How to Value a Potential Business

Starting a business for most of us is like nourishing a new born baby. You need to invest in them, nurture and guide them as they grow, further recognizing their potentials and develop their potential.

Reasons for starting a business

What exactly are the reasons why people venture into any trade? People start their own business for a number of reasons, some of these are:

- Profit – This is most basic motive of any business

- Charities – Contributing to the social welfare of the community is the purpose of these leading charitable organizations.

- Independence - Having a business of your own means autonomy to make decisions for it and not take orders from an employer.

On the other hand, there are also various reasons why people don’t want to go into trade because of the following:

- Money – The most universal reason not embarking in starting our own business is because of limited cash. Even if we have the most superb business idea, without capital, generally we won’t go anywhere.

- Competition – People are threatened by competition and will fail to even try.  Ultimately they are afraid of failure.
- No solid ideas – lacking concrete business ideas. People may desire having a business of their own but have no concrete ideas of where to begin.

The ultimate goal of all profit-oriented business is income.

Here are some suggestions that will help you enhance and expand your potential business or an existing one:

- Redirect your goals, plans – review your business plan making sure that you did not wander from your initial goals and try updating it.

- Renew and enhance client relationship – effective relationships with your customers are one of the most important reasons for success.  Communication with your existing customers paves way for a more rewarding relationship.

- Review pricing – you may want to evaluate your product or service pricing.  Assess whether there is a need for you to increase your price to gain more income.  However, taking into account competitor’s rates as well as that of the market is extremely important.  The last thing you want is a price war.

- Optimize efficiency and effectiveness of business operations – assess and find ways you can improve business operations with emphasis on product and service quality.

- Cut down cost – find ways how you can effectively cut down cost without sacrificing quality of products and services. Even if you are earning more than you are expecting there is still a need to look for more ways to limit costs and expenses to increase income.  The concept here is Gross Revenue – Costs (Expenses) = Net Income.?

- Assess performance/review strategies – evaluate performance and update or make changes if needed on the strategies currently being employed.  By assessing, it will give you an idea of how well your business is doing.

- Strengthening employee participation – employees are essential assets of any company. Make sure that they are getting what they deserve;  proper remuneration and other benefits. Effective communication with your subordinates, emphasizing to them their importance in the success of the business is crucial to your success.