until a disaster takes place where the owner is forced to sell. There are rarely any resources that point them towards specific value plans.  Yet alone a business value expert that does not want to sell your business(Appraiser).

Having the opportunity to do value planning many times over the years,  actual “worth” is only one part of the business value puzzle so I’ll assume you have a detailed earnings move within a value plan and know the attributes of a new value strategy that would lead to be successful.  If not we offer a complimentary review to start working towards this.

Often we recommend two strategies working together within a business value plan. An earnings move is based on the least effort and cost for the most return of business value. While the communication strategy(branding and short-term messaging) is for immediate gross profit results but has a higher up-front expense and demands more detailed measurements of tasks performed and provides for less business value if successful. The business value plan has a much higher return rate and much lower initial costs while offering to make a stronger business. You take your pick or combine them.

You should be able to find industry data on business value ranges for your type of business. A Business Broker or Appraiser might give you an income approach value or a multiple of EBITADA(usually around 3) but you should have a strategy for your position in a range from high to low. This should reflect your image in the industry and core business value strategy.

Finally, Business Owners’ usually work on productivity or sales moves that do not effect business value. If you earn one dollar in sales profit that usually increases business value about three dollars. Look at how much a similar business would have to do to sell vs. earn and then calculate how much value that generates. Don’t forget the savvy business buyer that uses discretionary and nondiscretionary (EBITADA depends on discretionary cash) cash allotments looking forward to really visualize the potential of the business. And if she/hey could afford to pay what the Owner is asking while comparing that to industry norms. This will help you understand business value and if what you are trying to obtain as a price is too low, too high or just right for your specific situation(that is why we use value metrics).  As for a complimentary review of your particular situation.

This is probably an exciting time for your business. Congratulations on taking a leap forward looking towards business value.

In less than 2 minutes you could download and read the short introduction. Get under the surface to principles and laws that effect BUSINESS VALUE not just sales. One earnings move could increase your company’s value $100,000s!

Click to Download the free introduction to the e-book.

Click for free download.

Discover in the e-book:

One earnings move could mean $100,000s to your equity.  What could it be?

More about the Author

To give you a better sense of what is better, a sales strategy or an earnings move, let’s go over rule 13 in “14 Unalterable Laws of Business Value”.

Law of Future Business Value

Future business value is determined by hope while capturing current market share.

Business Brokers and Appraisers do not use market potential to value a business. Yet we hear a lot about the American Dream-potential. The Dream is the hope of making business value. These two opposing areas form a dream-line; from what it could be worth in the future to what my company is worth now. Business Owner’s wants and needs along with efficiency and innovation come to play before and after this dream-line. There is a lot of confusion with this area especially projecting business value along with potential customer’s needs and wants.

Market research and projections won’t cover all the possibilities. However, removing obvious blunders, pitfalls, and snares giving to experience a new realm that may lead to innovation is a start. The challenge of finding and projecting real value is finding balance between the discipline of efficiency and the craft of innovation and effectiveness. It’s a reminder that dogmatic dedication to efficiency alone, or innovation alone, is a recipe for disaster.  So, without a starting point of  business value and future business value there would be no solid hope since there are too many potential factors for the human mind to consider between needs and wants.

Below is a way of realizing how important business value is to your business vision. This brings you past the dream-line into needs.

Vision Questions:

1. If you had all money and time you needed what would you want to be doing in 5 years?

2. The ideal business is making sufficient cash flow with an absentee owner to get you to where you want to be in question 1.  Is this where you are at now or do you have plans for getting there?

To get there we have to understand your business.  Lets take an example business in dry cleaning business.

3. Let’s say, if we invested $10,000 in the business and increased monthly sales 20% that gave an additional $5,000 in bottom line income?

As you know, income is split into living and retirement commitments.  Would that additional income get you where you want to be in 5 years?  Probably not, so, it takes more than just increasing sales?

