Year: 2017

Have You Failed in a Past Business Attempt?

    Finance Tips

Small business valuation multiples by industry

Hindsight is 20/20, but in the case of your mistaken business investment, you needed more than a better vision, you needed a better product, a better location, and a better pricing system. In fact, the decision to go into your business adventure without a complete understanding of the available business valuation tools was a very unwise decision.
Fortunately, you have been able to salvage some assets from this failed attempt at your first business adventure, and you hope to take what you have learned and make a new start before long. Company valuations are never an exact science, but with a better understanding of the small business valuation resources both new and unexperienced investors can make more informed decisions.
Business Valuation Tools Serve as an Informative Way to Approach Investing in a New Business Opportunity
Whether you are in the process of buying or selling a business, understanding the resources that are available to you can help you find a more accurate way to understand the value of a business. The business valuation process is largely an exercise in economic analysis. For this reason it should come as no surprise that the company financial information provides key inputs into the entire process.
In almost all valuation methods, the two main financial statements needed for business appraisals are the balance sheet and the income statement. In fact, to achieve a proper job of valuing a small business, it is important to have three to five years of historic income statements and balance sheets available. Using this information investors and sellers can start the process of determining both asking and selling prices.
Other key key starting points in establishing a business worth include:

  • Determining why you need business valuation.
  • Assembling all the required information.

With these two points determined, the investor or buyer can then find an institution or a computer program that can help measure the business valuation. Typically, the evaluation process then follows one of three approaches:

  • Comparison made to recent sales of similar businesses. Sometimes the similarity is found in number of employees, locations, products or services sold, or a combination of these and other factors.
  • Determinations based on the earning power and risk assessment of a business.
  • Determinations based on the assets of the company.

References.

How Cash Counting Machines Improve Efficiency and Security

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Coin counting machines for sale

For businesses that handle large amounts of cash, cash counting and cash recycling machines offer a number of advantages. Coins counting machines and other automated money handling processes help businesses to improve efficiencies and security, reduce losses, and to streamline the overall cash flow. Dealing with a large volume of cash, coin or cheques is easier when processes are automated.

Currency counter machines for businesses
Coins counting machines and currency sorters can count large stacks of notes or loose coins quickly and accurately. Currency counting machines have been around since the 1980s and were first used in the U.K. For business owners, controllers, accountants, CFOs, and COOs, they offer solutions for asset protection, loss prevention, security and other cash management needs.

  • Improve efficiencies
    Counting large amounts of cash and coins can be slow and time consuming. When counting notes and coins by hand, the process must be repeated several times to avoid error. Even so, the possibility of mistakes remains.
    With coins counting machines and currency machines, counting cash becomes quick and 100% accurate. It frees up staff for other tasks, especially customer oriented ones. Money counter machines can even reduce labor costs as staff time that was spent on counting cash and notes by hand is now use more productively.

  • Greater security
    Coins counting machines and currency sorting machines not only remove the possibility of human error, they also put an end to losses and employee theft. All businesses that handle large amounts of cash face the problem of regular losses due to theft. Automated cash handling removes this problem at the source.
    Automated cash counting machines can also improve security by reducing the frequency of armored car pick ups. Overall, better and automated cash handling improves both efficiency and security.

  • Detect counterfeits
    Coins counter machines also function as counterfeit detector machines and can help identify and eliminate fakes. Counterfeit coins and notes have been a problem throughout history. In the nineteenth century, when banks issued their own currency, it was a serious problem. The secret service was actually founded in 1865 with the primary task of detecting counterfeit currency.
    Currency counter machines can detect fake notes and bills and separate them, minimizing losses.

For businesses that handle large amounts of cash on a regular basis, currency sorter machines and coins counter machines offer multiple advantages. Greater security, accuracy and efficiency help to streamline the cash flow and improve opportunities for customer facing interactions.

When It Comes Time To Sell Your Business, Get a Professional Valuation

    Finance Tips

Small business valuation calculator

If you own your own business, you will likely need to consider selling it at some point. You will retire at some point, and you could need to sell before then because of financial hardship, illness or another reason. Even if you are just selling the business to an employee or a relative, you need to know what it is worth so you can be fairly compensated. To get an accurate business valuation, you may need to avail yourself of business valuation services.

