How to Price a Business Using Business Valuation Techniques

When selling your business, or any business for that matter, the primary question should be focused on the value of the business. Business valuation techniques can range in complexity from a simple calculation that gives you ballpark figure to one that evaluates tangible and intangible factors to produce a more in-depth result.

Unfortunately, there is no standard business valuation formula that will work for all business types and circumstances. And, there is no generally approved ‘right way’ to arrive at an accurate business valuation. Accountants may view the figures one way while business brokers will evaluate based on a wider set of criteria. The difference is that accountants focus primarily on the books, while a good NJ business brokers will conduct in-depth research and use that data as a context in which to examine the numbers.

For example, a common business valuation technique includes calculating the set-up and entry cost of a new business. Factors like promotion, hiring and hard goods have to be forecast, along with the cost of competitive entry into an established market. Depending on how steep the competition is, the cost to build a new brand can be quite high.

Common business valuation techniques include:

Market-based valuations:frequently used by brokers, these and are based valuations are based on broker experiences selling similar entities. The broker may suggest a price based on the sale prices of other businesses in the same, industry. While not a terribly accurate business valuation method to it is common for the sale of smaller businesses.
Earnings-based valuation:here a business broker will consider hitstorical financial figures, debt payments, cash flows past, present, and projected, and revenue. These valuations are often combined with asset-based valuations to arrive at a more accurate figure.
Asset-based valuations:address figures like the book value and liquidation. Brokers consider these to be the bare minimum values and are not generally used singularly.

Determining a value for fixed and intangible assets is an essential step that has an enormous margin for error left in unqualified hands. to perform a business appraisal valuation to help determine how to price a business. The business valuation technique of estimating the value of fixed assets is fairly straightforward.

ManyNew Jersey area business brokers will do this for you, but you can get a general idea by doing it yourself. The estimate should be based on the real market value of all physical assets in the sale. Fixed assets include items like stock, machinery, property and any other tangible ‘object’

When dealing with intangible assets it’s time to call in an expert business broker. Trying to evaluate concepts like reputation, customer loyalty, or your customer base can lead to wildly inaccurate numbers that will cause disastrous business valuation results and unhappy parties on both ends of the business deal. Only a qualified business broker skilled with business valuation techniques can help you accurately quantify the true value of your intangibles.

Many business brokerage firms will provide a free approximate estimate for small business values. NJ based firm like A Neumann & Associates have been in business for many years and can offer qualified free valuation reports.

Other key considerations to address when evaluating a business include:

health of the industry the business is in
economic climate of the industry
availability of loans
cash flow

There is no one-size-fits-all business valuation technique. There are experts who use a combination of many calculations and years of experience. Only trained, credited and most of – experienced brokers are qualified to perform accurate, certified business valuation technique.

Why Use a Business Coach

The right Business Coach has the power to lead you onto the path of success without letting you lose your focus at any point of time. Real Estate is a highly competitive business and players juggle with too many things. They must have a fairly good grasp of law, accounts, marketing, psychology, promotion, and business planning in addition to property management. The roles are diverse in nature. In order to survive and at the same time maintain the growth, you need to be exceptionally good in all the above spheres of knowledge. However, to become exceptionally good, you require special expertise and training and this is where a real estate business coach comes in. The majority of agency owners/directors rose through the sales ranks to get to their current position. They have had lots of sales training but often precious little business training. So all real estate business owners can benefit from a business coach in numerous ways. The following examples merely skim the surface:

The Coaching model: There are 2 ways of conducting business coaching. The first we call “Dial-A-Friend” from a well known TV program. The coach works with whatever issue you bring up in this conversation. This works on existing acute problems. The second approach is to follow a plan. You typically start with the basics in a business: Time Management, Financial Management and Sales Flow. Once this has been addressed and works well the coach moves on to Marketing and Systemisation of your business. Most businesses lacks in Marketing and they have not Systemised the business. Systemisation means in essence that you have worked through your various workflows and documented them. This is especially important in a growing company. Next comes your Team Culture. Everyone in your team must pull the ship in the same direction. The coach works with you to make this happen. The final step is to work with you to put your business on Auto-Pilot. This means that you as the CEO frees up your time so you can work almost exclusively on top level issues. You can also use the time freedom to get your life back in balance. An added benefit is that your company is now much more worth, because you can now sell it, if you so desire, to professional investors. And they can pay more for the right company!

