Value of our Business

BIG WOOD

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Georgia
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Matt w.
Every year, I like to see what my business is worth to give me more goals on increasing that number every year. So here's the formula I use that I got from the teachers in our industry:

Net before Taxes

Plus

Tax Free Perks

Plus

Charitable Donations

Plus

Adjusted Cash Flow

Divided by

Return on investment (.25-.50)

Plus

Fair market value of assets

Equals

Value of your business
 

BIG WOOD

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Location
Georgia
Name
Matt w.
The main question I have on this formula is why is the owner's adjusted cash flow used as a part of this formula? How does that play in what that number has to do in the buyer's decision to purchase your business? Why isn't the Gross income in this formula?

Because, for example, my business: I am dumping a ton of cash in my business right now, buying new equipment, marketing, making my image more appealing to the eye. Which costs allot of money, therefore reducing my cash flow. But it's increasing my Gross income. When the business is sold, they won't be spending the gross income on the same things I'm spending it on, therefore changing the Cash Flow. So that shouldn't affect the value of the business. But on every formula I've been reading...that plays a big part in valuing the business.

So can someone please enlighten me?
 

BIG WOOD

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Matt w.
Good news is, I have a very good answer to his 1-8 questions, which draws me closer to the .25 in my ROI. Bad news is the last few questions are nothing to brag about, which keeps me below my formula of .33 on my ROI. I feel that since I'm still an owner/operator, and my average invoice isn't worth bragging, then the Return of investment is nowhere near the goal of being .25 . So that's why I calculated it at .33
 
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bob vawter

Grassy Knoller
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La La Land
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bob vawter
The main question I have on this formula is why is the owner's adjusted cash flow used as a part of this formula? How does that play in what that number has to do in the buyer's decision to purchase your business? Why isn't the Gross income in this formula?

Because, for example, my business: I am dumping a ton of cash in my business right now, buying new equipment, marketing, making my image more appealing to the eye. Which costs allot of money, therefore reducing my cash flow. But it's increasing my Gross income. When the business is sold, they won't be spending the gross income on the same things I'm spending it on, therefore changing the Cash Flow. So that shouldn't affect the value of the business. But on every formula I've been reading...that plays a big part in valuing the business.

So can someone please enlighten me?
Sure....but then I'd have ta kill ya....!
 

bob vawter

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bob vawter
Tell me about it!

But I had a great run!

Picture a rather robust man
Jumping and clicking his heels
In the air.....
 
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bob vawter

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bob vawter
And what a shame. ...
I had my business within a 3 mi radius and was Killin it in the hood where the jobs were small and I owned complete streets. ....PLUS my big commercial accounts were great!

Crash decided he wanted to chase Mrs Phift with her big assed rooms 20 or 30 miles apart. ....
These kids don listen anymore and the truck is in his driveway ever time I pass his house.......

You can lead a horse to water
But sometimes it jus shits in the well!
The dealerships all closed up too...!

He does do the Chinese restaurant that I did forever
 
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BIG WOOD

MLPW
Joined
Feb 4, 2016
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Location
Georgia
Name
Matt w.
And what a shame. ...
I had my business within a 3 mi radius and was Killin it in the hood where the jobs were small and I owned complete streets. ....PLUS my big commercial accounts were great!

Crash decided he wanted to chase Mrs Phift with her big assed rooms 20 or 30 miles apart. ....
These kids don listen anymore and the truck is in his driveway ever time I pass his house.......

You can lead a horse to water
But sometimes it jus shits in the well!
The dealerships all closed up too...!

He does do the Chinese restaurant that I did forever
How many years was your business established in your area when you sold it to him?
 

bob vawter

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30 years.....I had 1250 steady custy that would clean from 2 to 6 times a year......

I worked the east side mansion gig for ten years before that....
I did the Lakeside Dr houses on the water...heated driveways and inside
Pools
I believe I mentioned cleaning the Romney mansion jus recently. ...

Ya. Ya. I know I should be rich.
 
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bob vawter

Grassy Knoller
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bob vawter
Ahh leave Matt alone....this is serious sh*t....I jus left my bidness go when I left the east side. ...then restarted in Pontiacrack. .....then it exploded when I did the south side...into something I wasn't gonna walk away from....
I'm here ta tell ya there' more money
In cleaning for the little old black ladies that want a clean house than driving all over trying to please Mrs
Phifts dumb ass....
 
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Benton KY USA
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Lee Stockwell
That demographic got me started in Kentucky in 1970. The little cleaning ladies got me "in the door" to many homes I couldn't have as a snot-nosed 19 year old with a serious Yankee accent and attitude.

Don't forget.
 
F

FB7777

Guest
You nerds keep trying to sit in the office crunch numbers and figure out the magic formula

Just keep your head down, and raise your daily average volume each year

Cuz at the end of the day, you most likely will fall in the 98 percentile and the biz is gonna be worth equipment plus a few grand

It's what you do with the profits each year that will determine your successful exit strategy

Money ... it's like Winning

It solves all problems
 
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