Marginal Value in Business

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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.

There are several different valuation models used in business. For smaller businesses, the preferred model is the multiplier of discretionary income method. This particular model utilizes 10 categories of business analysis and grades each separately. There is a weighted formula whereby each category is given a priorty over others. For example, the most important weighted factor for any business valuation is stability of earnings. The least weighted factor may be industry compliance (licensing, certifications, education etc.). Each category’s grade is multiplied by its respective weighted factor to accumulate a final score. This score is then divided by 10 to determine the mulitplier of the discretionary income to derive final value of a small business. Larger businesses use other models. The idea is to determine the respective factors that leverage value with business.

This section is dedicated to increasing the value of your business. Understanding the basic formula used by business brokers, CPA’s, and authorities in valuing a business is a prerequisite to action. 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.

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.

Value Investing Episode 1 – Introduction and Membership Program

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