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Business Value Indexing and Analysis

Leveraging 30k of Income to a 1 million dollar Business

 

All of you are familiar how a duplex could be leveraged to a 4plex using it’s equity. What about a business?  And what about leveraging internal process and intellectual capital (intangible value pillars and drivers) for more value and equity instead of other.

Let’s look at an internal leveraging example first. A Business Owner invests in new sales tactics $10,000 to increase sales.  It worked.  $250,000 in gross sales was added to revenue with 6% net profit. So, lets say he added $15,000 to the bottom line. Now, what if the Owner invested $10,000 into an earnings move to leverage intangible value pillars and drivers.  The move went something like: increasing price 3%, margin 3% and decreasing advertising 3% resulting in sane revenue as above yet, this new earnings move had a 15% gain of net profit, and over $112,500 to business value. We work with more complicated internal leveraging moves with proprietary software tools. But, it is obvious, but which move you would take?

Now, from the bigger picture of a buy-out or merger. There are a lot of reasons someone might sell a business or buy another one. However, the leveraging model is similar. Since, “leveraging is the fastest way to wealth”, by Warren Buffet why not use it with your business? Contact a Business Value Specialist for a spreadsheet of the leveraging model. They will explain it and give you examples and how you could use it to gain wealth. Contact us for a complimentary review of your situation.

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Business Value Indexing and Analysis

Business Owners Only Round Table

Get to know other Business Owners and how they do it in an online Round Table. It is also good for networking yet, better to get helpful hints. Bring a Partner or Associate, there is no cost. Start the year with some new ways to reach your goals. Register TODAY before it is too late!

We check everyone out before the online Round Table plus you will get to know them prior to and during the online Business Owner’s Round Table.  Come with a helping hand each and converse about business situations and how to move past barriers. We require a short introduction paragraph to your business if participating.

The online meeting starts with a brief introduction of the attendees then a 2 minute discussion of one principle or law from the book, “14 Immutable Laws of Business Value”. Then it will be an open discussion from the audience about the principle. There could be confidential break-out sessions too. Get tips from someone in your shoes.

Business Owners Only Round Table Registration

Thursday, January 12, · 6:15 – 7:00pm MST

If you are planning on attending click this link to register to save your spot. We are limiting this month to the first 15 Business Owners. There is no entrance fee. Register TODAY before it is too late!

 

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Business Value Indexing and Analysis

Business Value Culture

Business Value Culture

Business culture gets to the core of business value. It begins with the word (s), phrases, emotional lexicons and identifiers. However, the meanings are in each employee (Owner, teams, production/service) not in the word. An old professor (Tiemans) at the University of Utah once said, “meanings are in people not in the word,” in class back in the 80’s. As we develop a reference to certain cultures the importance of selecting the “right” word or words becomes apparent for moving forward with a business value culture. A culture that viberates throughout the industry and market place. Where little if any advertising is needed. And savvy buyers are bustling to find-out what you are doing and want it.

From starting a new business to leading a team an organization culture and structure could make a difference in the bottom line. Carefully placed words from research could begin to make a world of a difference in the work environment, promotional copy, hiring copy, employee training, social media descriptions-wherever there is a relationship. However, while moving towards the ideal business organization where the Owner works on the business and not in it brings the most business value. You cannot sell your business with you in it. See the chart below of a representation of the transition from a typical organization to an ideal business organization.Maximizing Business ValueFrom the chart above you’ll notice it takes a lot to bring the culture and organization to an ideal business organization. It all begins with the words. What words are you using?

The culture permeates throughout the entire company and reaches outward. With the right business value culture a business does no or little advertising. Download a case study of the Gore company with the form below.  W.L.Gore did zero advertising. Yet, Packinowski started building a formidable culture with each employee that evolved throughout the organization.

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HOW could you move your organization towards an ideal business organization with a solid culture while increasing value over $210,000 with $0 cost?  See an example on page, 12 in the book, !4 Immutable Laws of Business Value”. Of course, always have more than an HR manual but start early with ways an employee could engage in equity. There are several ways to do this. As you begin to unfold your culture begin with the ending in mind, like Covey would suggest while having the meanings of words foremost in your mind. Ask one of our experienced Advisors on the way to evolve a more solid culture foundation for higher retention and less advertising while increasing business value. We offer an online complimentary review of your particular situation.

 

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Business Value Indexing and Analysis

Third Party Verification of Sweat Equity

Maximizing Business ValueA Small Business Owner gives, gives, and gives. So, how does the Owner get the most sweat equity from her or his business? They are putting in 60-70+ hours a week. Often doing things that others cannot do. Or showing up for a front-line worker in an impossible moment. Do they ever get compensated for all this extra time?

