[lionrock88]

Originally Posted by My_little_pony

Overdraft and loans are agreed with the bank as the first 'debt' for the company, potential investors are aware and figures have been figured into future projections. Accountant has provided everything I need. Provision of accounts to investors will be made as I come up with a 'number'.

Any investment will more than likely account for less that 20-35% of the company.

I can do this on my own but it will be tight over our coming quiet time. Extra cash is always nice to cover eventualities. We are investing to expnd. Expansion is expensive but we are at our physical limit and again investors are well aware of this.

My customers are VERY loyal. We have a customer retention rate of 95% + over the past 3.50 years and because of this they are VERY sold on the product.

Well, this is almost cathartic. Like this

I'm curious! What business are you in?

[My_little_pony]

Originally Posted by lionrock88

I'm curious! What business are you in?

Education ...

[MovingIn07]

Kiddies kindergarten?

Learn to horse-ride establishment?

[My_little_pony]

Originally Posted by MovingIn07

Kiddies kindergarten?

Learn to horse-ride establishment?

haha how I would love a learn to horse ride establishment. Dream come true that

English language education.

[jimbo]

Originally Posted by My_little_pony

Education ...

As your established then have you thought of a franchise instead?

[My_little_pony]

Originally Posted by jimbo

As your established then have you thought of a franchise instead?

Not really, there are so many products that we are still trying to develop at the moment and new staff and expansion will help...


Does anyone have an 'X + Y / Q * H' equation type thingy that I can use then? hahahha.

I have always had a price in mind and it seems reasonable but of course I want to make sure it's correct.

[Crocodile]

There is no magic formula as there are too many variables, but without knowing anything about your business I can do some rough calcs, working backwards, to give you an idea of a business valuation. The figures that I will use are can be multiplied up to get the correct equity/valuation amount you are looking for.

Ok, using some round figures, say you want to give sell equity of about $2m. So, if you are willing to give away 25% of your business for this, that means you are valuing your business at $8m.

Say you value your business with a PE of 5 (some would consider that generous - at the moment you can buy plenty of good stocks on the market with PEs of 8-12). That means your business must have made an EBIT this past year of $1.6m. Unless your business has some significant fixed assets such as a building, the PE is probably a fair indication of the value of your business.

Which begs the question, if you are after $2m, why would you sell off 25% of your business when you can make an EBIT of that in just over a year?

Again, your Accountant should be doing this for you. Aren't you paying them to advise you so your financial situation is the best it can be? Your Accountant must be able to value your business for you. What you think your business is worth and what it is actually worth are two different things. Also, what an investor is willing to pay is another story - you might find someone who is willing to pay alot more than it is worth.

Are you after a silent partner or someone to work in the business with you? Are you looking for a business mentor to invest in your business to help support your growth?-(sometimes this can be considerably more value than the actual monetary investment) What dividend are you likely to pay each year to the investor? How much more expanding are you looking at? Are you already selling to OS customers?

From experience, selling off part of a business is not always the best thing to do. Personally, it would be the last option that I would choose - there are other options that are more attractive in the long term.

Hope this has helped a little.

[My_little_pony]

Originally Posted by Crocodile

There is no magic formula as there are too many variables, but without knowing anything about your business I can do some rough calcs, working backwards, to give you an idea of a business valuation. The figures that I will use are can be multiplied up to get the correct equity/valuation amount you are looking for.

Ok, using some round figures, say you want to give sell equity of about $2m. So, if you are willing to give away 25% of your business for this, that means you are valuing your business at $8m.

Say you value your business with a PE of 5 (some would consider that generous - at the moment you can buy plenty of good stocks on the market with PEs of 8-12). That means your business must have made an EBIT this past year of $1.6m. Unless your business has some significant fixed assets such as a building, the PE is probably a fair indication of the value of your business.

Which begs the question, if you are after $2m, why would you sell off 25% of your business when you can make an EBIT of that in just over a year?

Again, your Accountant should be doing this for you. Aren't you paying them to advise you so your financial situation is the best it can be? Your Accountant must be able to value your business for you. What you think your business is worth and what it is actually worth are two different things. Also, what an investor is willing to pay is another story - you might find someone who is willing to pay alot more than it is worth.

Are you after a silent partner or someone to work in the business with you? Are you looking for a business mentor to invest in your business to help support your growth?-(sometimes this can be considerably more value than the actual monetary investment) What dividend are you likely to pay each year to the investor? How much more expanding are you looking at? Are you already selling to OS customers?

From experience, selling off part of a business is not always the best thing to do. Personally, it would be the last option that I would choose - there are other options that are more attractive in the long term.

Hope this has helped a little.

Now, along with others, that's an excellent post

As the company is still quite small we started out with an old school accountant, you know, the $800 a month style. Well, he's been a good guy but still quite abacus and no email. He's kind of suited everything nicely up until now when I need to think a little more 19th century

Personally, I'm very much the 'get money out of people' type of businessman and it's always been very easy for me. However, now I have to be a real business owner the stunning good looks, sweet talking mouth and body of Adonis just won't cut it ((I am joking ))


I'm not scared to admit that I've just Googled 'EBIT'.

It's a funny situation. I have investors desperate to become part of their own experience and some are literally throwing money at me but the matter of how much I should realistically give and ethically give has become an issue for me.

You've given me a few more tools to look at how much to value the company and I should be able to factor it from that.........maybe I should just invent my own equation

[carang]

watch a few episodes of DRAGON'S DEN on BBC....it's 5 millionaires being pitched business ideas and deciding whether or not they want to invest their own $$$. it won't give you a clear cut idea, but it might give you something to think about.

i've been thinking about the same thing and i've found watching them gives me more of an idea of what investors would be looking for.

(i'm in the english education field, too!)