How Financially Fit is Your Business: Understanding Working Capital  

Working Capital is something that is scrutinized by almost every company but rarely talked about in the collision industry.

But I guarantee every large MSO in your marketplace is actively managing Working Capital.

It is also something that major vendors will consider if you are negotiating for a pre-bate or other consideration for purchasing their product.

Banks look at it too. If you want to borrow money to grow, they will scrutinize Working Capital to ensure that you can afford the loan.

If you ever sell your business, it will be a hotly negotiated topic as well.

Most business owners do not look at working capital until one of the above situations forces a working capital negotiation. But that is the wrong time to start managing working capital. It is like going on a diet the week before your annual doctor checkup. […]

Don’t Let Inexperience Get in the Way of Success

The collision industry is a $30 billion market in the U.S.  But not a single company accounts for even $1 billion in sales. There is a race to get to the $1 billion in sales mark. (Editor’s note: keep an eye out for our upcoming article on what is driving this race to $1 billion).

The quickest way to get to the $1 billion mark is to acquire other businesses that already generate a few million dollars in sales. So the consolidators need you – but they are also afraid of you.

They are afraid of you because you lack experience.

The large consolidators by their very nature are incredibly cautious. They are backed by some of the largest financial institutions in the world and are stewards for hundreds of millions of investment dollars. They unfortunately cannot just “take your word for it”.

Sure you have been in business for years. You have long term employees. You have long term referral accounts via DRP’s or dealer referrals and repeat business.

But you are inexperienced in their world. […]

Hire a Manager and Fire Yourself

Many owners I interact with still run their business the same as the day they started. They are the first one there in the morning and the last one to leave. They know what is going on with every file. They are the only ones allowed to make decisions.

This level of dedication is admirable. Unfortunately while it can feel profitable and even feed our own ego, it often gets in the way of maximizing the value of your business. You want your business to run better today and be better positioned for tomorrow – even if you are not planning on selling any time soon.

In order to maximize the value of your business you have to view your business from the outside in. Or, as a good friend of mine once told me, work on your business not in your business. […]

6 Ways to Maximize the Value of Your Business

Previously we talked about valuation methods. Valuation is great, but like any tool, only as good as the person using it.

Anyone can tell you that your business is worth $10 million. But if you can’t find a buyer at that price, is it really worth that much? An investment banker once told me that a business is only worth what a buyer is willing to pay for it…PERIOD.

In order to maximize what a potential investor or buyer is willing to pay for your business you must be able to demonstrate the value of your business to them.

Understanding valuation methods is important (common valuation models are discussed in this article).

You also need to pay attention to recent comps. Know what other businesses in your industry sell for. If possible, know the profitability and size of those businesses so you can compare them to your own business.

But in addition to the above, here are six more ways to maximize the value of your business: […]