What your business is truly worth may be more or less than what you believe it to be. If you have an inflated opinion of your business valuation, you may set the price way too high and not be able to sell it. If you think your business is worth less than what it really is, then you could wind up leaving money on the table. Neither of these situations is ideal, and they can be avoided by using the expertise of business evaluation services to get small business valuations.

When looking to value your business, a valuation professional is likely to take one of three approaches. He or she might use comparable sales of other businesses, take the value of the assets or look at the potential for future sales and weigh it against the risks. In some situations, your valuation professional may use a combination of two or more of the factors to come up with a price. What type of business you have can influence what method to use as well. For example, for an online service business, it would make much more sense to use a valuation income approach to look at prospects for sales. On the other hand, a manufacturing business with lots of expensive machinery may be better off being valued based on its assets.

At a minimum, you can expect to need to show your valuation expert about three to five years worth of balance sheets and income statements. You might also be asked for client lists, an inventory of intellectual property and other documentation that might show the worth of intangible assets.

Keep in mind that selling your business is more of an art than it is a science. Even if you have a firm grasp on assets and sales, it still comes down to whether you can find an interested buyer, and you may have to decide whether you want to get your business sold for less than you expected or hold out for a certain price while facing the risk of not selling your business at all. For more information see this.

Reasons You Might Need an Accurate Company Valuation

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Business valuation

When you are self employed, it can be difficult to accurately establish the value of your business. It is much different than working at a salaried position, where you are provided with detailed W2s. When you are the business owner, you cannot simply take into account the total income of the business. You have to also account for things like costs, rent and utilities, product development, marketing, employee wages and benefits, and even expected losses. However, it is important to have an accurate company valuation for many reasons.

To obtain lending

If your business requires additional capital for expenses or to expand the business, you will have to apply for a loan. When you apply for a small business loan, the bank requires specific information about the business, including its business valuation appraisal. If you are unsure about calculating the worth of my business, you may not have the necessary information to obtain a loan and may need to create an evaluation.

Business valuation is largely an economic analysis exercise. Not surprisingly, the company financial information provides key inputs into the process. The two main financial statements you need for business valuation are the income statement and the balance sheet. To do a proper job of valuing a small business, you should have 3 to 5 years of historic income statements and balance sheets available. These small business valuation resources may be especially helpful if you are wondering the best process for calculating the worth of my business.

To sell the business

Perhaps you are ready to move onto other business ventures or you want to retire. Either way, you will need an accurate business valuation of your company to sell it. Buyers will not even consider buying your business if you have never been involved in calculating the worth of my business. The business valuation with the intent to sell may be a little different than the valuation used to obtain lending.

It may seem surprising at first that the valuation results are influenced by your need for business valuation, but business value is not absolute. It is a process of measuring business worth, which depends on two key elements, how you measure business value and under what circumstances. In formal terms, these elements are known as the standard of value and the premise of value. Simply put, your reason for sale will factor into calculating my business worth. If you are selling because you no longer have time to run the business, yet it is profitable, you are likely to receive more. However, if you are losing money and cannot afford to keep the afloat, this will also be taken into consideration.

Insurance purposes

You may also be tasked with calculating the worth of my business for insurance purposes. Your insurance policy needs to align with the type of business you do and the amount of customers you service. Small business valuations can help an insurance provider understand your insurance needs. Small businesses involved in more dangerous of working conditions, such as construction companies or electrical workers may require higher amounts of insurance. The business valuation gives them a better idea of the needs of the company.

To go public

Gaining IPO status is a goal among many medium sized businesses. When you trade publically, you are opening up your business to endless growth opportunities. There is a lengthy and complex process involved with going public. One of the most important steps is calculating and publishing the true value and evaluation of the business. You can determine the value of your business using these three approaches, by comparison to recent sales of similar businesses, based on the business? earning power and risk assessment, and based on the company?s assets. All of these factors are likely to be taken into account when attempting to go public.

There are many reasons that you may need to calculate an accurate business valuation. A few of the most common reasons include obtaining lending, purchasing an insurance policy on the business, selling the company, or going public in the IPO market. Ensure that you have the necessary documents and that you are using the right method of valuation for your business.