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This is a complex issue. Sales may be driven the economic conditions, internal issues at the company, seasonality, or any of a variety of other factors. The point is this. Is the arrow pointing upward or at least straight out or not. If not, can this be turned around?
6. Instant Coffee
Believe it or not, coffee was not always instant and fast-food restaurants did not exist. We are less patient now—with everything. What does this have to do with the market value of a business? Just this. Smart valuators look at a business and ask themselves: Could a new owner walk in and run this business the day he or she took over? This involves the key personnel, the hardware store, and how well the operation is organized.
The closer the answer is to being truly turnkey, the better the business.
7. Do You Have Tenure?
Professors and U.S. Supreme Court justices are pretty much the only people in this country that get tenure—lifetime job security. Printers surely don’t. However, the older and more established the company the better.
This one doesn’t rank very high, because clients often could care less about how “Graybeard printing has been the printing needs of our metropolitan area for the last 14 billion years,” but it does speak to company visibility in the marketplace and, as such, merits note.
Disclaimers
Remember, this is just a start, my friend. Every business is unique and so one size doesn’t fit all. Moreover, there a variety of multipliers used to arrive at a dollars and cents value of a company. These change regularly and are affected by region, type of company, the economy, whatever. This grid, however, is pretty solid. Six of the last seven businesses I valued drew buyer interest almost immediately because they did nicely on these seven steps.
Maybe your not even thinking of selling? So why should you care about this criteria? First, because you always want to have as marketable a business as possible should you need to put it up on the market. Also, as previously noted, it is the positive side of these steps that typifies companies that make money and will do so well into the future.
Do you have a question? You may contact Dr. David at (702) 448-6622 or e-mail him at drdc46@yahoo.com.