Business Plan: Real estate executives who have undergone special training with a real estate business coach can craft solid business plans for their companies. With the help of the coach, you can envision the growth of your company five to ten years down the line.

Goals Accomplishment: An expert real estate business coach not only helps you formulate suitable growth plans for your business but also enables you to achieve them. He or she sets realistic targets for you and adequate time limits within which goals should be achieved. The coach also helps formulate marketing plans and identifies prospective clients to be gained in the process.

Quality Advice: Those who have undergone real estate business coaching are better equipped to understand changes in market conditions and the impact on their business. They can act early on changing market conditions and get an advantage over their competitors.

Fewer Mistakes: A real estate coach is like a third eye, he or she ensures that your company doesn’t make costly mistakes. He or she is like your business partner yet does not claim a share in business profits.

Technical Assistance: Your Business Coach also works with you looking at the various systems you use in your business. He or she helps you evaluate them. If your systems are old or not industry best, he helps you to transition to better and more modern systems If there are systems out there that you should use but currently are not, we’ll work with you to introduce them to your business.

Timely help: You are a very busy person. You need to off-load as much as possible from your plate so you can use your skills where they are needed most.. From doing research to making plans and strategies, your coach can lend you a helping hand in just about every aspect of your business.

A Real Estate Business Coach is a catalyst for success. With expert help, you can take your business to greater heights and remain relaxed even during unfavorable economic phases. If you really want to take your business to the next level, you should consider hiring a Professional Business Coach.

The Common Types of Business Formation

Every future business owner will have to decide what type of business structure they want to have. Once the entrepreneur has determined what type of product they wish to market, or what types of goods and services they wish to offer, they will then have to decide how they will go about structuring their business. Entrepreneurs are some of the hardest working people out there, they often times invest many man hours and even large amounts of their personal funds to start a new business. Because so much time and money goes into forming a business, it is essential that the entrepreneur fully understands the tax laws and how to take advantage of them.

When starting a business, the entrepreneur will have to choose how their organization will be structured so they can enjoy the greatest benefits. Entrepreneurs are faced with a variety of options including: a sole proprietorship, a limited liability corporation, or a corporation. Each option has its own advantages and disadvantages, and it is the job of the entrepreneur to learn each different structure and how each one works. This way they can choose the structure that will best suit their needs and they will be on their way to reaping the greatest rewards from their business. Although a certain type of legal structure may appear to be the best fit, it is always a sound business decision to consult with a business litigation lawyer before making an ultimate determination.

When an entrepreneur is deciding how they will form their business they will need to take several factors into account including: their ultimate goals for their business, how much control they wish to have, the tax implications of different ownership structures, their expected profit and/or loss of the business, if they are going to need to take cash out of the business, the potential vulnerability to lawsuits, and whether or not they will need to re-invest their earnings back into the business.

A large percentage of businesses start out as a sole proprietorship. In these types of businesses, the business is formed by one person who runs the daily activities of the business. Sole proprietors reap the rewards of any profits made by the business itself; however, at the same time they are also responsible for any liabilities or debts incurred by their business.

In a business partnership, two or more people share ownership over a business. Whenever someone ventures into a partnership, it is essential that they have legal agreements set in place that determine how the decisions will be made, how the profits will be distributed, how debts will be paid, how a partner can be bought out and how issues will be resolved.

With a corporation, the entity is separate from the owners. It can be taxed and it can be sued; however, the shareholders have a limited liability for the company’s debts. The owners are referred to as shareholders, and in general they are only held accountable for their investment in stock of the company.

A limited liability company is a popular form of incorporation for small business owners. The LLC is structured so that the business owner can benefit from the limited liability features of a corporation along with the tax benefits of a partnership. With an LLC, the business owner can choose between being taxed as a partnership or a corporation, and the owners have a limited liability for business debts even though they were in control or contributed to business decisions.

Choosing the right type of structure is extremely important for all future business owners. A business litigation lawyer will be able to provide you with all the information you need to make an informed decision. Whenever you are starting up a business, it is essential that you discuss your plans with a qualified attorney who is well versed in all aspects of business law. If you are forming a business, contact a business litigation lawyer today so you can be put on the right track for your business, and so you can enjoy the benefits of making the right choice.