Q. In case a business owner is ready for transition planning, where to start?
I think the best place to start is to educate yourself about business transition planning. There are seminars like the one we are holding on November 3rd and there are lots of books to read on the subject of the book we are handing out at this same seminar called “The Business Transition Crisis” by Wayne Vanwyck.
As I mentioned before, it takes a different set of skills to plan for a business transition properly, and it is a wide field of knowledge requiring different expertise. It is, therefore, important to have a Transition Advisor to guide and educate you, as well help you along the way at a level of involvement that is right for you.
Q. How businesses are valued?
There are a number of ways that companies are valued, and one of the most popular methods is the discounted cash flow method. This approach says that the value of the business depends on how much cash it generates and how likely is the cash flow expected to continue to into the future, or in other words, how much risk does a potential buyer see in your business. We help increase the value of the business in both areas. We help increase the cash that the company generates, which doesn’t necessarily happen when increasing profits. We also help lower the risk in the business from a buyer’s perspective. Most business owners and consultants focus on just increasing sales and profits, believing that it will automatically increase the value, but that is not necessarily the case. It is surprising how much the value can be increased with some focus on decreasing a business’ risk.
Originally posted 2016-10-22 01:07:55.