232 | Valuating Your Business with John Shumate

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John Shumate

Do you know the valuation of your company?  I think that if even if you were not planning to sell your company soon or even in the next decade that you should know the valuation. My main reason is that understanding what increases the value of the company you have now will make it more profitable now.  I interview John Shumate who specializes in valuations for technology and healthcare companies. He shares the essentials to valuations.  Check out this episode to understand how to put a value on your company.

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Target Audience: John serves a wide array of entrepreneurs but especially those within the technology and healthcare arenas

Understanding Your Valuation and Your Target

Think about all the different areas of Valuation within your business. What kind of value creation are you really building? Those thinking of selling their company, often times haven’t spent time thinking about what it is worth. Those who are really good at it determine this  BEFORE they even build the company.

Common points people don’t pay attention to..

One area is managing of working capital. Often times, business owners don’t manage inventory well. Capital is thus wasted.

Industry Performance: What do you look for?

This is what the industry trajectory is. It is reflected in overall multiples of the company. This is about looking at how the market is betting on the FUTURE of the company. Looking at those different metrics is helpful. It is estimating how long people think you will be around.

The exercise of developing a financial model depends on the company. Quantify the risks. Also, approximate the capital that is coming in for the future. What John does is try to build out a detailed financial model. So much of the value is so much in the future. Bake in the perceived risks to determine the value today.

You certainly don’t want to be everything to everyone. Pick one area and do it WELL Then you can get into the other vertices. Contemplate one hill. Articulate your niche well. Should be as laser-focused of a niche as possible and knock it out of the park!

Practical and Actionable:

Do the exercise. Do market research first and compare how other market companies like yours are doing. There are great free sources. For instance, google finance or yahoo finance to check it out as a start. Search by sector, industry and keyword. Find out who the competitors are. Compare their margins to yours. Create the ratios. Determine the tax data. What is their typical day’s revenue?

If you’re an earlier stage company, check out Venture Deal ($20/month). http://www.venturedeal.com/ You can search by industry. They have it at a pretty niche level. These are quick ways on getting cheaper data. This is a great exercise to go through on a regular basis.

Resources and Links

How is your business going…would you like to talk about it?

I love my audience of listeners. I really do.  I would love to help you in some way. I started doing calls with listeners and realized that it was a great way to understand you.

Okay, then I formalized the process to offer a Results Roadmap… it is a private one-on-one call with me about your business.  I want to help you see your roadmap with more clarity and confidence. Find out more about the Results Roadmap (it takes you to my personal website). This is not a sales pitch. Let me serve you.

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