Does your business have a third-party document your business value?

When a Small Business Owner has to sell his or her business because of health, divorce, or an unforeseen reason they often miss the fair factor. However, there are ways to minimize the loss of sweat equity by working beforehand with a Business Value Specialist. While meeting with the Specialist the Owner conveys activities that seem to fit with the principles and laws of business value from the book,”14 Immutable Laws of Business Value.” In turn, after reviewing the Specialist documents these activities in a business value plan. These are later shown and reviewed by a private Buyer or Investor.

This third-party documentation of business value activities verifies the Small Business Owner’s sweat equity for a future review or evaluation. Without it, there is no way a Small Business Owner could get compensated for all the little extras she or he puts into the growing concern. Ask for a complimentary review of your specific situation by a Business Value Specialist. And start documenting what really matters with a third party.

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Business Analysis

Profitable Business Yet NOT Valuable?

Is your business profitable? OK… Is it valuable? While I was prospecting for small businesses to sell I ran upon a small manufacturing business with commercial energy materials that had been around for about 3 years and was doing $300,000 annually in gross sales with a margin of 60%. From the surface, things look great. With a quick evaluation we determined to have about $300,000 in business value (3 x EBITADA). What happens next?  Join us and talk about the what ifs in a Business Owners’ Round Table.)

So I ran to my Manager with a potential business listing (See Author’s Bio). He put on his business value glasses and asked a few questions. He then asked me, “Did you know a business could be profitable but not valuable? Many of us often think, “What is the value of that company or my company?” I was unsure at the time. But listened to his advice that a customer base with 20-30% or more with one type of customer lowers in value. Join a Business Owner’s Round Table and talk about your options.

There were several other areas he went into but specifically pointed to how the product, customer base and value were tied together. I realized this advice was not written down anywhere so I started taking notes and eventually had enough for a book. How might this be applied with businesses in other situations?

The book, “14 Immutable Laws of Business Value“, was written to help Business Owners with a business valued at 5 million and under, with a guide for not only looking at their company but also to use while targeting another business or for leveraging their equity, so avoiding pitfalls. What questions are you asking about business value?

With the notes I complied from over 20 years, the right questions could be asked for a better picture of business value.  For example, rule number 4, pg 13., in the book, “14 Immutable Laws of Business Value“, states, ” Business Value rises as a customer base is more diverse.” There is more in the book about this and other laws but basically, in this particular situation, the Manufacturer had one government contract.  Yet, it was profitable. Get insight at the monthly online Business Owners’ Round Table into your particular situation.

There is more to the story, but, how do you find if the business has a diverse customer base and what % of the customer base means less value if one or two customers were the main ones or only ones? Join us and talk about the what ifs in a Business Owners’ Round Table.

As you know, a slight offense to the government official that extended the manufacturing contract could end the contract. Yes, it depends on the situation but this business would not a get a full 3 X EBITADA valuation from an appraiser even with profitable sales. Get more questions to ask about business value in the book.

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Business Value Indexing and Analysis

Value Pillars and Drivers

Maximizing Business ValueEvery business has different value streams that add to business value. These are composed of intangible value pillars and drivers that are governed by principles and laws of business value. After careful business value analysis, the stream and pillars/drivers begin to emerge from within. What are your company’s value pillars and drivers? How do they create business value?

The value pillars are evolving in your business right now. It may be a sales pitch, leadership, patent, product feature, integrity, perseverance, determination, innovation, respect, passion and fair-mindedness or other. It takes a trained expert, to look from the outside-in to begin to see/understand them, so you could capitalize on them. Contact us for an online complimentary review to begin to identify what creates your company’s business value.

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Business Value Indexing and Analysis

Business Value Indexing

Business Value Indexing

“An agile company for the changing world demands data information based on a solid platform.” Adobe

We use an overall business value index to know, “What is going on?” with the business value of a particular business during a specific time period. We do not use a performance index, that is a measurement tool business owners and managers use to evaluate business operations or keep people accountable. We are not looking at performance but business value.

Business Value is more important than a kpi, accounting ratio or profit/performance indicator. Example: A KPI might tell you how fast a car is going down a roadway but a value index lets you know the “value” of the car. How is the value of your car or bus doing?

What is the big picture? Have you ever wondered how the business is doing with business value? Is it your own or have you invested time and money into it? Yet, you know the business is unique and hard to measure. Traditional indexing usually compares numbers to other businesses that are in the same industry but not similar. Not with Analyzer II-we only look at historical data.

