Is Your Business Worth Investing In?

The effect of the recession

The recession has changed the competitive climate for most every type of business and it will likely remain changed for some time. No longer is it enough to simply find a growing market, hang out your shingle, and manage the business you start into success. In today’s economy, a business grows only by finding and serving customers with money to spend. But, these customers have become scarce and are much sought after by the competition. So, to acquire customers for your business, more and more, you must steal them from the competition.

Find a business idea with profit potential

To acquire customers in today’s economy, you must start with a business idea that has profit potential. And, to find that kind of idea, you must answer the following questions in the affirmative with confidence.

  1. Have you identified a substantial number of customers with a compelling need? And, are these customers willing to spend money on the package of goods and services that your business intends to sell to them to satisfy that need?
  2. Will these customers prefer the package of goods and services offered by your business to those offered by the competition?
  3. Will your business be able to create and market this package of goods and services at a profit?

Fortunately, the Internet has brought free and easily accessed resources to help you answer these questions. It then becomes a matter of systematically using these resources to analyze your industry, the competition, and your customer in order to determine whether or not your idea for a business has profit potential and is therefore worth investing in.

Evaluate your business idea

In order to assess the profit potential of your business idea; you must complete the three stages of a business concept evaluation. Each stage requires you to complete some common sense research and analysis in order to answer the above three questions and determine if your idea has profit potential and is worth pursuing. A brief description of each stage follows.

  • STAGE 1: Find the sales potential of the idea This stage has you take a look at your industry and identify challenges and opportunities. It also has you narrow your focus on a defined market area and target customer group.
  • STAGE 2: Verify your competitive strength In this stage, you will research and analyze the competitive climate for your business as well as your target customer, particularly what motivates them to purchase. You then use the results of your analysis to design an offer (a package of goods and services) that will appeal to these customers more than the goods and services sold by the competition. This stage ends by having you determine your initial promotional strategy and estimate sales based on the results of a market test.
  • STAGE 3: Evaluate the profit potential of your business idea In the final stage, you will identify a strategy for pursuing your idea for a business and estimate the expenses associated with implementing that strategy. This should give you confidence in your estimate of the profits your business will generate. It will also allow you to analyze the effect on profits of different assumptions used in making your calculations, (especially those concerning market conditions), and determine break-even points.

It is work! But, it’s worth it!

Whereas working your way through these stages might at first seem like a big investment of your time, ignoring the profit potential of your business idea can cost you much more in terms of time and money. It doesn’t make sense to plan your business unless you know it is based on an idea that shows a promise of profits. It makes even less sense to start it without an evaluation. So, unless you have time and money to throw away, it makes sense to evaluate the profit potential of your idea FIRST!

How Much Is Your Home Based Business Worth?

If the electronic energy in your body’s hydrogen atoms could be utilized, scientists have calculated that a person could supply all the electrical needs of a highly industrialized country for almost a week. By this estimate, the average person is worth about 85 billion dollars! Never sell yourself short. You are unique and immensely valuable as a human being. The payments you receive from life are what vary from person to person.

Anyone building a business for themselves is actually building a lifestyle regardless of who signs the paycheck at the end of the week. You hold the office of the President of your own corporation, which makes you responsible for success and failure. The members of your team are the stockholders and it is your job to see that the value of the stock increases in the years ahead.

Even though the operations of a corporation are complex, they can be reduced to four basic functions: Finance, Production, Sales and Research. Without proper financing, there would be no production. Without production you would have nothing to sell. Without sales you would have to stop production. Without research you could not keep up with the changing times. All four of these functions must flow in unison in order to have a successful business. How successful you are in meeting these challenges will determine your present and future growths.

You must be concerned with growth because nothing in this world stands still. A body in motion tends to remain in motion until acted upon by an outside force. A company that is growing has a tendency to keep growing. The same goes for a company that is either standing still or falling backwards. All responsible business owners should be able to look into the future and predict how well they will progress based on their current level of activity. Never before in the history of mankind has an individual had the opportunity to make a brighter future for themselves than now.

