Why building sustainable business value is a marathon, not a sprint

Posted by James Price | JPAbusiness on 25-Nov-2020 02:00:00

One of the lessons I’ve learnt over 35 years of running my own businesses – and also advising on and observing others – is that very little value is generated in a ‘fast foot race’.

Good things come from time, careful execution, trial and error, and patience.

I'm spending a few hours in the gym these days trying to tone and trim up a bit. As a tall guy who’s less than perfectly coordinated, there are some exercises that are a bit of a challenge – barbell squats for one. My form is not a picture of symmetry and grace.

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Topics: Business Value, Business Planning, Succession planning, business advice, Business valuation, Business advisor, JPAbusiness, Parramatta, Central West NSW, business transaction advisor, sustainable value, business sustainability

Do I need a valuation before selling a business? [video]

Posted by James Price | JPAbusiness on 26-Aug-2020 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 ‘yes’: we always recommend clients have their businesses independently and professionally valued before they invest time and money in a sale process.

In this video I explain how our first experience of helping a client sell their business – combined with our many years of subsequent experience – has shaped this philosophy regarding valuation and its role in a successful sale process.

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Topics: Business Value, Video, business advice, selling a business, Business valuation, Business advisor, Business selling, JPAbusiness, Parramatta, client case studies, Central West NSW

What are some 'rules of thumb' for valuing a business?

Posted by James Price | JPAbusiness on 22-Jul-2020 02:00:00

When it comes to valuing businesses – listed or private – you will often hear people refer to ‘rules of thumb’. Some will say the value of a business is:

  • ‘x times its revenue’ or
  • ‘x multiples of its earnings’ or
  • ‘a function of its after-tax profit’ or
  • ‘a function of its gross profit’ and so on.

These ‘rules of thumb’ tend to be industry based i.e. “a business in Industry A is worth ‘x’ times multiple of earnings” while “a business in Industry B is worth ‘x’ times revenue”. (I won’t repeat the actual ‘rules’ I’ve heard – I don’t want to encourage anyone to use them!) 

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Topics: Business Value, business advice, Business valuation, Business advisor, business valuer, JPAbusiness, Parramatta, Central West NSW

How to calculate your Business Maintainable Earnings [infographic]

Posted by James Price | JPAbusiness on 08-Jul-2020 02:00:00

Business Maintainable Earnings (also known as 'Future Maintainable Earnings') reflect the ability of a business to generate earnings into the future.

BME is one of the most important concepts the market will consider when assessing business value – it is particularly critical for determining a business' going-concern value, including the value of goodwill.

The following infographic shows how to take account of abnormal fluctuations in your business’ performance (i.e. normalise) when calculating your BME.

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Topics: Business Value, Valuations, BME, business advice, Business advisor, JPAbusiness, valuing a business, Parramatta, Central West NSW

How to prove goodwill value [templates]

Posted by James Price | JPAbusiness on 01-Jul-2020 02:00:00

Goodwill ­is a key component of business value, alongside factors such as working capital and plant and equipment.

Many people think of goodwill as an ‘intangible’ and therefore its value can’t be proved, but that's not necessarily the case.

Goodwill value relies on being able to prove the sustainability of a business’ earnings going forward.

In this blog we’re going to explain how record-keeping is a critical component of proving that sustainability, and provide some simple templates to get you started.

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Topics: Business Value, contracts, business advice, Business valuation, JPAbusiness, goodwill, Parramatta, Central West NSW, work in progress, WIP, tendering

How a valuation can be used to add value to a business [video]

Posted by James Price | JPAbusiness on 01-Apr-2020 02:00:00

Business owners often seek a business valuation after being prompted to do so by a 'significant event’, for example:

  • a family break-up
  • retirement
  • need for business restructuring
  • bank lending requirement
  • purchase offer
  • bringing in a new shareholder or partner, and so on.

In this video I explain how valuation can actually be used as an ongoing management tool, adding value while you’re running the business and also potentially boosting value on exit.

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Topics: Business Value, Valuations, Exiting your business, Video, Business advisor, business management, growth strategies, James Price, JPAbusiness, Parramatta

Free up cash with our Working Capital Checklist [free template]

Posted by James Price | JPAbusiness on 25-Mar-2020 02:00:00

As a business owner or manager, there are a number of 'levers' you need to control to successfully manage working capital and drive a successful, cash-generating business.

As our Working Capital Checklist shows, those levers fall into two buckets: current assets and current liabilities.

You can use the free checklist to assist you in achieving a firm control of your working capital levers and cash position, so your business proposition is not hampered by poor cash flow.

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Topics: Business Value, Selling your business, Cash flow, Working capital, Exiting your business, Template, Checklist, business management, COVID-19, business strategy, coronavirus

Business valuation or market appraisal – what is the difference? [video]

Posted by James Price | JPAbusiness on 18-Mar-2020 02:00:00

Business market appraisals and valuations are both robust assessments of a business’ worth and are appropriate for use in different circumstances.

In this video I explain the difference between a business market appraisal and a business valuation, and when each should be used.

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Topics: Business Value, Advice, Valuations, Video, Business valuation, market appraisal, valuing a business, Parramatta, Orange NSW

How your inventory management impacts business sale price [case study]

Posted by James Price | JPAbusiness on 11-Mar-2020 02:00:00

A few years back the JPAbusiness team facilitated the sale of a 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.

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Topics: Business Value, Selling your business, Advice, Cash flow, Inventory, selling a business, Business advisor, JPAbusiness, Parramatta, Orange NSW, cash flow management

How to get good staff and keep them [eBook]

Posted by James Price | JPAbusiness on 19-Feb-2020 02:00:00

We often hear business owners and managers say “it’s so hard to find good people – we’ll just do it ourselves”.

But as we’ve discussed in many blogs and eBooks, critical to building business value is having the people resource that allows the business to deliver sustainable returns and earnings.

If you find yourself throwing your hands in the air and saying ‘I’ll do it myself’ because you can’t find someone suitable for a role, or you’ve hired three people in 18 months and they’ve failed to stay or deliver the outcomes you were after, you need to reconsider your recruitment process and what you’re trying to achieve.

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Topics: Business Value, Employment and recruitment, eBook, staff recruitment, business management, 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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