This month we discuss how to valuate your business; we meet Nomsa Mazibuko and Warren Fernandes in our success stories and David Morobe explains the importance of a half-year review.
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SME Business Bang
July 2014   |   Volume 5.6

The science and art of valuing a business

The question “What is the value of this business?” is one of those best answered by another question: “Who wants to know?”

A seller of the business, who may have spent many years and tears building it, will try to emphasize the most positive aspects, says Gerrie van Biljon, executive director of Business Partners. If he cannot find much to be positive about in the last set of financial statements, he will find it in the future prospects of the business and build it into his price.

The buyer, on the other hand, is almost always skeptical about what is under the hood of the business, more wary about the future of the industry on which he is about to place a sizeable bet, and, if nothing else, keen on a bargain. His valuation will inevitably be lower than that of the seller.

Success story:
Thriving guest house group built on teaching and training

It is hard to tell sometimes which businesses really mean it when they say “our people are our greatest asset”, or “empowerment is what we're all about”. But with Nomsa Mazibuko, owner of the guest house business Visit Vakasha in Mpumalanga, there is no doubt.

She has fourteen full-time staff members who run her group of five guest houses in Emalahleni in Witbank. One of them goes by the title of “HR and Training Manager”, which sounds rather grand for such a small organisation, but that is truly what she does. The training manager, a qualified, accredited trainer in the hospitality industry, spends every working day training her thirteen colleagues...

Success story:
'Consistent persistence' ensures survival in a land of giants

It must be the sheer size of Gauteng's huge billboards that seems to warn that outdoor advertising is the preserve of the corporate heavyweights of the advertising world. How dare one guy working from his study at home even think of entering this land of giants, especially when he has never even worked in the advertising industry before?

Warren Fernandes not only dared to enter, but his company Admadmedia is thriving among the four giants that do indeed dominate the industry. “Consistent persistence,” is how the 33-year-old describes the most important factor of his success.

It's time to prepare for the second half

For a spectator of a game of football, the half-time break is merely a chance to stock up on some beer, but for the captains, the coaches and the players, it is a crucial few minutes of reviewing and tweaking their game plan.

In a similar way, businesses that do not use some time in the middle of the year to reflect and plan are running the risk of losing the game, says David Morobe, regional general manager of Business Partners. The questions asked in the locker room at half time are strikingly similar to those that a business has to ask from time to time. “Have things been going as planned? Are we ahead or behind with where we wanted to be? What worked well? What didn't work well? What impact has the competition had on us? What opportunities did we miss? What competitor weaknesses did we not capitalize on? What do we need to do in the second half? What changes need to take place and in what area do we need to up our game?”
In this issue
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