Question about business

As a Business Broker one of the most common questions I receive from small business owners and entrepreneurs I meet is this the following: How do I get a quick idea what my business might be worth? More often that not, most of these individuals are just looking for a rough “street valuation” to determine if they should sell now or sometime in the future. Although there are many unique factors to consider when valuing any individual business, and there are generally no definitive or concrete rules on what any particular existing business maybe worth at any given time, below are a few widely used and common quick business valuation methods that should give most small business owners an adequate starting point to help determine what their business might be worth in today’s market place.

Multiple of Seller’s Adjusted Net Cash Flow:

The most widely used method to value and determine an asking price for a small business is based on the adjustment or recasting of a business’s most recent annual profit and loss statement. The goal in this process is to determine the true earning power of the business by adding back to the net profit all the non-essential or discretionary expenses not necessary to run the business to demonstrate a more realistic net cash flow for the owner.

Once this number is determined, the next step is to multiply it by a business category related multiple (service, retail, manufacturing, etc) that are widely used as rules of thumb by the business valuation and business brokerage community. For instance, in general terms small service related businesses are generally valued at a multiple of somewhere 2 to 2.5 times the Sellers annual adjusted net cash flow. Small manufacturing businesses generally receive higher multiples that can be in the 3 to 3.5 times range.

There are a variety of resources available to the public to find and research cash flow multiples that may be relevant or specific to your business. This includes well known guides such as the Business Reference Guide by Tom West, and business for sale directories such as BizBuySell.com that provide a data base of recent business sales and the multiples achieved. You may also want to visit fastbusinessvaluations.com which provides a free online business valuation calculator based on widely used industry related valuation multiples.

I would also recommend if you are considering selling your business to contact a local professional business broker in your area. He or she may be able to provide you with valuable information about recent sales in your market of similar businesses like yours, and the net cash flow multiple that they eventually sold at. You can find small business brokers in your area by visiting a directory like findabusinessbroker.com

Industry Rules Of Thumb:

Another commonly used quick business valuation method is to use a general rule of thumb. A rule of thumb valuation basically consists of using a simple formula that estimates the value of a business through a set of established and very general business pricing guidelines.

For example:

Auto Repair Shop: 35% of annual revenues

Full Service Gas Station: 2 to 3 times Sellers Adjusted net

Fast Food Business: 40% of annual revenues

Janitorial Service: 2 times Sellers Adjusted net

Motels: $20,000 per room

Keep in mind like all quick valuation methods “rules of thumb” are subject to the various unique characteristics of each target business being valued. Reference books like the aforementioned “Business Reference Guide” offer a comprehensive and excellent database of “rules of thumb’ by individual business category.

Market Comparables:

With the advent of the Internet, business owners now have the ability in most cases to view dozens (sometimes more) of real time listings of businesses very similar to their own on large online “business for sale” directories. Although it’s been my observation that many of these small businesses listed for sale tend to be overpriced, these directories such as bizbuysell.com still can provide a very useful source of free raw data, including rough comparables of both “for sale” and “sold” business listings. Keep in mind also that very few businesses will ultimately sell at there listed asking price, but if priced properly, (and the price can be supported with good financial records) many should ultimately sell with in 80% of their asking price.

Liquidation Value:

This is a relatively simple and fast way to value a small business by determining what the sale or liquidation of all the businesses’ hard assets (equipment, inventory, receivables) would generate in total proceeds on the open market after paying off any liabilities or debt associated with the business. Although a business liquidation valuation is a relatively straight for ward process, it does have significant draw backs as a valuation method because it does not take in to account the value of important factors such as goodwill, established customer/client base, future growth potential, and more.

Summary:

Keep in mind that even though all these valuation methods above offer either a quick and inexpensive way to get a rough idea of the value of most small businesses, or can be used as pricing guidelines when selling a business, at the end of the day a business is worth what some else is willing to pay for it.

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Question about business

Business planning is an extremely enjoyable, ongoing process for me — now. But I remember when it was a struggle, a “should”, something I felt I “had” to do as a business owner, but that didn’t give me much joy. I had spent years creating successful plans as a fund raising professional (quite easily, I might add), but for some reason, I felt a great deal of resistance within me when it came to creating a plan for my own business. That resistance ended up being complex and required a lot of clearing.

Part of my resistance to business planning was because I really loved working with the spiritual laws, and I didn’t want to get caught up in some of the “negative” energies around business and money I witnessed in the material realm. And, of course, I associated business planning with these energies!

But, gradually, my polarized way of thinking changed. Reading this sentence in Sanaya Roman and Duane Packer’s book, Creating Money, assisted that transformation: “It will take less of your energy to attract, save and create more money if you are in harmony with both the spiritual and man-made laws of money.” And, if you’re a business owner, one of the man-made laws of money is business planning. So I set out to develop a business planning model for myself that harmonized the physical and metaphysical laws of commerce.

A Manifestation Tool

Many wonderful dreams and business ideas never materialize because they have not been clearly envisaged and grounded. A written business plan enables you to get very clear about your vision for your business, to ground this vision in the physical world and to align/focus your energy as you act on your plan. It’s a fabulous manifestation tool!