If your business is selected as a viable candidate for our Business Value Mastering Program, we are customize the business value variables to your business and provide a unique business value index from current and historical data. The software uses proprietary formulas to determine this unique number. This index from past index averages gives a holistic view of the health of a company that relates to principles and laws of business value, not another business or a small department or division. We look at business value of the company not comparing it to others.

“Organizations must focus on promoting a culture of agility across people, processes, and technology, to respond in the moment….” Adobe

Future reports of the business value index could give the impact of an initiative or program on the overall company’s value.   This proprietary way gives you information based on principles and laws of business value not just profits or performance.

How do you start indexing with your business? We first set key indicators of crucial areas to the company’s value. We then provide a report with a  Business Value Index (Includes business value, based on EBITADA) that forms a reference point. This point tells us how close a business is running with the principles and laws of business value. As time goes on your company’s score will be more accurate and useful in day-to-day operations, strategic planning, projections, and eventually the exit. If you would like we could develop other key variables of your business or initiatives for risk evaluation.

Here are a few of the benefits of the Business Value Index.

* Helps keep a pulse on the company from a broad view

*A way to start Optimizing a company’s  business value

* Focuses on the intangible value drivers of the company, not problems

* Continuous improvement mentality

There is no charge for setting up the Business Value Index for your specific situation. Start today and contact us for an online complimentary review of your situation.

 

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Business Value Indexing and Analysis

5 Business Value Myths

5 Business Value Myths

  1. The value of your business is what you think it is.
  2. Employees are going to stay in the business you sell or buy.
  3. A Franchise is a better buy than an established business or E-Distributorship.
  4. Someone will tell you the “true” value of your business.
  5. You will know why they are really selling the business.

The principles or laws in the book are either working for or against your company’s business value, right now. Find the untapped value within your business with an online complimentary review and report with an Ambassador of Business equity. Contact us today!

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Business Value Indexing and Analysis

Retirement Income?

How Much do you Need to Retire?

Not too many Business Owners will use this equation before it is too late; business value – business debt = business equity + personal equity = retirement income. What is the gap between what you need for retirement and what you have in business equity?

Maximizing Business ValueOne small change in business value in the above equation could make a Business Owner $100,000s for retirement. What is it? How much do you need to retire comfortably? We discuss these questions and more in an online complimentary review of your specific situation. Set a time with a Senior Business Value Analyst at this link.

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Business Value Indexing and Analysis

An Ideal Business Organization

Maximizing Business Value

What is the Ideal Business Organization?

From the picture above you could visualize how a business must have the ideal business organization, at the sale for maximum value. Just like a business, you cannot sell a car with the owner driving it. You might not be thinking about selling now but every Business Owner either shuts the doors or exits. How close are you to an absentee run business?

The owner of a business usually controls most of what is going on at first to her or his advantage. But as time goes on and sales come in things change. She or he cannot do it alone and the team starts to grow. If she or he is not leaving it for chance, since a business sells, on average, every 3 to 5 years (a good one) then employees are empowered, teams are formed, trade secrets are transparent and the big picture of building business value is on the radar. That is why moving toward the ideal business organization starts now.

As the team grows money(compensation) begins to be dispersed while roles and responsibilities change. Whether you are in a partnership, family business, or proprietorship, finding the “right” person for team players while growing could be one of the most difficult tasks to encounter as an “Owner”. If you want an absentee-run business, then moving towards an “ideal business” model is on the top of the list at that time. When the Owner starts moving towards working on the business and not in it, then the business value goes up.

During this culture change reorg, a Business Owner could lose value or make it depending on compensation, roles, and responsibilities. This is one of the most difficult organizational structure changes a Business Owner(s) or HR manager participates in, yet is rarely looked at through the eyes of business value. Read the example in the book “14 Immutable Laws of Business Value“, of how the business value was increased by $100,000s with one move. To get more insight into how making the “right” organizational move could bring move business value while preparing for the future exit ask one of our Business Value Experts for an online complimentary review.

CEO Analyzer along with proprietary process has been designed to assist a Business Owner or HR Manager get the highest business value while moving towards the ideal business organization. Without the software suite, it would be virtually impossible to fine-tune the culture, employees, roles, responsibilities, and processes for the absentee run business. When are you exiting? Sometimes we do not know. Start getting prepared today and set a time for a complimentary review of your specific situation. Start evolving your company’s culture and organization closer to an “ideal organizational structure” utilizing an Advisor’s guidance. Connect with a Senior Advisor on the contact page for an online complimentary review of your situation.

A company’s value is less with the Owner working inside the business. From, “14 Immutable Laws of Business Value“, Rule 12, Pg. 21.. Read more about how this laws is interdependent with cash flow in the book.