Valuation Of Emerging Technology Businesses

By: BuyTradeBiz.Com

Typically traditional business valuations are based on income, assets, cost approach and historical performance. Emerging technology companies present a significant valuation challenge, since they typically have limited revenues, few fixed assets, and a history of losses – and a short history at that.

There are several unique aspects to valuing a technology company. The factors typically present in a traditional valuation are either not present or provide very little insight in a technology company valuation.  Typical valuation methodology looks to assets and/or income for value and involves income, assets and cost approaches. Operating businesses are usually valued based on an expectation developed from their historical performance. On the contrary, technology companies many times have limited revenues, no history to speak of, and a track record of financial losses.

Often the technology company will represent the first of its kind of business. Therefore, it is difficult to find a peer group or competitors to benchmark performance. So, investors in technology companies usually look toward the future with an expectation of explosive growth.  Here are some other factors that impact the process of valuing a technology company vs. a traditional business opportunities:

Lack of Fixed Assets and Inventory – Technology companies do not invest significant dollars into land, buildings, or other fixed assets and derive most of their value from intellectual property. Since the products or services produced by the company are electronic bits & bytes, there is no inventory to speak of.

Projections are Key – The valuation of an emerging technology company is based on the projected future stream of income from its intellectual property. Projections include assumptions regarding demand for the product or service, revenue growth, competition, alternative technologies, the economy and many other factors. However, such assumptions, if based on market research, known facts and sound logic can be a basis for value.

Cost Of Capital – Another difficulty in the valuation of technology companies is determining the cost of capital. Many technology companies are dependent upon equity financing causing the cost of capital to approximate the cost of equity. Some technology companies issue hybrid securities, such as convertible bonds. Technology companies may have bank debt, making it hard to rate. In general, estimating the cost of capital from historical data is more difficult with technology companies that have short histories.

Management Strength – Investors often have their own methodologies for valuing technology companies. Some may evaluate certain factors and assign values to them. While a good idea may have value, without good management it may not be successful. Strong management may be worth more than any other characteristic. Industry contacts and relationships are important factors. Demand and an analysis of the marketplace must be evaluated. Finally, the feasibility of the product itself must be considered.

Intellectual Property – Most of the use of capital in a technology company goes to building up the company’s intellectual property.  So the appraiser has to pay close attention to the built up intellectual property in order to assign value to it.  Unless there is a proven track record of revenue, the appraiser has to research the market and evaluate the potential for the product before assigning value.

Given these challenges, it is clear that the valuation of technology businesses for sale should be performed by an appraiser familiar with current trends, data sources, market transactions and market participants.

BuyTradeBiz.Com is the Internet’s newest business for sale and franchises for sale listing website.  This is the site if you are looking to sell a business or buy a business or buy a franchise.

Internet Businesses for Sale

By: BuyTradeBiz.com

Simply stated, the Internet has changed how we do business.  The fact of the matter is that the Internet has in some way or another impacted every business on the face of the earth.  Few changes in commerce and business have had the impact of the rise of the Internet whose influence has been nothing short of profound.  There are plenty of Internet businesses for sale, but there are also some significant points that one absolutely must keep in mind.

Your Due Diligence

There are a variety of steps that you should take before signing on the dotted line.  For example, take some time to search the domain name on the web and check out its reputation.  If there are a variety of bad reviews about this business, they will continue to impact you once you have taken over.  Perhaps that is the reason that this Internet business for sale is being sold in the first place!

Also make sure that you secure the domain name along with the business.  Otherwise this could present a significant hurdle.  You should also take a look at other specifics like will you receive web hosting or do you need to secure it on your own.  If you are looking to sell an Internet business, you need to also consider these same factors and consider what you will give to the buyer.

New Rules and Old Rules

The Internet may have broken some of the old established rules regarding how we do business, but that doesn’t mean that the way you approach someone who is looking to sell a business online should be different.  The old rules regarding what you should be looking for in a business still apply.  You are, after all, looking at businesses for sale.  The fact that the business is Internet based shouldn’t mean that you throw away all traditional wisdom!

A business for sale can be a fantastic money making opportunity or it can also be a giant money pit and nothing short of a headache.  Internet businesses for sale are in no way different.  A business with a poor foundation and poor financials is the same in the end, regardless of whether it’s a brick and mortar store or a virtual store that sells any kind of goods.  In short, an Internet business for sale differs from traditional businesses for sale, but that doesn’t mean that the core aspects of whether or not a business is healthy should be overlooked.

Do People Need This Site?

When you are looking at Internet businesses for sale, it is prudent to stop and ask yourself a very simple question, “Do people need this site?”  This question should quickly be followed by, “Does this site make money and will I make money?”  Remember that vast sums of money were invested in Internet companies that had never turned a profit of any sort, and many of those companies never did.

You wouldn’t by a traditional store that sold products that no one wanted or needed, so why would you buy an Internet based business that essentially did the same thing?  Viewed from this perspective, you can quickly evaluate the wisdom of buying a given Internet based business.  Sure many people are looking to sell a business that is Internet based, but should you be the one looking to buy a business of this kind?

Getting a good deal on a business that is doomed to never make a profit isn’t a good deal after all!  While you might be tempted for a variety of reasons, if the investment doesn’t meet the traditional criteria for being sound financially, then you should just keep on searching.

