"Should I Buy This Business?" - How To Know If You Should And How Much It's Really Worth

"I've seen a business that I can get for a good price and I wanted to know what you think.."

So came the request.

Now the business, as it turned out, was in another state. Nice part of the world. A shop only a few years old and the owner wanting to sell because of health issues in the family.

You've heard of that one, right?

"Do you have the full financials for the period they have been trading?" I asked.

"No, but they sound okay."

So here we have "a good price" and "okay financials" ... but no real data.

What followed was series of more questions with very few answers and none of them backed up with any evidence. But it was a good story and on the face of it you could see how picking up a newly established business with fit-out for less than half the price paid new for the equipment seemed like a deal.

When considering buying a new business there a lot of questions to be considered before embarking on the process of narrowing down the issues that will allow you to make a good decision.

Personal Issues When Buying A Business

Before any merit of a business is considered, we need to be clear on our purpose and intention for making that jump.  If we are to buy a business what business has the capacity to produce a return that we would be happy to achieve?  How much would we need to achieve to make it worth the risk and sweat and hard work that will surely go into it?  Are we skilled in this industry or are we completely green with no knowledge at all?  Is your temperament suited to working with the customers your business serves?

Importantly, can you afford to stop work and getting a paycheck and invest money into this venture for the first year, without taking money out of  business? Realistically, that might be what needs to happen.

Due Diligence - Your Job To Know The Real Position Of The Business You Want To Buy

Beyond your own suitability for owning a business is the question of whether you want to build a business from scratch, or buy one that's a going concern.

Either way you need to be able to know how to research the market where the business will be.  You must understand the competition it faces and the trends that will affect the longer term viability of the business. Anyone  trying to sell a Music CD store or video rental shop might find themselves hard-pressed to get a sale for it now.

What's the long term outlook for this industry?
Who's leading the market for this nationally?
Who owns the top position locally for this?
What can your business offer customers - that they want - that they can't get already?

Many owners of restaurants and retail stores complain about issues that the owners should have taken into account before they opened the door to a new business. The cost of doing business is an element that is crucial to understand.  Employee wages are just one element that is a factor you need to expect as an ongoing cost.  Wages are a cost but being cheap and exploiting people isn't necessarily going to give you value for money.  Those employees you hire can be a real asset to the business and done right can be instrumental to generate income for you too - not just cost money.

Cash-flow - The Ins and Outs

Yet it is money you have to find and is only one part of the costs for you to have calculated when it comes to determining your options regarding the financial stability of the business. Opening hours, pricing, realistic numbers of tables you can fill and meals out the door... all of these have implications.  If you are running an eatery: times of service, levels of return you can make during a sitting, selection of menu items, cost containment and minimal waste. All of these are factors that will have bearing on the ability of the business to perform at a level that is workable. How well your business is located, marketing plans, rent and operating costs - all of these are issues you need to have answers for in order to know if a business is worth buying or opening.

And you need real numbers - not just "sounds right" numbers you made up, or someone told you.

To test your business value now or check the value of a business you might want to buy, check out this great app to calculate the real value of that business.    This will help you find your way through the maze and has been designed by a certified business valuer,  and is easily accessed. (I respect their professional ability but have no vested interest).

 A 'Quick Business Appraisal' APP is currently available for IPads & IPhones.

http://itunes.apple.com/au/app/quick-business-appraisal/id452170755?mt=8&ls=1

An Android version is also available from Google Play:

https://play.google.com/store/apps/details?id=com.quickbuiness.appraisal

As it turned out, the business that was being looked at we began with, was just sending up too many warning signals for it to be a good buy for the person who asked for help in assessing the deal. 

Thankfully, he wasn't made a fool of in that deal, but he'll know a lot more about what to ask for in future as he looks for a business to buy.  The right business, for the right reasons.  

Related business articles:

When it comes to starting a business - passion alone is not enough
How to tweak your business for more sales
How to step-up in you business for better results
Prepare now for that business you want to sell later
Make your five year plan for life goals and for your business vision

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Unconscious Strategies You Didn't Know You Had And How To Make Them Work For You

"I don't use a strategy in my personal life. I don't have any plans."

That's what most of us probably see as a true statement.

In fact it is probably not true at all. We are creatures of habit and that habitual behaviour, if you were to study it would reveal patterns that repeat over and over.

How we buy things, is a great example of our unconscious patterns of strategy at work. What is really interesting is that companies are now using technology and neuromarketing techniques to track our spending patterns across the web and use this to sell us more junk. Yet we are largely unaware still, of our own patterns. There is something that strikes me as wrong with that arrangement.

An unconscious strategy is an internal process around an action that we take. It may start with an action to be taken, incorporate a feeling that we have about that and the action that we take next will pass through a series of filters that will affect when we do it (now or procrastinate), what we feel about doing it, what other actions we need to take on the way to doing it and the order in which we do these things. For example if you are leaving the house, it makes sense to check that you have your keys in your hand before you pull the door shut - and not after.

An example of an unconscious strategy might be the one we use for buying things. Buying strategy for a big item like a car might look something like this:

For others, they have a different set of conditions as their criterion that must be met before they will buy.

Sometimes the strategy that we use already for certain things works perfectly. Other times we may be using strategies that are not helping us and may be causing us problems and getting us results that are not working for us very well at all and giving us results that we don't want.

Knowing that these strategies exist mean that we have options now, to review and revise and even borrow strategies from others who are really good at doing those things that we are not so good at.

And that's a fantastic strategy!