We have not included converting business value to cash for leveraging helping you realize your dream.  For example: There is income and then actual earning of the business.  Sometimes called discretionary cash.  In the example your investment was 10k which brought $5,000 to income but $3,000 to discretionary cash.  So when an owner goes to sell his or her business they have earned about $9,000 as equity-to leverage.

Business brokers know a business on the average sells every 3-5 years. Are you prepared for this transaction?

Know the difference between sales strategy and business value move!

Thinking about buying a business? We researched by googeling “Mistakes when buying a Business”. We found various articles did not have some vital areas. So we created a free download for those contemplating buying a business.
Click and download “Mistakes When Buying a Business”. Learn from Other’s mistakes.

The links below are to other articles.

http://blog.globalbx.com/2008/11/06/the-8-biggest-mistakes-when-buying-a-business/

http://www.grants-loans.org/resourceview.php?id=221

http://www.life123.com/career-money/small-business/buying-business/top-10-mistakes-when-buying-a-small-business.shtml

http://www.allbusiness.com/buying-exiting-businesses/purchasing-a-business/4007-1.html

Contact us for information on maximizing business value before or after buying a business.

May 2010 Newsletter/July 2010 Newsletter

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One of my first Professors (I am not going to mention his name out of respect) is still trying to show how an organization’s culture brings value to a business. While at the University we were all convinced that it did.  All the others gave up years ago but a few still remain. Until going out in the real world and selling it to corporate leaders did the truth come to light-its a hard sell.

25 years later from the same camp of thought came a question to me, ”How do you sell organizational development?”  He was amazed that I was evolving organizations to a particular structure from all the alternatives- again he did not understand business value.�
The complete newsletter and business value…

On the average a business sells every 3-5 years.  At this time an Appraiser or Broker places a value on the business to sell it.  They value not analyze for critical areas to maximize business value. What are you doing before the sale to maximize business value?

Most Business Owners are asking, how could I maximize business value?  They might have recently purchased, inherited, started or split-off so want to build.  Because when all said and done it they know it boils down to Owner’s equity.

Maximizing business value is like tricking out a sports car or motorcycle to make it rip.  Most businesses are already running they need a littler boost in the right place.  There are a lot of possibilities.  So discovering a high performance equity booster begins the fun.

Remember an earnings move has a three times more return than a typical sales or productivity strategy. What is your next earnings move?  Ask for a complimentary review.

Obviously these are sales strategies with average returns. We implement earnings moves that go along with sales strategy but in addition go something like increase price 3%, increases margin 3% and decrease advertising3% which results in a 15% more increase to EBITADA. What ever your sales strategy is going to be we add an earnings move. Make sure you do the right combination of media since they could work against you with the same 15% if wrong. Find out with a quick analysis with CenterfigurE and remove any obvious blunders.

As a former State Champion Hockey player at Viewmont High School, David went on to graduate from University of Utah with a unique combination of business and communication education. He soon started brokering businesses at Business Resource Center of Utah. After one year he was elected to sit on a presidential committee for his quality transactions while also having more transactions than other agents. From there he learned how businesses work within a framework of business value.

He then went to Law school for a year to return back and start Target Software Inc. to develop best practice software tools that work along with business value.  Earlier in his career, as he was brokering businesses he was asked, many times, “How do you increase business value?” This began his quest for assisting business owners to reach their business goals with business value in mind.

Later, inspired by the book “22 Immutable Laws of Marketing” he researched Business Owners’ and Business Brokers’ for ways to build business value. This study showed common initiatives known by some Owners and not others.  He began further developing tools, testing, executing and training value-based business principles and laws in small, medium and large corporations, educational institutions and non-profit organizations.  These principles and laws are in his upcoming book, “14 Unalterable Laws of Business Value”.

He now runs Growth Concepts LLC while residing in Provo, Utah assisting local, national and international businesses maximize business value for building Owner’s equity. Read More…