Create more wealth by utilizing the concepts of marginal value.  Learn how to identify and maximize triggers in your business operation.  Use this information to generate feedback that automatically corrects business shortcomings.

This section is dedicated to increasing the value of your business.  You must first understand the basic formula used by business brokers, CPA’s, and authorities in valuing a business.  From this basic understanding you can then make major adjustments to those areas of the business to make significant changes in the value of your  business.  In addition learn how to tweak the little items and make large value changes in the overall sales price of your business.

Please understand that these are business related articles and are in-depth and educational in nature.  The primary goal of each article is to educate and provide insight, guidance and knowledge to the small business entrepreneur.

FEATURE ARTICLES:

  • The Cost of One Putt

    “That was ugly” quipped by brother. “Good thing you’re not a pro, your family would starve” remarks another brother. My playing partner just sneers at me. Another typical round of golf with family and as usual, I missed that dreaded 2 footer. For me, it costs a mere ounce of pride and some dignity which ...
  • Calculating the Value of a Business – Discretionary Income Multiplier Formula

    In the world of small business, the sale of a business is dependent on two critical elements.   They are DISCRETIONARY INCOME and the BUSINESS RISK MULTIPLIER.  These two elements are multiplied to create the overall value of the business operation.  In general, no small business operation is worth more than three times the discretionary income.  ...
  • Focus Groups – Adding Real Value to Your Business

    I often wonder how a business could get better if it didn’t know what being the best meant.  How could a small business entrepreneur determine he was indeed performing at or above the industry standard if there was no information available to say what was the best, average or poor?  There isn’t any real performance ...
  • Stability of Historical Earnings

    No other element of the Multiply Discretionary Income Formula has as much weighted value as the historical earnings of the company.  Every knowledgeable business entrepreneur, accountant, lawyer, broker, you name them; they look for this information first.  There’s a reason for this.  It really identifies the value of the company overall.  If you are really ...
  • Business and Industry Growth

    The second most weighted factor in the risk multiplier series for the Discretionary Income Multiplier Formula is business and industry growth.  This factor evaluates the overall change in an industry and in particular the business under review over the most recent three years.  As a small business owner, you need to understand the importance and ...
  • Marginal Revenue in Business

    The scholarly definition and reality are two different perspectives.  The student is taught that marginal revenue equals the additional dollars generated for an additional single unit of sales.  It is literally taken right down to the micro measurement.  This is simple to understand but in small business, the scope of its meaning and impact are ...
  • Fair Market Value

    ‘One man’s trash is another man’s treasure’ Value at the individual level is strictly personal.  But as more buyers for the same item come into play the price of the item begins to stabilize.  If there are hundreds of thousands of buyers, the price reaches a high level of consistency or what is called ‘Fair Market ...
  • EBITDA

    EBITDA is an acronym for Earnings Before Interest, Taxes, Depreciation and Amortization.   The value is generally known as operational profit before capital expenditures and tax obligations.   EBITDA is frequently used for estimating value of small businesses as the earnings component of the market comparable valuation approach; one of three approaches used to value ...
  • EBITDA – Buyer Beware (Case Study)

    In the article EBITDA the fundamentals of Earnings Before Interest, Taxes, Depreciation and Amortization were introduced.   In general EBITDA is commonly used with the market comparable valuation approach.   In that article it was illustrated how a simple income statement’s operational income increased $50,000 attributable to interest, taxes and depreciation based on the functional ...
  • EBITDA – Drawbacks

    This is Part III in a 3-part series.  Please read Parts I and II before continuing: EBITDA – Part I  standard formula and income statement adjustments EBITDA – Part II  balance sheet impact There are several business financial attributes required for EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) to work well as a basis for the ...

 

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