Listen to Episode 185
Today, we’ve invited Jenny Letts onto the show. Jenny is a forensic accountant based in Brisbane. She founded the firm in 2013 after spending 15 years helping business owners going through a separation or conflict. We invited her to join us because this month we’re talking about getting your business ready for a sale. Getting an accurate appraisal of your business is critical to obtaining a fair price. Jenny reveals some metrics you can use to know your value.
Jenny works with personal, corporate and government clients across a broad range of matters, including appraisal and valuation, tracing of assets for commercial and technical purposes and economic loss assessments. With extensive experience in forensic evaluation Jenny has the ability to deliver successful outcomes for lawyers and their clients.
Getting fair market value
An easy way to value you business is be calculating three times your earnings. That’s an old-school rule of thumb but it may not be accurate. If you’ve created systems to run the business efficiently those are worth money. You have to valuate your business on an individual basis.
Write down all your systems and processes. Write down each person’s role in your company and detail their responsibilities. The easier you make running the business the more money you can sell it for. With a detailed system in place you can achieve a very high multiple when you sell.
More than just the business
There are other aspects of your company that could add value to a sale. Examples include intellectual property, patents and copyrights. Branding can also add value. Each of these aspects of your business could themselves be spun off and sold individually.
Know your customers
Know where your customers are from and how much business you do with them. Have detailed information about your conversion rate. Also be aware of any potential risks in your customer base. If 90% of your customers come from one industry you will be in trouble if that industry falls on hard times. The more streams of revenue you develop from diverse kinds of customers the more your business is worth.
How did you make your first dollar?
In primary school I sold friendship bracelets.
What book should every business owner read?
More about this Show
We started Business Legal Lifecycle to create a simple way for you to understand complex legal terms. Most importantly we want to help you to develop a plan to take your business successfully into the future. There’s a startling statistic the underscores the importance of developing a solid plan. The majority of business owners are just seven months away from losing everything. A single aspect of your business that is not set-up correctly can shut down your whole operation very quickly. Legal advice is not cheap and even when you can afford it there is often a divide between lawyers and their clients. We want to close that gap once and for all. We want to put legal knowledge and tools into your hand to prevent the worst from happening to you.
Twice a week we are going to deliver those tools right to your home or office with Business Legal Lifecycle TV. We’ll start the week with Fast Fix Monday, a short 5-10 minute video that will tackle a single issue that businesses have to deal with. Then on Wednesday’s our main show will feature with more fulsome discussions and interviews all delivered in a straightforward and easy to understand format.