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What Is My Business Worth

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At least once a week a dealer will ask me what I think his business is worth. A business broker friend of mine tells his clients that “your business is only worth whatsomeone else is willing to pay for it ... and that may be a whole lot less than you thought.” Concerns over decreasing values of wireless businesses are real but don'thave to be cause for panic. Unfortunately, the days of getting multiples of revenuewith a cursory glance of the balance sheet are gone.



The failure of so many “dot-coms” has given new meaning to the words, duediligence. The process has become much more complicated and the computations much more intricate. The factors that now determine the overall “worth” of a business in today's climate reach well beyond the scope of the businesses' bottom line.

Our organization doesn't sell businesses, but we do help them get ready to sell. The good news is that there are steps you can take to dramatically increase the value of your business. The criteria and questions below represent a great exercise for all businesses, regardless of whether they are considering looking for a buyer or not.

We find that most businesses don't really know the answers to a lot of the questions, but some can quickly double or halve the perceived value of their business in the mind of a potential buyer by putting some relatively simple practices into place. These items are critical to the overall health of the business. When someone asks usto help a business increase its net worth, we begin by looking at the following areas:

Profit & Loss Statements

Most financial analysts will look at the “quality” of your data and “trends” overthe last two or three years to determine if your business is on the rise, or on the“demise.” First they'll look at the bottom line to see if there is one. Then they'll lookfor trends, and most importantly, if your net profit as a percentage of revenue is rising or falling. The final test is to determine if the percentage is healthy enough tomake a buy recommendation to a potential purchaser.

Portfolio of Products and Services

Do you have a mix of products that makes sense for your business? Is each category profitable? Some dealers think they need to carry every wireless carrier to be able to serve the needs of every customer that calls or walks in. This is more often than not a very unprofitable way for a dealer to go to market. Instead of having an outstanding relationship with one or two manufacturers or carriers, they diversify their business to the point of having very little leverage to negotiate or receive additional support because they demonstrate no loyalty in return. In most cases, we recommend that dealers pare back the number of products and carriers they representas a means to INCREASE their sales and profitability.

Expenses

Are your expenses in line with revenues? A major red flag goes up if yourtrend shows expenses growing faster thanrevenues. This signals trouble to potential buyers. Look at your key expenses as a percentage of revenues and compare them with the last two years. Keeping fixed and variable expenses in line is critical to business valuation.

Revenue Areas

Today, most buyers are interested inbusinesses that are growing. If your sales and margins have been steadily increasing, you pass the first test. Next comes alook at whether your manpower levels are appropriate and productive. Retention and experience counts too, as expertise is valuable to both customers and buyers of your business. What are your “costs of sales” as a percentage of revenue? There are a lot of things you can be doing to drive sales up in your operation from providing sales training to performing sales meetings. A management and motivation process similar to the popular CDI Beat Your Best™ program demonstrates structure, measures results and adds value.

Customer Base

One of your most valuable assets isyour customer database. The number of “active” customers and the average value of a relationship over time are key ingredientsfor determining the “worth” of a business. Thus, the business with processes and procedures for maintaining and growing customers over time are worth more. These are some of the most important criteria for determining a business's worth and we could certainly spend a lot more time on each category and how to build it. Other items such as fixed assets, real estate, infrastructure and recurring revenue streams are also important considerations. This outline will provide you with the basis for creating a written plan for improving each one of these areas. Buyers today are a lot more critical about the value they place on your business. The more you can do to impact each of these areas, the more your business will be worth to a potential suitor. As my friendsays: “Your business is worth exactly what someone else is willing to pay for it.” Now that you have a better look at what someone else will see, “what's your business really worth?”
What Is My Business Worth
If you are already advertising on the internet, you know the costs of having banners or pop up ads. Video advertising is not that much more and is twice as effective. If you do not believe this check it out. You can try this for a month and see if you get more stats on the video ads or the banner ads. Most advertising engines agree that their customers get many more views on their video advertising than plain text or even photo advertising.

Cost will depend on how you wish to use the video to market your business. If for example you simply want to use a video on your website, it will not cost anything, besides the uploading of the video into the website. If you want a more professional looking video for your website, there are plenty of companies out there that provide this service for much less than text advertising. You can have a slick ad or you can have one that is home made. Sometimes, the home made videos tend to stand out more.