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Related articles on Goals

Goal Checker - A Tool To Use

Beliefs and Goals

How To Set Goals You Can Reach

Focus Before Goals 

Steps To Creating An Achievable Outcome

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"Comfortable" The Hidden Disease

I wrote this way back in 2006. I think it still stacks up.

What have I learned since I first wrote this? I think we can have a very poor understanding of our feelings and what we tend to assume is comfortable is not the deep, sink in and feel wonderful and cosy feeling that is really comfortable, but just a dry, dull absence of real pain. We can wander about with this 'feel nothing' feeling and not even know that this is less than the good feelings we could be enjoying every day. Much like the difference between being truly happy, and being not unhappy.

Why You Should Be Uncomfortable About Being Comfortable 

When Self Deception Masquerades As Comfort

Seldom do we consciously realize there is a little voice that resides in our mind. It whispers to us, when an opportunity presents to us, saying that “we should not take the risk”. The voice just like our parents used when they talked to us, when we were tiny tots. It reminds us that we should keep doing what we’ve always done, because that’s where we are comfortable. Safe. Keeping to a known quantity, where we know what to expect. Familiar territory.

We listen to that voice as we are growing up. Eventually it becomes so much a part of our experience, that we internalize those instructions to the point where we no longer need someone “outside” to tell us – because now we’ve incorporated it into our internal landscape. It’s where we learn to know to verify what we know and convinces us what we should do. It’s where we know how to get what we get. It’s the voice that has kept us doing those things that are comfortable and sometimes it shares the space in our head with other voices, When you bring them to mind, you may recognize when you think about it, that those voices belong to someone from your past. Perhaps a mother, or a father, or a grandparent. Bring the voices to mind now and see if you can locate who the voices remind you of... both in the tonality of how they sound, and in the kinds of things that those voices say to you. Is it someone you know? Is it your own voice you hear when you listen?

What those voices have in common is that they share a single intent, Simply, the intention is to keep you safe.

They all want to save you from disappointment, or accident, or harm. Just like they looked after us when we were a small child with little experience, and fewer resources in both emotional, intellectual, education and personal skills than we have now as adults.

So how do you know when to trust those voices, which whisper to us and urge us to keep to the safe, the known path; those little voices that want only to keep us safe, the only way they know how? Learning to respond now with all the resources you have as an adult, and not as the child that you once were - vulnerable and with limited choices - is the beginning of personal growth and the start of living a self-determined life.

Now what I'd like to ask here is what you do in your own life to visit some of the assumptions that we make on 'Automatic'.

Have you begun yet, to question those things that you just know you know?

Lindy Asimus
Business Coach
Mobile: 0403 365855
lindyasimus@gmail.com
www.lindyasimus.com
www.designbusinessengineering.com

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Check Your Website For Roadworthiness

The world is governed more by appearances than by realities, so that it is fully as necessary to seem to know something as to know it.  -- Daniel Webster

Your business has cars that you check on each of them for safety before you assign it to be driven, right? You have made sure that it is fit to be on the road, that it is reliable to get from point A to point B and that the tyres are not worn out and the pressure is correct. There is oil and fuel in the tank and the registration is up to date and the seatbelts all operating as they should.

Your Website Vehicle 

Well we talk about traffic online and this is the currency of business.
How much traffic is there? How much of that traffic converts to sales?
That's what keeps businesses going and that is the beginning and the end of what any business owner in any field should want to know about their business whether it is online or offline or hopefully, both.

So since we are talking traffic terminology it makes sense to think of the vehicle by which the traffic is generated.

It is clear that many businesses who have a website do not maintain them as they would their fleet of vehicles and since the website has the potential to bring in new business, this is rather hard to understand why it is so.

Let's just investigate how a business might undergo a Roadworthy test with this checklist. The answers to these questions, should be known without hesitation by the owner of the business. No exceptions.

So here's your pop quiz! Now these do not represent an in depth list of questions that you should be monitoring but it is a very quick and dirty method of seeing if your website needs a service.


Your Website Roadworthiness Checklist

How do you measure your traffic to the website?

What are the top keywords people are using in search that brings them to your business?

Do you have a conversion system for your website?

What description about your business is Google picking up?

How are you using local search for growing your share of sales in the local area?

What pages are most visited on your site?
What websites are linking to you?
Which external websites are sending you traffic?

What percentage of your business comes from web compared to offline sales?

What is the turnaround time for enquiries to your website?

What facility is on the website for people to buy from you today?

If you have a shopping cart system, what is the dropout rate for those shoppers who don't complete a purchase?

What are the key words for which you want your business to come up, when people search?

In what way are you incorporating social media with your website and offline to generate traffic?

You have a process for monitoring your reputation online so you know what is being said about you and the business online.



In Summary

If you don't know the answer to these questions, then you need to get the report on these from your employees to you right now.

If you can't manage to get the report to you in short time, then this indicates you have issues that go beyond the website that need to be reviewed too.

These are just some of the obvious things that a business owner needs to be managing in the business. There are many more that you should know especially if you are paying for adwords and the like as well as issues of a more technical nature that can and should be measured in addition to these.  And it is a good idea to get these monitored by someone outside the business  from time to time - at leaste once a year, to ensure that you are getting the best advice from those inside the business whose job it is to oversee your web presence.

There are many ways to tweak a website for better performance and some of these can be done very easily and quickly.

So how did you go?

Happy with the result you achieved on this test?

If you are less than happy and would like a review of the rest of your website contact me now and let's investigate before there is any more damage.

Related posts

How To Set Goals - And Reach Them

The Dirty Secrets Business Needs To Know About Social Media

Why You Need To Build Your Mailing List And How To Do It

How To Get Your Local Business Found Online



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