JPAbusiness Work +61 2 6360 0360
Orange • Bathurst • Sydney • Melbourne • Brisbane

    Business transfer issues: Customers, Suppliers and Stock [blog]

    Posted by James Price | JPAbusiness on 21-Oct-2016 03:03:00

    From the JPAbusiness Strategic Business Insights blog archives

    In this blog we examine the next three categories in the JPAbusiness Business Transfer ChecklistCustomers, Suppliers and Stock.

    Customers

    In our previous blog we talked about the financial issues related to customers, but there is a separate issue regarding customers and that is ‘relationships’.

    A business may have 50 regular and loyal customers and yet 15 of those may represent 60% of the sales on a regular basis.

    Continue reading...

    Topics: Customers, Business transfer, Inventory, Suppliers

    How much stock is too much? [infographic]

    Posted by James Price | JPAbusiness on 12-Oct-2016 05:39:00

    As a rule of thumb, a stock holding that represents 12 months worth of sales is the maximum needed. However, it’s very hard to generalise.

    Some businesses are import oriented so need to commit to a certain level of stock to ensure their freight rate is not exorbitant and/or they have sufficient stock ordered from a single season pre-order. This may cause lumps in their stock holdings.

    At the other end of the scale are products that are rapidly changing in terms of the market acceptance due to changes in technology. A 12-month stock holding of sales in that sector would be far too extensive. Often these stock holdings are measured in days or weeks.

    The first step in determining the correct stock holding for your business is to understand your current Inventory Turnover Ratio (ITR) i.e. your stock turn.

    Continue reading...

    Topics: Working capital, Inventory

    The price of poor inventory management [case study]

    Posted by James Price | JPAbusiness on 12-Oct-2016 03:20:00

    A couple of years ago the JPAbusiness team facilitated the sale of a strong, independent business involved in import and distribution.

    It was a well-known, independent brand that had been established for well over 50 years and had solid bottom-line performance.

    Unfortunately, when it came time to exit the business it soon became apparent there was too much inventory (stock on hand).

    We negotiated a price for the goodwill, plant and equipment etc, based on a multiple of Business Maintainable Earnings (BME), which is essentially the cash flow of the business. Then it was time to address the stock value.

    Continue reading...

    Topics: Selling your business, Advice, Inventory

    Top tips for managing inventory [blog]

    Posted by James Price | JPAbusiness on 02-Sep-2016 03:00:00

    When we started our eBook series one of our first eBooks focused on cash flow.

    Cash Flow Management for Small to Medium-Sized Businesses was written post the GFC, because we saw cash flow management as an important success factor for our clients in managing the dynamics of their businesses in a challenging environment.

    We recently completed the transaction on a business sale for a client and it served as a reminder of how important both cash flow and working capital are to the success of a business.

    In particular, it reminded us how important they are to building business value and therefore, when exiting a business, receiving value from the marketplace.

    Continue reading...

    Topics: Business Value, Cash flow, Working capital, Inventory, Running your business

     
    Disclaimer: The information contained in this blog is general in nature and should not be taken as personal, professional advice. Readers should make their own inquiries and obtain independent, professional advice before making any decisions, taking any action or relying on any information in this blog. 
     
     

     

    JPAbusiness

    Topic

    more

    Recent Posts