How to read business figures and value a business

POSTED IN Buy And Sell Business, Buying A Business, Selling A Business

Business Advisors Matt & Liz Raad, Mal Emery

A couple of weeks ago we presented onstage at Mal Emery’s event about buying, building and selling businesses (awesome workshop by the way!) and over the course of the weekend through speaking with the many various business owners there I was reminded of the importance of business owners being able to clearly interpret their own business figures and understand how to value a business.

This is the one area of business where we constantly see business owners make big and costly mistakes because they have no idea (or maybe they are burying their head in the sand?). If you can’t interpret your businesses figures in a practical way you will really struggle long term in your business and you will make wrong business planning decisions that will hamper your business growth.

What is particularly scary to us is that we see business owners rely on their financial advisors like accountants who don’t tell them until its too late that they are losing heaps of money. When I first became a business broker this constantly surprised me as I would often come across business owners asking for me to help them sell their businesses that were clearly going backwards rapidly to the point of being bankrupt. What actually amazed me the most is that you could see in their figures (that were prepared by an accountant) that the business had been struggling and in serious trouble for several years – why didn’t the accountant start giving them some serious warnings or business advice years ago rather than wait. Often the business owner had no idea until too late and yet if they knew how to read figures in a PRACTICAL WAY they would have been fine and could have made better business planning decisions.

If you are in business or thinking of buying a business, make sure you understand how to read business figures in a practical way and especially how to see any red flags in the figures and what you can do about it. This kind of business knowledge will definitely pay-off for you on your entrepreneurial journey and it’s actually not that difficult.

Why can I say this so confidently? Because ALL the successful business owners we know (and especially those that made millions from buying and selling businesses) could read, understand and interpret business figures and value a business. I was lucky that I got to work with these guys personally and see how they did it. Most had their own unique ways but basically at the end of the day I noticed that you should be able to value a business and work out what the business is doing “on the back of an envelope” as a first sweep and 9 times out of 10 this would turn out to be a reasonably accurate business valuation.

Liz and I are quite passionate on this topic to make sure business owners are empowered in their own businesses to be able to read and understand the figures themselves. So I am looking forward to this weekend teaching our high level coaching clients exactly how to do this at our upcoming inner circle mastermind and boot-camp.  I have decided that in addition to the usual mastermind I will run a special session on reading business figures. We are also going to hotseat some of clients figures because as a group I believe we can learn a lot better doing it as a hot seat as the actual owner is sitting in the room with us to explain what has happened in the business (rather than just trying to read off the figs).

Obviously, for the majority of you reading this article you are not going to be at our boot-camp, but I urge you to make the effort understand your figures in a practical way (not some “theoretical” way) and review your figures regularly so that you can make more accurate business planning decisions which will ultimately help you be more successful in your business growth.

 

Why It’s A Great Time To Be Buying and Selling Business

POSTED IN Buy And Sell Business, Buy and Sell Websites

We just finished the webinar with Mal Emery, and it was great to hear his no-holds-barred attitude to getting out there and buying businesses to sell.

We know it’s a fantastic time to be buying and selling websites because we’re right in the middle of the online boom, with valuations rising and the amount of serious money invested into online business growing by the day.

But it’s also a great time to be buying traditional offline businesses to sell as well. There is currently a “cleanse” happening as Mal tactfully put it, with lots of businesses going under and many more finding it tough. Many of these businesses are good businesses in disguise – run down by the owner because they really dont know what they’re doing.

And if you’ve got the knowledge and skills to turn them around, you can negotiate yourself a fantastic deal on the buy, and then sell for a great price relatively quickly. As we say, there’s always a market for a good business, “a money making machine” as Mal puts it.

We’re really looking forward to presenting at the Cash-Out event this weekend, we’ll be sharing our strategies for turning a business into a highly sellable fortune, and also our profitable online buy and sell strategies.

If you would like to attend, there are still places left – but not many after tonight with the webinar full to capacity and having to turn people away, we’re sure the same will happen for this weekends event.

Click Here if you would like to book in

See you there!

Matt and Liz

 

 

 

Join Us Live With Mal Emery!

POSTED IN Buy And Sell Business, Buy and Sell Websites

Join Matt and Liz Raad LIVE on Tuesday night with the “Millionaire-Maker” Mal Emery on a special Buy and Sell Business Webinar.

You’ll get to hear how Mal has made millions of dollars from buying building and selling businesses, and how he does this with as little as $1! Plus you’ll hear how we make fast cash-flow and profits from buying and selling online businesses and websites.

Best news is – it’s FREE!

Places are limited so click here now to reserve yours now!

