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Value in Business

Some  people think finding value in business is like finding a needle in a haystack. Others find it easy to find value in business. Why do some struggle and others prosper?

Perhaps the point of entry into buying a business is the critical date in your business journey. It matters less what you do with the business and less what you sell the business for...so long as you buy it correctly in the first place.

If the value in business is correctly identified by having a business valuer identify the profit accurately and the profit multiple which should then be applied, then you have a better opportunity to be a correct price for the identified value in business.

There is a well used MBA acronym taught at the Harvard Business School, which states The Principal of BAM !

BAM! stands for "buy well, add value and manage intensively!

But remember, before you can add value by altering the business model and making changes and tweaking the product or service offering, you must first enter the business at the right price for the value in business you have identified.

Remember also, that before you can manage the business intensively, and squeeze every last drop of profit out of the business every week...you must first have bought the business at the right price for the value in business it has demonstrated is available to you on the first day of your ownership.

If you don't buy well, then your repayments on your business loan will be substantially higher than they needed to be ...and it will take you so much more effort in adding value and managing intensively just to get back to where you should have been in retained profits (after loan servicing) .  What a waste!

If only you had engaged a Business Valuer Network member and engaged him to value the business. He would have established the "value in business" for the enterprise you were thinking of buying and you would have been much better equipped to show the seller  and his broker why the offering price did not represent real value in business and in effect that the business was slightly overpriced. Oh well, you are stuck now and will just have to work harder and longer to catch up on the gap between the real value in business and the lack of value in business.

The difference between the two is how much you have overpaid for the business.

Quality advice should be viewed as an investment...not as an expense. Quality business valuation advice from a Business Valuer Network member will more than pay for itself.  support@businessvaluer.net.au

 



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