BuyTradeBiz.Com is the Internet’s newest business for sale and franchises for sale listing website.  This is the site if you are looking to sell a business or buy a business or buy a franchise.

Few business decisions are easy ones.  In fact, the larger they are and the more important they are, the more difficult decisions can be.  For example, the choice to buy a gas station is just such a decision.  More than likely, you have seen gas stations for sale from time to time.  This should come as no real shock.  After all, the number of gas stations in the world is truly staggering, and this makes sense considering the car-obsessed nature of our culture.  Plus, there is the wide scale acceptance of the concept of suburbia.  As a result, people spend a great deal of time in their cars.  Let’s be honest, on average, those cars get dreadful gas mileage and that adds up to a real business opportunity for those seeking to buy a gas station.

However the issue of whether or not you should buy a gas station is a bit more complex than it might initially seem.  In this article, we will explore some of the ups and downs that go along with grabbing that “Gas Station for Sale” sign and putting your name on the dotted line.  Gas stations for sale can be quite lucrative, but is this truly the right business for you?

Are You Comfortable Turning Over the Reigns to Someone Else?

When you see a business for sale, it is important to question whether or not that business is a good fit for you.  Can you envision yourself owning and perhaps also operating that particular business?  Many who own gas stations actually turn over that operation to other employees instead of operating it themselves.  If this is something that you are comfortable with doing, then a gas station might be one of the businesses for sale that you will want to consider.  However, if this idea makes you uncomfortable, then you might want to gear your search elsewhere.

The practicalities of who will operate your company are more relevant with a gas station than many other businesses.  If, for example, you buy a store that sell picture frames and does custom frames, you don’t have to necessarily stay open long hours.  However, this is typically not the case with gas stations.  Instead gas stations are usually open long hours and sometimes even 24 hours a day.  That means that an owner-operator is not likely to be present most of the time.  This is an important concern and one that any prospective owner should consider before buying a gas station for sale.

The Need for Gas is a Big Plus

Even if fuel efficiency goes up, it is also very likely that the price of gasoline will also rise as well.  The likelihood of this occurring is only amplified by the ever-growing need for gasoline, thanks in part to the industrialization of nations like China and India.

Thus, when you buy a gas station, you are likely investing in an aspect of the transportation industry that will be healthy for years, if not decades, to come.  There are alternative technologies and approaches on the horizon, but it will likely be quite some time before we see them.  These factors definitely make gas stations attractive in the array of businesses for sale.  Further, it is also quite possible that the existing infrastructure of gas stations will in some fashion be incorporated into any major “switch over” if one does actually occur.

BuyTradeBiz.Com is the Internet’s newest business for sale and franchises for sale listing website.  This is the site if you are looking to sell a business, buy a business or buy a franchise.

Editors and Journalist receive thousands of press release everyday; On average only 3 percent get published.  How can you make sure your press release is the one that gets published?  Below are a few steps in the right directions:

1. One-on-One Time:  The best public relations strategy is to b uild relationships with key members of the press.  You can easily identify a core group of media outlets that can deliver coverage vital to your business.  It takes a bit of homework to create your own short list of the media that influence your cutomers when they’re considering buying what you market.
2. Choose the Right Tool:  When sending a press release, make sure its headline contains a stat, fact, or compelling piece of information that’s new or revelatory, and that your first sentence has the power to sell your story.  Never send a stream of ho-hum pitches in the hope that over time you’ll capture attention.
3. Follow up to seal the deal:  Follow-up is essential for taking your new PR relationships to the next level.  You can make contact by phone, e-mail, or both.  The key is to determine that your pitch was received and whether there’s any interest in that particular item.  Most of all, you want to uncover what type of information you can provide that each media contact will find most compelling.

Maybe you’re press release will be the next big story on the home pages of CNN, MSNBC, and all the other major websites!

More than half of all U.S. businesses are based at home.  An estimated 6.6 million home-based enterprises provide at least half of their owners’ household income. Together these “homepreneurs” employ one in 10 private-sector workers, and by many measures they’re just as competitive as their counterparts in commercial spaces.

The 43% of home-based businesses that provide at least half of the owners’ household income are, on the whole, smaller than non-home-based companies. Only about 35% have revenue above $125,000, compared to 75% for non-home based businesses.

“It’s reflected in our pricing that we don’t have the same kind of infrastructure costs and fixed costs that some of our competitors do,”  Home based businesses measure up to other small businesses on key aspects of doing business, including access to capital, benefits to workers, marketing, and innovation.

CNN states, “Small businesses have shed an estimated 1.6 million jobs this year. That leaves the remaining staffers to pick up the workload left behind — and even bosses are pitching in. With their employee rosters cut to the bone, business owners are going back to the basics, re-learning to do tasks they may not have handled in years.”

When small businesses are started, business owners handle everything from emptying the trash to ordering the paper. As the business grows owners and mangers focus on the overall well being of the company but this does not mean they should only know how to operate their business on paper; in fact business owners and mangers need to know how to physically run their business, stepping in from time to time. “In a small business — if the business is a successful business — you probably always have the manager rolling up their sleeves.”