How To Value A Business In Turbulent Times? Let’s explode another of the myths about business valuation in turbulent times. We are living in turbulent times right now. How do you know you’re in turbulent times, here are a few sure-fire signs. There’s a sudden change or maybe even a gradual change in consumer preferences and habits. You have to be on the lookout for these and be prepared to adapt and change your own behaviour. We are in times of stiff competition from other businesses with similar goods and services. Be it locally, or internationally. There’s low consumer confidence – spending is down and this leads to a reduction in your sales. Have a look at your sales throughout the year and watch for change in sales and what might have caused them. There’s a sudden rise in the cost of production or doing business in a given region. Check your costs in each line item as a percentage of sales.
Political uncertainty, which leads to a reduction in consumer confidence. This happens leading up to an election but also when there’s general political unrest. Businesses are unsure of where government stands on particular critical issues. Governments play a major role in affecting businesses and their success either by direct or indirect regulation and legislation.
Here are some tips on how you can avoid risk and damage associated with turbulent times. Broaden your product and service offering so that you are not reliant on one or two major products or services. Broaden your clients so that you are not reliant on one or two major clients. If possible, no client should be more than fifteen percent of your business. Have a good mix of full-time, part-time, casual and out-sourced staff. That gives you flexibility with staffing arrangements and an ability to make an adjustments to your expenses.
Review your suppliers and look for savings. Is there a more competitive price for your telephone supplier? Can a bookkeeper do part of what your accountant is currently doing. Go through every line item.
Preserve your quality of service so that you are not as reliant on price to compete. In tough times, prestige goods and services generally maintain their volume. Relationships really matter when things go wrong, so always keep a good relationship with your customers and your suppliers. As always, you need a business broker to assist you in this process. However in turbulent times, a need for a skilful, professional advisor is even greater. It could mean the difference between selling and not selling.
How do you know you are in turbulent times?
You will find:
- High or stiff competition from other businesses with similar goods and services.
- Changes in consumer taste and preferences.• Low consumer confidence which leads to reduction in consumer spending.
- Climate or weather changes that may adversely affect buyer behaviour.
- Sudden rise in the cost of production or doing business in a given region.
- Political uncertainty which leads to a reduction in consumer confidence.
- Businesses are unsure of where government stands on particular critical issues.
There is no doubt that in turbulent times business buyers are more wary and hence you will have to work harder to make your business more attractive. The ways you can do this are as follows:
- Broaden you products and service offering so that you are not reliant on one or two major products or services.
- Broaden your client base so that you are not reliant on one or two major clients. If possible no client should be more than 15% of your business.
- Have a good mix of full-time, part-time, casual and outsourced staff. That gives you flexibility with staffing arrangements.
- Review your suppliers and look for savings. Is there a more competitive price telephone supplier? Can a bookkeeper do part of what your accountant is currently doing?
- Preserve the quality of your service so that you are not as reliant on price to compete. In recessionary times, prestige goods and services generally maintain their volume.
- Relationships really matter when things go wrong. So always keep a good relationship with the your customer and your suppliers.
- You always need a business broker to assist you in this process. However, in turbulent time the need for a skilful professional advisor is even greater. It could mean the difference between selling and not selling.
