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!

Local magazine:
$120 per 1,000 issues. Like direct mail Depends on circulation. Direct Mail Letter-sized envelopes: $15-$20 per
1000.

Single sheet newspaper insert: $25-$40 per 1000 issues. 1-2% is a great return Depends on copy and follow-up Search Engine
Optimization and SEM $15,000-$75,000 per year.

Landing pages with co-op Like direct mail Visitors are seeking your products
and services and return to become
regular
customers. No personal contact.  Only email back. Phone Follow-up $500-$75,000 per month for two
people calling from part-time to full-time. Increases response 10-15% Medium high ROI.
When on phone customer buys if the right sales
pitch.  Lead recycling.. Mailer and Phone $3,000-$75,000 per month.

for two people calling from part-time to full-time Direct mail then phone response High ROI.  If right timing
of sales scripting and mailer.  Must have great copy.
Lead recycling. Mailer, Phone and
Landing Page Optimization with email, newsletter and SEM with specials.
$3,000-$75,000 per year.

Landing pages with co-op

minimuim 3 months

SEO and calling is working for you Direct mail then phone follow-up
with collection site/co-op advertising/ and SEO Exceptionally high ROI as
visitors are seeking your products and services and return to become
regular
customers.  Lead recycling

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.