 

Matt and Liz Raad – The Talk of Australia

POSTED IN Buy and Sell Websites, Workshops

Your promise to deliver The Secrets of How to Buy and Sell Websites was honoured
100% and MORE.

Today your amazing energy and knowledge is spreading like wild fire throughout Australia.

From stage your eyes must have been dazzled by all the light bulbs going off from the spell bound 200 plus attendees of your 3 day seminar.

Your ears must be red hot and burning because Matt and Liz are in our conversations and thoughts. Sometimes as whispers keeping you our secret, other times shouting your names to the heavens, finally two down to earth true blue Aussies, crikey you’re even the experts on Kangaroos.

Every conversation I heard was filled with absolute praise for your generosity of time and knowledge.

I regularly attend seminars on self  development, property and internet marketing (sadly it’s part
of my social life) and I have NEVER experienced the awe and love that every one had for the both of you.

You have and are something very, very, very special (using a pun from the weekend).

If I was asked to describe my personal experience of the last 3 days in just one word, it would be DYNAMIC and this would still not really do you and your seminar justice.

I can say this because I saw attendees in the streets, at dinner and the airport. If we did not actually
recognise each others faces or had made personal contact during the 3 days we could tell each other apart from the crowd by the sparkle in the eyes, the slight knowing smile AND the biggest give away was the light bulb hovering around the head that was not just bright and shiny but SPARKING.

If any one walked away from your 3 days without at least one idea welling up inside of them, then their temperature needs to be checked to see if they’re still alive.

Personally I have 89 jamb packed pages of pure, life altering notes, ideas and examples.

I had a major light bulb experience which woke me at 5am this morning and have commenced action.

All of this delivered without any Ra Ra hype. We didn’t need to do massages or stretches to keep
us awake.

Your non stop delivery of fact had us gob smacked.

Your examples of the good, the bad and the ugly websites that have sold, with full explanations on each, certainly opened our eyes as to what is possible for us at any level of experience.

Without giving away too much, the magic numbers to aim for and how to plug up the holes …

The rags to riches stories that are happening right here, right now set off the light bulbs for so many of us.

Matt and Liz Raad you are True Blue Aussie Entrepreneurs.

To say thank you seems so ho hum, but what else can I say except a very, very, very heart felt
THANK YOU

Sue Elliott

http://www.bestbarfurniture.com

Matt and Liz’s 4 Golden Opportunities For Buying and Selling Websites

POSTED IN Buy and Sell Websites

 

The marketplace for buying and selling websites is growing quickly, and buying established websites is a fast and easy way to boost your online income and get targeted traffic to your existing business or ebook or membership sites.

It’s early days for this online boom, which means there is still plenty of opportunity to find rundown or undervalued websites to renovate and sell, or keep for the cash flow – just like real estate!

However just like in real estate, there are both good and bad online properties. So before you rush out and start buying up big, it’s worth educating yourself and having a clear strategy in place.

The most common mistake website buyers make is paying for a website that actually has no value for them. The only reason to pay good money for an existing business is because it is going to save you TIME and MONEY. When you pay for a business, you are paying for the convenience of everything already being set-up and running, and preferably making money!

In this article we want to share our 4 Golden Opportunities to look out for when buying and selling websites, which should keep you from making the most common mistakes that new website investors make.

When you are looking for a website to buy, it should have at least one of these elements:

Opportunity #1: PROFIT

A website that is making a profit means it has been proven in the marketplace and also means instant cashflow for you. It is far easier to quickly make more money from an already profitable website than it is to launch a new, untested one. Buying websites with existing profit gives you INSTANT online cashflow, which can then be used to fund the renovation, or buying more sites.

Often it will only take some simple changes to copy or layout, or even updating broken links or outdated information to considerably increase conversions and profit on the site.

The other benefit of a profitable site is that you can take an already proven system and just add more traffic to make more money. Then you can either keep the extra cash flow or sell on for a good profit.

Opportunity #2: TRAFFIC

After profit, the most valuable part of a website is the traffic. Think about how much it would be worth to you to have thousands of targeted people finding your website and product every month!

But it’s amazing how many people build up a great position in their niche, have good rankings on Google and get lots of traffic every month, but don’t make any money from their site. This is a golden opportunity for you to buy the website at a bargain price, and then offer that traffic something to buy.

So don’t get caught out like many first-time buyers and choose a website that has no traffic, it’s not worth anything unless it is already bringing in the customers.

Opportunity #3: LIST

If a site has no profit or traffic, then the other reason you may buy is because it has a list. Lists can be incredibly valuable as the people on them have asked for more information about a certain topic, or have formed a relationship with the website or business. Again, this is an opportunity to offer products or services that the previous owner has not, especially if they are products or services that you already provide.