Inspired business planning integrates both the spiritual and man-made laws of business development together. Specifically, it:

- connects you to the higher purpose of your business;

- helps you clarify what you desire for your business;

- supports you in clearing any resistance to having what you desire for your business;

- anchors you in a consciousness of faith and love;

- gives you a space in which to receive guidance from your highest levels;

- translates that guidance into the action steps of your plan, as you discern what business-building strategies to use and structures to put in place that will allow you to receive what you’re desiring; and

- quantifies the financial aspects of your business.

The Seven Steps to Inspired Business Planning

Inspired business planning is a continuous process that will help you develop your business naturally, utilizing both your intuitive and intellectual capacities in an integrative way. As you go through this process, you’ll notice that you feel more balanced and aligned, that the steps to build your business become clearer and you’re more trusting and relaxed about the results. You’ll experience much growth and expansion.

Inspired business planning is a seven-step process:

1) Determine the higher purpose of your business.

From a spiritual perspective, what function is your business meant to serve? What’s your role in the evolution of humanity and our planet, and how will your business allow you to fulfil this purpose?

2) Create key intentions for building your business.

Like clarifying the higher purpose of your business, intentions are part of the “visioning” aspect of your plan. They are the broader goals you establish that will help you fulfil your purpose. What are your intentions?

3) Identify specific objectives and targets you desire related to each intention.

Also part of visioning is defining objectives and specific targets you aim to achieve for each intention. Objectives are more narrowly-defined goals; targets can be both the quantifiable or unquantifiable results you desire. What are your objectives and targets?

4) Tap into your guidance system to determine the action steps associated with each intention and corresponding objective(s) and target(s).

Spending time quieting your mind through meditation or other techniques and thinking/receiving ideas from your highest levels will lead you to the action steps of your plan. What action steps are you guided to take?

5) Clarify your financial inflow and outflow.

How much will it cost you to operate your business, create your offerings and get them out to the world? What level of revenue are you open to receiving on a monthly and/or yearly basis? How will you price your offerings to match that revenue level?

6) Clear resistance that may come up as you create and implement your plan.

Resistance is a belief, thought and accompanying feeling that disallows your natural state of well-being. The intention of building a prosperous, fulfilling business can bring up any number of fearful, resistant thoughts and feelings. These can prevent you from creating a business plan in the first place or from taking the actions your plan describes. What resistant beliefs, thoughts and feelings do you have about creating and implementing your business plan? How can you release this resistance?

7) Operate from love and faith by using prayer, visualizations and affirmations.

When you operate from love and faith, your actions are more joyful and inspired and you more easily attract clients and customers. Prayer, visualizations and affirmations are powerful tools that will anchor you in a state of love, trust and surrender. What prayers, visualizations and affirmations will support you as you build your business?

The real gifts of inspired business planning are in the process of creating the plan and implementing it, without being rigidly attached to the plan or its outcomes. So it’s helpful to remain flexible and allow your plan to change and evolve as you gain more knowledge, guidance, perspective and clarity. Keeping your inner focus on higher essence states such as joy, generosity and gratitude is also important. As Sanaya Roman and Duane Packer say in Creating Money, “the process of getting there is the quality of being there.”

Copyright 2008 Mary C. Davis

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Question about business

A good business plan doesn’t have anything to do with length, or the information covered in the plan. It’s all about the process of figuring out what your goals are and the specifics of how you’ll achieve them. If you want to know how to write a business plan, here’s some advice – keep it simple, specific, and realistic so that you can actually achieve the goals you’ve set for yourself.

Every small business needs a good business plan to get started. If you don’t have a clue where to begin, search for a business plan template to get the ball rolling. A business plan template provides an outline for a basic business plan so all you have to do is fill in the blanks, so to speak. When running a small business, it can be difficult to put all the information together – for most people using a business plan template takes some of the guesswork out of how to write a business plan, and speeds up the process. There’s no good reason not to use a business plan template if you want to.

So what are the elements of a well-written business plan? A simple plan is always best. Can you take action on everything you have planned, or are you being too unrealistic? To help your small business grow and flourish, it’s important to understand how to write a business plan that serves as a decent reflection of what you can actually accomplish if you implement the steps outlined in the plan.

Is the plan full of specifics? You need to lay down facts and concrete objectives to make sure you know exactly what steps to take to achieve your business goals. Knowing how to write a business plan is one thing, but if you want to write a plan for your small business that won’t let you down, it’s important to take the time to seriously set down a real plan of action.

A sample plan, many of which you can find online, can help make the process easier. With a sample plan to guide you along the way, it’s possible to get the job done more quickly than if you were doing everything from scratch, without any extra guidance. Or, purchase software designed to put together a proper business plan. Business plan software is easy to use, and guides you by the hand, step-by-step, to complete the process.

A good business plan should always have a specific budget included in the financial section. This is important if you plan to ask investors or a bank for loan money, but even if this isn’t the case, it’s helpful for your own sake. Setting up a budget and planning how you’re going to take care of the financial aspect of your business will help you turn your dreams into a reality. And that’s the whole point of starting a business and writing a business plan – you want to start or continue to run a business in the best way possible, to provide a service to the public and enjoy what you do.

The exact points you include in a business plan can vary depending on your needs and your specific situation, however, there are a few main sections that should always be included in a business plan. The finances section is a must, as well as a vision statement. Of course, every business plan is different, so you have to follow your own needs when putting together a business plan for your company.

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