Top 3 Reasons Small Businesses Fail

It's an interesting question, but not one that can be answered in any meaningful way without drilling down into the specifics of the business because in the real world, the valuation of a business has many variables including industry types, differing market sectors and individual levels of profit and risk that make any 'prophecy' of business asset valuation as reliable in outcome as taking a trifecta bet at a race track. This is particularly true in relation to a privately owned small business valuation whether the business is incorporated as a private company or operates as a sole trader. Apart from their annual Tax Return, privately owned businesses in Australia, are not obliged, to lodge financial reports with any statutory body or publish any details of their activities in the public domain. With publicly listed entities (companies listed on a stock market) there is more data for a business valuation company to analyse in the form of share prices, price to earnings ratios, historical performance and annual reports. Comparisons can be made between these indicators to determine a range of valuation metrics. Private businesses, however, are as different as fingerprints - no two businesses are the same because they are generally 'built' around the needs of the business Owner. Business analysis and valuation of private businesses must therefore, in addition to a study of the financials, include a detailed Risk Assessment and take into account the Return on Investment that the business makes for the Owner and the Cost of Capital to buy the business. What to Look at When You Want to Value a Business for Sale? Commonly, many SME (Small to Medium Enterprises) business asset valuations focus on the 'Return on Investment' (ROI). This is usually expressed as a percentage (%) and is a measure of the Risk to an Owner versus the Return. For a privately held business in Australia this should be between 20% and 50%. The closer to 20% the more 'secure' the business investment - the closer to 50% the more 'riskier' the investment. A business valuation report that demonstrates a ROI under 20% indicates that it would be unlikely to generate an investment (or a Bank would not lend the funds to purchase) - quite simply the return would not be enough (because of the liquidity - or ease of conversion to cash) to warrant the investment and a return of over 50% would indicate that there are significant risks which would be outside of the comfort zone of most investors and financiers. As a general rule, private businesses and the valuation of companies in the private space tend to be based on historical financials with the valuation of intangible assets based on the adjusted net profit (before tax) - called EBIT (Earnings before Income Tax) Adjustments are made to the Accountant prepared financials to 'add back' any expenses to the business profit which are discretionary to the owner(s) personally, plus 'book' expenses like depreciation of P&E and any abnormal 'one off' expenses like a non recurring bad debt to arrive at the real Net Profit (before tax) of the business. It is multiples of this Net Profit, tempered by the Risk profile of the business and the ROI percentage which will determine the Value of the business. But whilst most people ask for a private or corporate business valuation, what they really want to know is the PRICE. Value and Price can be two very different numbers. https://telegra.ph/How-To-Sell-BEST-BUSINESS-OPPORTUNITIES-10-23 https://controlc.com/7901b84d https://notes.io/Gvig https://anotepad.com/notes/3hrc5idr https://pbase.com/topics/beambook0/here_is_what_you_should_do_f https://riber-johannesen.blogbright.net/never-lose-your-best-business-opportunities-again https://raahauge-lundgreen.technetbloggers.de/what-can-instagramm-teach-you-about-best-business-opportunities https://authorplanet8.werite.net/post/2021/10/23/10-Ways-To-Immediately-Start-Selling-BEST-BUSINESS-OPPORTUNITIES https://larchuse4.bravejournal.net/post/2021/10/23/Master-(Your)-BEST-BUSINESS-OPPORTUNITIES-in-5-Minutes-A-Day https://www.folkd.com/submit/kevinpoitier.blogspot.com// https://zzb.bz/b6T6g https://bom.to/uwVdaU https://shorl.com/pirylabefesi https://s.id/ https://cutt.ly/9RTwn9F https://public.sitejot.com/pinecamp4.html https://flipboard.com/@raillink7 http://gematodiatrofi.hua.gr/wiki/index.php?title=You_Can_Thank_Us_Later__3_Reasons_To_Stop_Thinking_About_BEST_BUSINESS_OPPORTUNITIES http://archives.bia.or.th/wiki/index.php?title=Should_Fixing_BEST_BUSINESS_OPPORTUNITIES_Take_60_Steps