Posted in Business Valuation, Exit planning, Selling a business by Daniel Atherton on June 9, 2011 | Be the first to comment.
In 1906, Italian economist Vilfredo Pareto made an observation that would become the core principle of many a business, sales and marketing book.
It’s called the Pareto Principle. You might also know it as the 80/20 rule.
I first came across it years ago, and I must have heard it a thousand times since. It’s a beautifully simple idea which instantly rang true with my own experience in business and, for that matter, in life!
The Pareto principle
The Pareto principle, or 80/20 rule, states that 80% of results come from 20% of causes. Or, in business terms, 80% of your profit is generated from 20% of your clients. Click to continue…
Posted in Buying a business, Selling a business by Daniel Atherton on June 4, 2011 | Be the first to comment.
Economics writer Tim Harford’s article in today’s FT talks about some notable business failures, and discusses how people use failure as a catalyst for success.
It includes interviews with those entrepreneurs that have experienced some high profile failures; Ernst Malmsten – one of the co-founders or Boo.com – and Gerald Ratner.
Gerald Ratner
I’ve always felt for Gerald Ratner. He clearly was – and still is – a very talented entrepreneur and businessman. For the few that may not have heard his story, his downfall came from a few badly chosen comments in an after-dinner speech. Click to continue…
Posted in Business sale info, Business Valuation, Selling a business by Daniel Atherton on May 28, 2011 | Be the first to comment.
In my previous blog post “How To Value A Business“, I talked about the way that sustainable profit can increase your business’ value. This is based on the following bit of maths:
Value = Adjusted Net Profit x Profit Multiplier
While adjusted net profit is a fairly fixed figure – it is what it is – the profit multiplier used to value your business may go up or down depending certain criteria. One of these criteria is how sustainable your profit is.
The profit multiplier comes from the assumption that the performance of your company will continue for the coming years and so the buyer will get a return on her investment. But this is not guaranteed – your company may not perform as well as expected and the profit may be reduced. Click to continue…
Posted in Buying a business, Selling a business by Daniel Atherton on May 21, 2011 | Be the first to comment.
Are you considering selling a business?
Or an investor looking to buy a company?
Either way, there are a number of websites that list businesses for sale connecting business buyers with sellers (or their brokers) that you may find useful in your research.
These websites act as a marketplace where potential buyers can review, shortlist and contact sellers if they are interested in buying a business. Click to continue…
Posted in Business sale info, Selling a business by Daniel Atherton on May 14, 2011 | Be the first to comment.
Read any paper, watch any news report, and you’d think not. We’ve seen the shock collapse of some pretty established UK businesses in the last two years, including Woolworths and MFI – high street staples of our youth. So it seems that the rest of the UK has now battened down the hatches ready to weather the recession.
Business and finance experts are desperate to pinpoint just how and when the economy will stabilise. But the global impact has had far-reaching consequences, with our business partners in the US and most of Europe facing the same uncertainty. Is this likely to change in the next year? Two years? Five? It’s currently impossible to say.
So how does this affect you if you’re planning on selling a business? Here are five factors you might need to consider… Click to continue…
Posted in Business sale info, Selling a business by Daniel Atherton on May 7, 2011 | Be the first to comment.
Selling your business can be both exciting and stressful.
On one hand, you’ve reached the final chapter of your relationship with your business. You’ll soon be handing over the reigns to someone else before you walk away with a nice windfall – a satisfying end to all the years of hard work you’ve put in.
On the other hand, it might be the final chapter but it’s going to feel a bit like wading through the last chapter of Tolstoy’s War and Peace – and somehow you have to get to the end whilst still keeping your business on track! Click to continue…
Posted in Business sale info, Business sale process, Selling a business by Daniel Atherton on April 30, 2011 | Be the first to comment.
Weak. Feeble. Lacking strength. Words that conjour up some pretty negative images. And not words that you’d want to attribute to your business – especially when you’re looking to sell it.
Chances are, though, there will be parts of your business that are weaker than others – or are certainly not as strong as they could be.
But this doesn’t have to affect your chances of a sale. As long as you know what your weaknesses are, you can turn them to your advantage. Click to continue…
Posted in Business sale info, Buying a business, Selling a business by Daniel Atherton on April 23, 2011 | Be the first to comment.
Did you know that one of Jimi Hendrix’s most legendary songs, All Along the Watchtower, is actually a cover version? It was written and originally recorded by Bob Dylan – without an electric guitar in sight!
In fact, Bob Dylan is one of the most covered artists of all time; everyone from Pearl Jam to Tracy Chapman has recorded a song that he first wrote or performed.
So why do people record their own versions of other people’s songs, rather than (or as well as) writing their own? Click to continue…
Posted in Business sale info, Business Valuation, Selling a business by Daniel Atherton on April 16, 2011 | Be the first to comment.
Before I started the process of selling my business, I hadn’t given any thought to how much it might be worth.
With hindsight this seems strange as I could have told you every other statistic with unhealthy accuracy: Profit, revenue, average order value, debtor days, work in progress, sales pipeline value – you name it.
The difference is those figures can be calculated very simply with a pencil and a scrap of paper if necessary (or, in my case, a spreadsheet featuring a self-indulgent level of complexity – and pretty colours), whereas the value of a business – the value of your business – is a much more subjective thing. Click to continue…
Posted in Business sale info, Exit planning, Selling a business by Daniel Atherton on April 8, 2011 | Be the first to comment.
If your business is making a profit, then it will have a value. In fact even if your business isn’t making a profit it may still have a value – if it has the potential.
I liken the value of your small business to the chips in a casino. They too have a value, but you can’t spend that value until the chips have been converted to cash.
Although your company may generate a tangible profit each year, to release the value of your business you have to cash in your chips and sell up. Click to continue…