Opportunity #4: NICHE

The fourth opportunity when buying websites is to find sites that fit in with a niche where you already own money-making sites. You can use these niche sites for links, or for directing traffic or adding credibility, but also for dominating your marketplace. Imagine if you owned not only the site that was ranked #1 in Google for your keywords, but also the sites ranked #2, 3, 4 and 5.

If you always buy websites that have at least one of these four elements you will ensure you have a valuable online asset that you can sell profitably in the future.

To learn more about the new online boom and making money through buying and selling websites, don’t miss our new 3 day workshop “How to Buy and Sell Websites on the Gold Coast 8-10th July 2011. Visit www.howtobuyandsellabusiness.com/websites for more details.

The Top 6 Business Tips For Timing Your Business Sale

POSTED IN Recommended Reading, Selling A Business

As we mentioned in our previous article When to sell your business is a frequent question we get asked as business brokers. In this article we are going to share with you some of our best business tips regarding the timing of a business sale that will help you plan your exit strategy and make sure you achieve the best outcome.

Business Tip #1 to help you consider timing: We suggest keeping an eye on the general overall market and pick when the market seems buoyant for business sales. Look at what the really big players are doing are there big business sales and deals occurring such as mergers and acquisitions being reported in the financial press? Are there lots of new IPO's (new companies being listed on the stock exchange), or are Private Equity firms making big or lots of acquisitions? We have noticed that the big business sales can give you a reasonable indicator of the market and buyer activity even if you are selling a small business as it all has a knock on effect.

Business Tip #2: Exit Strategy and Your Instincts Knowing when to sell your business can often come down to gut instinct. If you feel it is time to get out on a gut level then it is probably wise to pay attention to that gut feeling or instinct and start the process of selling your business.

Business Tip #3: Your Personal Goals In the end timing will often come back to either your life goals and/or your personal situation. If part of your goals were to retire at age 60 and you are now 59 then the time is right to start selling up and implementing your exit strategy. Sometimes your personal situation may force you to sell your business e.g. health reasons, partnership breakup etc or a competitor may come knocking wanting to buy you out for a top price – Side-note: More good reasons to make sure your business is always prepared for sale!

Business Tip #4: Define the selling parameters You will need to determine your selling requirements just the same as a buyer needs a buying a business checklist. Just like a buyer, you will need to create an organised plan as part of your exit strategy. Remember that you as a business seller will be asked to answer lots of questions by not only your buyers but your intermediaries such as business brokers as well. You need to be ready for both. You need to understand the business sale from your buyers point of view so we suggest as part of your preparation for the sale you understand the sorts of questions they will ask. If you want help with this in our How To Buy And Sell A Business e-mentoring program we have included detailed lessons on a typical buying a business checklist that you need to understand.

Business Tip #5: The year leading up to your Business Sale Don't go spending your valuable cash on new capital equipment, fixtures and buildings etc leading up to your business sale. You will rarely get it back through the sale. If you must purchase new equipment for the business and you know you are going to sell your business in the next 12 months, it is far better to lease it. We see many business owners make this simple mistake and realise it too late.

A Case Study to illustrate what we mean: A client of ours spent over $100,000 on a new piece of industrial equipment (printing and packing machine) in the year that his business was to be sold. This $100,000 piece of capital equipment went straight to his balance sheet. The buyers did not care what the actual value of the equipment was as they were only interested in paying a sale price based on a multiplier of the net profit. Whilst our client viewed the equipment as highly valuable, the buyers really didn't care whether it was worth $200,000, $100,000 or $20,000. They were only interested in the net profit of the business and their offer was simply x4 of this amount. It didn't matter what the equipment was worth. After the sale, my client realised that he had just effectively spent (and thrown away) a needless $100,000. If he had just leased the equipment the new owners would have been just as happy taking over the lease, thus my client would not have had to outlay $100,000 of his own cash.

Business Tip #5: The Final Consideration on Timing Your Business Sale… Are you willing to devote the time needed for your business sale? Many business owners do not consider the effects of the sale process on their business time-wise. A business sale does not happen within a few days or generally even a few months. Remember, this is a process that will take time and energy on your behalf. Make sure when considering the timing of your business sale that you have the time and energy to devote to the sale as it can take up considerable amounts of both depending on the deal. Following these business tips will help you in planning your exit strategy and in deciding when to sell your business. As business brokers we take our clients through each of these ideas in planning their business sale so that they are well prepared and get the timing right for their business sale, and most importantly they are realistic about the sale process.