https://www.transtats.bts.gov/exit.asp?url=https://kevinpoitier.blogspot.com/ http://pandora.nla.gov.au/external.html?link=https://kevinpoitier.blogspot.com/ http://www.astro.wisc.edu/?URL=kevinpoitier.blogspot.com/ http://sc.sie.gov.hk/TuniS/kevinpoitier.blogspot.com/ http://www.drugoffice.gov.hk/gb/unigb/kevinpoitier.blogspot.com/ https://www.pcb.its.dot.gov/PageRedirect.aspx?redirectedurl=https://kevinpoitier.blogspot.com/ https://www.misterpoll.com/users/larchlink72 http://lodserver.iula.upf.edu/describe/?url=https://kevinpoitier.blogspot.com/ https://historyhub.history.gov/external-link.jspa?url=https://kevinpoitier.blogspot.com/ https://bbs.pku.edu.cn/v2/jump-to.php?url=https://kevinpoitier.blogspot.com/ http://ezproxy.cityu.edu.hk/login?url=https://kevinpoitier.blogspot.com/ http://www.bsaa.edu.ru/bitrix/rk.php?goto=https://kevinpoitier.blogspot.com/ https://www.fcc.gov/fcc-bin/bye?https://kevinpoitier.blogspot.com/ http://gmprvolg.ru/user/pinebook0/ https://vuf.minagricultura.gov.co/Lists/Informacin%20Servicios%20Web/DispForm.aspx?ID=12589 http://www.alexandria.gov.eg/Lists/comp_new/DispForm.aspx?ID=704298 https://list.ly/pereirapratt022 https://www.pinterest.com/pereirapratt022/ https://www.mixcloud.com/amountlink5/ https://splice.com/amountlink0 http://bioimagingcore.be/q2a/index.php?qa=user&qa_1=pinebook0 https://vimeo.com/pineplanet0 https://www.wattpad.com/user/amountuse9 http://www.dellemimose.it/index.php?option=com_k2&view=itemlist&task=user&id=1867445 https://ask.fm/authorshape33 https://setiweb.ssl.berkeley.edu/beta/team_display.php?teamid=2778978 https://lib02.uwec.edu/ClarkWiki/index.php?title=How-To-Win-Clients-And-Influence-Markets-with-BEST-BUSINESS-OPPORTUNITIES-w http://git.radenintan.ac.id/desireshape8 https://www.bonanza.com/users/50684474/profile https://git.sicom.gov.co/beamskill9 http://www.nidiinfanziaolbia.it/index.php?option=com_k2&view=itemlist&task=user&id=3094504 http://www.eduvision.edu.pk/counseling/index.php?qa=user&qa_1=authorshape2 http://qa.supermap.com/index.php?qa=user&qa_1=railbook2 https://genius.com/porchshape1 https://www.ted.com/profiles/31135933 http://www.autogm.it/index.php?option=com_k2&view=itemlist&task=user&id=1980213 http://www.authorstream.com/porchshape9/ https://forums.ppsspp.org/member.php?action=profile&uid=1508996 http://www.sygk100.cn/home.php?mod=space&uid=8979639 http://www.ccwin.cn/space-uid-5444829.html http://appdev.163.ca/dz163/home.php?mod=space&uid=4131079 http://www.bbs.91tata.com/home.php?mod=space&uid=7761713 https://dailyuploads.net/8sar6nakqog7 http://www.docspal.com/viewer?id=uvebnfaq-19318344 https://www.file-upload.com/prgoglsu97mo https://files.fm/f/q5wv7m6pz What is the Difference between 'Value' And 'Price' when You Want to Value a Business for Sale? In the valuation of companies where the reason for the valuation is for the re distribution of shares for a Management Buy In, the price conclusion must relate to the market (is the sales market for this type of business up or down?) so that a base price can be determined at that point in time even though there will be no actual "sale" of the business. Similarly, in business valuation for divorce where there could ultimately be an external transaction to sell but in some cases one party wants to retain ownership of the business and buy the other party out. In this case both parties want to know the 'Fair Market Value' of the business so they can settle even though the business is not actually being sold. In essence, 'Value' can be entirely based on hypothetical theory whereas 'Price' in the true sense can only be based on "what the market will pay". Paul Nielsen is a graduate of Chicago's Loyola University School of Business Administration and is a Certified Mergers and Acquisitions Advisor (CM&AA). He holds qualifications in Australia as a Certified Practicing Business Broker (CPBB) from both the REIQ & AIBB, is a Certified Machinery & Equipment Appraiser (CMEA), Licensed Real Estate Agent, Licensed Second Hand Dealer and Accredited Sponsor of the Australian Small Scale Offerings Board. Paul is a Fellow of the Institute of Directors & Managers (FIDM) and an Accredited Senior Business Analyst (SBA) with the International Society of Business Analysts. For three successive terms Paul was the elected National President of the Australian Institute of Business Brokers (AIBB) and is an active Member of the Australian Institute of Company Directors. Operationally, Paul has served on the Boards of Publicly Listed and Private Companies as Chairman, Executive and Non Executive Director over a 38+ year period.