How competitive advantage contributes to 'strategic value'

Posted by James Price | JPAbusiness on 22-May-2019 02:00:00

Competitive advantage occurs when you as a business do something better than anyone else and it is hard for other businesses to quickly and easily replicate that offering.

There are degrees of competitive advantage and, in terms of strategic valueyour competitive advantage has to be something a potential purchaser will value.

(Quick reminder: strategic value is the value a purchaser is willing to pay for a business, over and above what an impartial business valuer might determine is 'fair market value'.)

For example, you may say ‘we sell more air conditioners than anyone else because of our unique customer relationship management approach’. That’s great, but are you achieving reasonable margins on those sales? If the answer is ‘no’, there is no value being created, strategic or otherwise.

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Topics: strategic value, business advice, Business advisor, business valuer, Parramatta, Orange NSW, competitive advantage

5 tips for selling a business [infographic]

Posted by James Price | JPAbusiness on 22-May-2019 02:00:00

The infographic below is based on lessons learned during a sale we facilitated for a client.

During the sale process our client showed how listening to market feedback and being responsive and flexible can deliver an acceptable outcome.

As we often say, selling is a dynamic process – it's not a 'set and forget' where you get your valuation, list the business for sale at that price, and away it goes.

In this case, the vendor achieved a satisfactory sale by applying each of the five guidelines outlined in the infographic.

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Topics: infographic, business advice, selling a business, Business advisor, Parramatta, Orange NSW

Franchise advice as parliamentary report calls for sector overhaul

Posted by James Price | JPAbusiness on 15-May-2019 02:00:00

When it comes to franchising, our message is consistent: get robust, independent advice before you buy a franchise (or any business, for that matter!)

The recent release of a damning federal parliamentary report into Australia’s franchise sector has reinforced the importance of this message.

The parliamentary inquiry into ‘Fairness in Franchising’ recommended an overhaul of the industry's regulatory framework, stating that it had “manifestly failed to deter systemic poor conduct and exploitative behaviour”. It said the existing rules had “entrenched the power imbalance” favouring franchisors.

However the report also acknowledged there are good franchise systems that “operate to the mutual benefit of the franchisor and their franchisees”.

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Topics: Buying a business, Franchises, Video, business advice, buying a franchise, vendor due diligence

How to attract valuable customers [infographic]

Posted by James Price | JPAbusiness on 08-May-2019 02:00:00

 

Business value comes in two different ways:

  • during the course of operations, and
  • at the end, when you sell or pass on your business.

Many people run successful and efficient businesses, but don’t take the time to sit back and ask ‘what is actually driving the value in my business?’

Understanding those value drivers and focusing energy on them is the difference between having a business that runs efficiently today, and one that builds value over time.

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Topics: Business Value, Customers and Clients, Customers, infographic, business advice, strategic planning, Parramatta, Orange NSW

What is ‘discounted cash flow’ when valuing a business?

Posted by James Price | JPAbusiness on 08-May-2019 02:00:00

When advising clients looking to buy businesses, as well as running businesses, we use a number of different methodologies to assess value.

A business is a dynamic entity – a ‘going concern’ – so you can’t just value it at a point in time. You need to assess the level of cash flow it is generating today, and what you can expect it to generate into the future. You then need to assign a ‘present day value’ to those potential future cash flows. 

One way we do this is by using the discounted cash flow (DCF) valuation method.

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Topics: business advice, Business valuation, valuing a business, business basics, Parramatta, Orange NSW, discounted cash flow

5 issues to be aware of when planning a joint venture [infographic]

Posted by James Price | JPAbusiness on 24-Apr-2019 02:00:00

If you are considering entering into a joint venture, we have created the following infographic to help you.

The infographic lists five issues to be aware of and which should be raised with all parties early in the planning and negotiation stages. 

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Topics: Shareholders, infographic, business advice, Business advisor, shareholders agreement, joint venture, Parramatta, Orange NSW

3 ingredients needed for a successful business sale or purchase

Posted by James Price | JPAbusiness on 24-Apr-2019 02:00:00


Based on our years of business broking experience – and successfully making a match between many buyers and sellers – answering ‘yes’ to the following three questions should set you up for a successful business transaction:

  1. Price – Is the price market related and does it reflect the value a willing buyer, under the circumstances of the sale transaction, will perceive as fair?
  2. Facts – Are the facts on the business or opportunity clear, unambiguous and relevant to the risks, issues and opportunities the risk-taking party will likely perceive in making the purchase?
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Topics: Buying a business, Business transfer, business advice, selling a business, Business advisor, business broker, Parramatta, Orange NSW

Do I have to get a valuation before selling?

Posted by James Price | JPAbusiness on 17-Apr-2019 02:00:00

The simple answer is ‘no’, you don’t need a valuation to sell a business.

However, in terms of engaging JPAbusiness to sell your business, the answer is a resounding ‘yes’, you do need to get a valuation before you embark on a sale process.

The reason for that is part of our point of difference among business brokers. It’s based on a lesson learned early in the life of JPAbusiness, and backed by years of subsequent experience. 

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Topics: business advice, selling a business, Business valuation, Parramatta, Orange NSW

What is an earnout or contingency payment?

Posted by James Price | JPAbusiness on 10-Apr-2019 02:00:00

Earnouts and contingency payments are typical features of business sales in the Australian, European and US corporate markets.

In our work in Australia, we are seeing them increasingly used in the small to medium-sized enterprise (SME) market and we’re often involved in structuring these deals, either from a purchaser’s or vendor’s side.

If you are considering selling a business at the larger end of the SME market, with a longevity of orders and forward earnings, it’s important to consider the concept of earnouts and contingency payments because it will come up from interested parties.

It’s also important to recognise that earnouts as part of the purchase price have capital gains tax implications, so expert advice is essential.

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Topics: Buying a business, business advice, selling a business, seller earnouts, business basics, Parramatta, Orange NSW, contingency payment

When should I tell my staff I'm selling my business?

Posted by James Price | JPAbusiness on 03-Apr-2019 02:00:00

In assisting clients to prepare for a business sale process, we often get the question: When should I tell my staff I’m going to sell?

It’s an important issue because staff can significantly impact your business’ value, while selling can impact their lives.

The reality is there is no simple answer because every business is different.

A complex situation

Our guiding principle is that open and transparent communication with your staff is always a positive thing.

However, this is complicated by the fact selling a business is a sensitive issue and disclosing the fact it’s for sale can be detrimental to a business’ operations.

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Topics: staff management, business advice, selling a business, business basics, Parramatta, Orange NSW

 
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. 
 
 

 

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