Questions & Answers

Q: Is it possible to expand the categories for variable and fixed costs. The categories provided are extremely limiting. I can easily envision the need to have several dozen categories to make this a useful tool?

A: The Forecast and Budget builder is specifically designed as a high level tool (ie with limited categories). This decreases the complexity and increases the ease of use. We do have a Budget Tool Business Excel https://bizpep.com/BudgetTool.html which allows you to freely add as many categories as you like to build a detailed budget. Many clients use the Forecast and Budget builder to develop a high level forecast and use the insight gained to then generate a detailed budget using the Budget Tool Business.

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Q: Is your software suitable for a book of life insurance / mutual Fund business, in order to determine the selling price?

A: The design and methodology of the Business Valuation model makes it applicable to any business. Because it uses market indicators to develop a forecast and the valuation is based on the forecast it can be applied to any business. It is available free for 7 day evaluation so you can give it a test run from https://bizpep.com/businessvaluation.html .

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Q: Does this model allow one to determine the value of a business you would like to sell; i.e., the suggested selling price range?

A: Yes, this is one of the things it is designed for (as well as buying). When you input relative indicators a forecast is generated. From this a valuation range is determined. If you are selling you should approach it from a generic buyers perspective but use your industry/business knowledge assist in developing the relative indicators. Once you have a valuation range use the valuation model to substantiate your selling price to the potential purchaser, also considering an individual purchaser there maybe areas where they can add additional value (ie the business is worth more to them). For External Earnings it is probably best to use an indicative value for the type of person that would consider buying your business (possibly someone like yourself?). However keep in mind that particularly if you have a lifestyle business the buyer may consider a smaller salary acceptable than they may achieve otherwise.

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Q: Business Valuation - Does this tool allow one to assess a business such that you can derive at a offering price for a small business. For example, I am considering a business wherein the asking price is $150,000 and the cash flow is $80,000. The way I interpret your model, this business would have a negative value to me if I can make $80,000 on the outside.

A: Yes the Business Valuation Model was originally designed with small business in mind. If you can earn $80k without investing (risking) any capital then a business that only returns $80k but costs $150k is worthless to you because you are getting no return on your investment (you would be better of putting it in the bank). Having said that you need to look at the return over time ie the 3 year forecast. So input your forecast variables to gain some insight into what returns are possible from the business. If returns have the potential to double over the forecast period then it becomes a different story. The valuation developed by the model considers the 3 year returns when developing a valuation. Also if there is a lifestyle component in the business then possibly you are prepared to accept a lower return?

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Q: I downloaded the 7 day free evaluation version today. When I try to open it, I simply get an Excel spreadsheet. Doesn't seem to be any special software package, so I can't tell anything about it. What am I doing wrong?

A: The software is in Excel format, it includes formula and calculations to determine the forecast and valuation. Simply start on the input sheet and input your data into the blue cells. The forecast and valuation will be calculated. Full instructions are provided in the help file.

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