The Hidden Value of Your Business in Non-Revenue Assets

The Hidden Value of Your Business in Non-Revenue Assets

The Hidden Value of Your Business in Non-Revenue Assets What’s drives the value of your business? It’s a question I always ask my prospective clients, and about 99 percent of the time, they answer in the form of a question: “Um, revenue?” Most business owners don’t know where the value of their business is locked...
How Do Financial Statements Help Your Decision Making?

How Do Financial Statements Help Your Decision Making?

Even if you are a passionate and committed business owner, spending hours delving into the detail of your company’s financial performance may sound terribly unappealing.  Yet businesses are made and broken on the decisions that are made. Therefore, how to use the information obtained from your financial statements to make better business decisions begins with understanding of the main three financial reports used. The three financial reports that are usually used to make a business decision are the Balance Sheet, Income Statement, and Cash Flow statement. Your financial reports must be accurate and GAAP (Generally Accepted Accounting Principles) compliant. It would be very difficult to make good decisions based on inaccurate information. The Balance Sheet: The balance sheet is a summary of the financial balances i.e. assets, liabilities, and equity of a company at any GIVEN time. It depicts a picture of the strength of the company and days of working capital i.e. how easily can a company handle changes in revenue while staying afloat. Balance sheets can also identify other trends, such as how the receivables cycle works, how net profits are being used, and how often equipment is replaced. The Income Statement: The Income Statement, also known as Profit and Loss Statement (P&L), reflects the company’s revenue and expenses DURING a particular period of time.  The purpose of an income statement is to show how the company has performed, by listing sales and expenses, and the resulting profit or loss. The Cash Flow Statement: The Cash Flow Statement simply states the inflows and outflows of cash during a finite period of time. These movements of money will account for the...

Selling Your Small Business? 3 Tips for Making the Deal you Want

There are hundreds of thousands of small businesses available for purchase yet 80% won’t sell. Many businesses are overpriced, the asking price is solely based upon the owner’s desire to make x amount of dollars. How do you ensure a successful sale and the best return on what is likely your most valuable financial asset? These critical decisions are among those for which owners are least prepared since they may be confronted only once in a lifetime. Owners may have decades of experience at managing their business but little to no experience with the complex process surrounding their exit.  Every business owner leaves their business, either by death, sale, closing or succession. Which way do you want to leave? Here are 3 tips to increase your shareholder value and close the deal:   Timing: Early planning is essential Although every business will be faced by the owner’s exit, very few small business have a liquidity or transition plan in place. Caught in the day-to-day management, they fail to recognize it is already time to think about their exit. As a result, they react to a life event, aging, illness, etc., and do not harvest the fruits of their life labor through a proactive strategy. A sufficient time-frame, generally between three to seven years, will dramatically increase your leverage and consequently your return.   Value drivers: Objectively assess your business A small business owner’s life is often so intricately intertwined with the business that it makes it very difficult for them to objectively and effectively assess the value of the business. A professional third-party assessment will identify the business’ value...