It will cost you slightly more to have your videos featured on other websites where you advertise. More than a banner ad or a line ad. But again, how much is your business worth to you? If you want to see how effective this medium is, test it out.

If you have a small business and want to advertise for free, there are plenty of places on the internet where you can post your videos. They will also give you stats on how many people have viewed your video. On some websites, the videos are rated.

There are many professional companies that can help you out with video advertising. They can offer everything from creating the video, uploading onto the proper websites to even using it in e-mails to your clients. Many businesses keep a data base of their clients. If they don't, they should. From time to time, they have sales or promotions and wish to contact their clients by e-mail. E-mail is very inexpensive. Actually, it is free. You can either hire a professional to e-mail your clients your advertising video or do it yourself to save even more money.

Writers are gaining publicity for themselves by using videos on writing websites. They upload a video of themselves and talk about their work. This is an excellent way to get people to read your work, particularly if you are on a site that pays you for page views. You can do this in an interview format, or simply have someone film you talking about yourself. This is free.

You can also promote yourself or your business on YouTube for free. Or MySpace. Camcorders have come down significantly in price. Many are around $100 or even cheaper. Each year the price goes down and the quality goes up. They are easy to use and the contents can be uploaded to your computer with ease. Then all you have to do is decide where you want to “advertise.” If you are advertising a small business, your art, or even a political cause, you can put it on a site that offers free video uploading. When you compare the cost of video advertising on the internet to an actual commercial on television, you are talking apples and oranges. Video advertising is much cheaper and even small businesses can afford a professional agency that can take care of this for them.

How many of you get e-mails from businesses with which you have previously had a relationship? Most of you do, I would suspect. Even if you clicked on their ad by some mistake, they will contact you via e-mail. As said previously in this chapter, e-mail is free.

Now imagine that you get an advertisement from a business that has a very funny video attached to it? You will be entertained and not forget about that business. It may even prompt you to take a look at their sale or new promotion.

I saw one of the most effective and clever uses of advertising on the web recently. I was taking a look at shower filters. Instead of just a website, like most of them, that featured shower filters and explained the advantages of having one of these gadgets, this one had a scene from the movie “Psycho.” Yes, the shower scene. The caption was “Remember when the only thing you had to fear about the shower was….” and then it stopped. We saw the familiar scene of Janet Leigh in the shower and “Mother” coming through the door with the knife. It was clever, entertaining and certainly caught my attention. In fact, this was the company that I decided to purchase the shower filter from.

How much did this ad cost them? A little more than a regular video ad. The film “Psycho” is not in the public domain so they had to pay synchronization rights to the producer to use this on their website. But synchronization rights on film even for the internet are based upon seconds. They did not have to pay for the rights for the entire film, just a brief portion of the shower scene.

If you have a clever imagination, you can film your own video that will attract attention to your project in the way that this shower filter company did. You can purchase synchronization rights from film producers if you want, or you can simply make up your own video. Also, be aware that many films made prior to 1962 lie within the public domain. This means that they are free to use. Clips can be obtained from all over the internet, or can be downloaded from your television or DVD player. You must make sure that the film is in the public domain, however. The way to do this is to check with the United States Copyright Office. There is also much information about which films lie within the public domain on the internet.

No, it is not expensive to advertise using video on the internet, particularly if you are advertising on your own website or e-mailing your customers video advertisements. Just make sure that the advertisements are not too long or it may bore the customer, no matter how entertaining it may be. You do not want to go more than 30 seconds.

If you decide to use an internet advertising agency, they can keep track of the amount of customers who view your video and make sure that they are placed in the proper venues.

The cost is not that much more than banner ads and may be well worth it. Banner ads are sometimes clicked on by accident, giving false stats. A video ad, however, can be managed where the person has to click on to the “play” button to view it. Once they begin viewing, chances are that they will continue to do so. Either way, at least you will have an honest count of viewers when it comes time to pay Google or whoever you are using for your internet advertising. In a way, the difference in the quality of the views more than makes up for the price difference in advertising.
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Both Mark Landiak & Sam Stevens are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.

Mark Landiak has sinced written about articles on various topics from Advertising Guide. . Mark Landiak's top article generates over 720 views. to your Favourites.

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Antique Chinese Tea Set
So check that out as well if its available on the site! These sites will also offer sake once in a blue moon and usually its of good quality considering its an oriental site!
 
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