Stand back and look at yourself and your future objectively, as an intelligent stranger might. Ask yourself what you are worth right now. What is your value to your business and what is the value of your business in the marketplace? If you were an outside investor, would you want to invest in your company? If not, then change the reason why. Give personal attention to the growth of your business so it doubles in one year instead of eight. Find a timely business model that has achieved what you want and follow it. If you do twice as much, you are bound to receive twice as much. It sounds simple, but 95% of business owners can’t grasp it. Knowledge is power.

Sales is more than selling a product or service, it’s the way in which we sell ourselves to everyone who is interested in what we have to offer. It is the way we get along with our associates, our families, friends and neighbors. One extra call a day leads to 250 extra calls in a year. In 5 years that comes to 1,250 calls that you wouldn’t have otherwise made. A person can triple their effectiveness in less than a month. How have you been handling the four basic business functions? How much time are you really putting into moving forward?

Home based business owners have to be harder on themselves than any strict boss at a regular job could ever be. Yes, the reason we want to work from home is the have the freedom of doing what we want, but we can’t build a business with that attitude. You have to put the time in to set your business up first. Then we have to constantly strive to improve our effectiveness so we never have to worry about going back to being a puppet of the corporate giant. It’s all up to you to make these decisions. It’s the difference between being worth an average amount of money and an above average amount.

Tomorrow is a brand new day. Begin to think of ways in which you can increase your effectiveness.

Selling My Business – How Much is My Business Worth?

Almost all businesses are for sale to some degree. Lets say yours is not For Sale. Assume Your business is worth $100,000. You love what you are doing, someone contacts you with an offer to buy your business for $500,000. Is your business now For Sale? The preceding is not a likely scenario for most business owners. To successfully sell your business planning and preparation is needed. But if you are now or at some point considering the sale of it you may want to consider the following 3 points:

1. Identify your honest interest level when selling your business. Early in the decision process of selling your business consider what approach you may take towards selling it. As a Business Broker in Florida I interact with the various interest levels by small business owners.

  • – My business is not for sale but if someone walks in and offers me way more than what I think it is worth- I would sell it
  • – My business is not for sale but if you run across someone that would want to buy it please let me know. – I want to pursue selling my business but I won’t sell it for less than…( A somewhat inflated price). I am willing to accept that it may take 1-2 years to sell my business, and if priced too high I can accept the fact that my business may not even be sold.
  • – I want to pursue selling my business and after significant due diligence I feel the price I am seeking is consistent to what other like businesses have recently sold for.
  • – I want to sell my business and I want out now. I will set my price aggressively and set a lower price than price currently sought for businesses similar to mine. I will expect this aggressive pricing to both help me sell my business and decrease the amount of time it will take to sell my business.

If you do have a true interest in selling your business as suggested in above last 2 points you do need to exercise due diligence to gain understanding of what the value of your business may be.

2. You can expect that the perceived value of your business to you and the value of the business to a potential buyer will probably be 2 different values.

  • – Ultimately the price of your business is what a willing and able buyer is prepared to pay to buy your business.
  • – Seek “reasonableness” to your price that you will seek to sell your business for. If similar businesses to yours are sold at 1 1/2 times adjusted cash flow, why is yours worth 3 times adjusted cash flow? – Ask yourself what you honestly would pay to buy your business
  • – Do a free Search on my website or other similar websites to find out what similar businesses to yours is asking to sell their business for. Remember – all businesses are different, but use such a search as part of your due diligence. A business for sale asking price and the price a business sold for can be greatly different, but asking prices can provide some basis-while current Businesses Sold information is more pertinent
  • – Speak to your trusted advisers. A business broker may be able to help with non-public info on sold businesses in your area. Your accountant or attorney also may or may not be aware of such sales as well. A Professional Business Valuation specialist may benefit you.

3. Whether it is part of your exit strategy to sell your business or not, you should have an exit strategy.

  • – Most small business owners do not have an exit strategy.
  • – If you own a business you should have an exit strategy. Do some planning, perform some due diligence. Know what you have or may have.
  • – Even if you are not planning to sell your business there is value in knowing approximate value of this potentially large asset. You know what your house is worth, you car, your other assets. Understanding the value of your business can be a significant piece of information when planning ahead.

Selling ones business can be a rewarding experience when done properly. Understanding a proper value for your business can set the stage to a successful sale of your business or a business that is unable to find a willing and able buyer.