FRANCHISEE
BOOSTS BUSINESS VALUE
SIGNIFICANTLY IN THREE SHORT YEARS!
A
Virginia Franchise owner wrote to say that she was pleasantly
surprised on reading our new book “Print Shop For Sale.” She
discovered that her business appears to be worth even more
than she had thought. Here are the details.
She
started her printing business in 1983 and has had steady,
although unspectacular, growth over the past 24 years. In
the past three years, sales have been growing at about 5%
per year and they stood at $950,000 in 2006. Her owner’s compensation
percentage has been climbing as she has worked to trim costs
in all areas of the business. Through this hard work, she
has improved it from 13% in 2003 to 18% in 2006. When I spoke
with her in late 2003, she asked me to guesstimate the approximate
value of her business. Based on sales of about $800,000 and
13% Net Owner’s Compensation, I put the value at about $300,000
at that time.
I
remember her being pretty upset with this value, because she
wanted to retire by 2008 or 2009 and she felt that she needed
a lot more than $300,000 from her business. I indicated that
her best bet to raise the business value was to improve the
profitability while continuing to grow the sales. Well, that
is what she has done and it has paid off in spades. Based
on the 2006 numbers of $950,000 sales and 18% Net Owner’s
Compensation, her business value came out to be $570,000,
or almost double what it was in 2003. In addition to the increased
value of the business, she is also enjoying a lot of extra
profit each year. In 2006, she made $171,000 Net Owner’s Compensation
(18% of $950,000) vs. $104,000 in 2003 (13% of $800,000).
Needless
to say, she is very happy with the improved profitability
and plans to continue to work at building the business value
for another couple of years. Her new goal is to get the sales
up another 20% or so and get Net Owner’s Compensation into
the 20% range. Based on her calculation, using the CD that’s
available with the book, she figures that her business value
will increase another $200,000 to about $770,000. Then, maybe
she’ll retire or, maybe she’ll keep building value. That’s
a nice decision to have to make.
CLICK
HERE TO ORDER BOOK & CD
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