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What Should I Consider When Buying a Company?

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Year: 2017
Home › 2017 › Page 2
Year: 2017

What Should I Consider When Buying a Company?

Posted on by Gravity Consulting
Projecting Your Business Cash Flow

Introduction

You’re considering whether buying and owning a business is right for you. You may know what your objectives are, what you’re willing to pay and what your income requirements are. But do you know that businesses in the same industry, of the same age, same size and same profitability can have major variations in valuation among them?

This is not to say that one company is overvalued and another isn’t. It is to say that seemingly similar companies may be very different in ways that both affect their value and how they fit with your objectives.

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Posted in Business Planning Tagged with:

How To ‘Productize’ Your Service Offerings

Posted on by Gravity Consulting
How to ‘Productize’ your service offerings

Why turn services into products?

Turning your service offerings into standardized products increases the value of your business. When these standardized products are sold on a recurring basis you can much more easily train staff to both sell the products and perform the services required.  This reduces the dependency of the company on you as an owner, and allows your company to scale much more easily.  Furthermore, by offering products that can be sold on a recurring basis, you’re increasing the value of your business since recurring revenue streams are predictable and repeatable.

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Posted in Cash, Value Builder Tagged with: , , ,

How Many Enjoy Watching Sports Without Any Kind Of Scorecard?

Posted on by Gravity Consulting
How many enjoy watching sports without any kind of scorecard

Yet many private companies only get financial statements, which is a scorecard for their business, once a year.

Performance measurement is the main reason why all companies should prepare and review financial statements at least monthly.

Three main areas should be tracked: Cash flow, profit generation and capital position (i.e. the ability to withstand risks)

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Posted in Value Builder

How To Scale Up Your Service Business

Posted on by Gravity Consulting
Scale-Up-Your-Service-Business

It can be hard to grow a service business. Customers are buying your expertise, and if all you have to sell is your time, the size of your business will always be limited by the number of hours in your day.

There are several ways you can scale your service business. One way is to ‘productize’ your service offerings. You offer a relatively short menu of standardized service offerings, the sales and provision of which can done by your staff. This way your business can become less dependent on you, the business owner.

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Posted in Value Builder

5 Ways To Get Your Business To Run Without You

Posted on by Gravity Consulting

Some owners focus on growing their profits, while others are obsessed with sales goals. Have you ever considered making it your primary goal to set up your business so that it can thrive and grow without you?

A business not dependent on its owner is the ultimate asset to own. It allows you complete control over your time so that you can choose the projects you get involved in and the vacations you take. When it comes to getting out, a business independent of its owner is worth a lot more than an owner-dependent company.

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Posted in Financial Modeling, Value Builder

Does Your Business Have A Financial Plan?

Posted on by Gravity Consulting
Does your business have a financial plan

Would you fly on a plane if you knew the pilot had not filed a flight plan and if you knew there were no air traffic controls to ensure the plane kept to its flight path?

So why do so many businesses operate without a financial plan and without regular reviews of actual results against their plan?

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Posted in Value Builder

What Would Happen To My Company If Something Were To Happen To Me?

Posted on by Gravity Consulting
What Would Happen To My Company If Something Were To Happen To Me

The risk in your company can be measured by what would happen if: You as the business owner became sick and was out of action for several weeks; or you lost the company’s biggest customer; or you lost your major supplier you lost one or more key employees.

The higher this risk, the lower the company value and for a business owner who want to sell the company, steps should be taken to reduce these risks and increase the company value.

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Posted in Value Builder

Three key financial numbers for start-ups

Posted on by Gravity Consulting
Three key financial numbers for start ups

For any new venture it can be daunting to answer important financial questions such as when will revenue occur, when will your business become profitable and how much financing will you need.

It is vital for any new company to know the financial numbers that can provide answers to these questions. Generally speaking, knowing your start-up costs, your operating costs and cash flow will put you in a good position to know where your business stands.

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Posted in Financial Modeling

3 Reasons You Need A CFO

Posted on by Gravity Consulting
CFO

Imagine you are the owner of a company with $5 million in sales. It has been operating for a number of years, and is profitable, but you want to grow the business.

Say you would like to double sales over the next five years. Before you start the growth process, you should ask yourself: why double sales? What will a doubling in sales mean to profits? What cash is needed to double sales?  Quite often, you know that you are profitable but are not satisfied with the level of profits and you do not know exactly why profits are where they are or what should be done to increase them.

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Posted in Business Planning