As a business co-owner, being exposed in the event of the death or disability of another co-owner can immediately cripple a business. Fortunately, getting properly covered is easy. Business owners all bring something key to the table. It may be their relationships, their experience, their technical ability or their access to capital. The loss of one of those key people is not only a tragic event in and of itself, but if not planned for, can also mark the death of a business. Ensuring that the right form and levels of protection are in place beforehand – and remain current […]

The true and ever-changing value of your business is one of the most important numbers to have on hand at almost every stage of your business’ development. A business’ value is not a simple thing to determine. Every Tom, Dick and Harry can run a discounted cash flow model or give you a number based on earnings multiples – and charge an arm and a leg to do it. But no two businesses are the same, and as an owner, investor or financial planner, being able to value and communicate that uniqueness is key to making the right decisions at […]

The accrual accounting method allows companies to count their chickens before they hatch by considering credit as part of a company’s income. “Accounts receivable” and “settlement due from customers” can appear as line items in the assets portion of a company’s balance sheet, but these items do not represent completed transactions, for which payment has still to be received. They do not, therefore, count as cash. However, it must be noted that the opposite can also be true. A company may be receiving massive inflows of cash, but only because it is selling off its long-term assets. A company that […]

This approach views the business as a set of assets and liabilities that are used as building blocks to construct or substantiate the value of the business. The economic principle of substitution applies i.e. What will it cost to create another business like this one that will produce the same economic benefits for its owners? Since every operating business has assets and liabilities, a natural way to address this question is to determine the value of these assets and liabilities, with the premium difference being the business value. Sounds simple enough, but the challenge is in the detail: figuring out […]