If valuation does not equal purchase price, what is a business really worth? By Bob Power On the subject of business valuation it is important to remember that there is no standard method for valuing a business and no single ‘correct’ answer as to how much a business is worth. A mentor of mine once said “There is no correct method for valuing a business; due diligence, negotiation experience, judgement, ‘business nose’ and horse-trading skills all have an important impact on the final outcome.” I also once attended a business seminar where 15 of us were each given a set of financials and instructed to valuate the business. The result was 15 different valuations based on the same set of financials. There are, however, criteria common to all business enterprises which enable basic valuation rules to be formulated. Whether buying or selling, I have rarely concluded a deal on the value calculated by an auditor or adviser. Any valuation is no more than a guideline and the price eve...

Strategic relationship marketing advice for franchises. By Gerhard van Wyk Relationship marketing is defined as ‘interaction within a network of relationships, or establishing, maintaining and enhancing relationships with customers and other partners, at a profit, so that the objectives of the parties are met through a mutual exchange and fulfilment of promises’ (Jooste et al, 2009). Key aspects of relationship marketing Franchises hoping to employ a relationship marketing strategy should consider the various stages that exist in any business relationship. The relationship stages, comprising an establishment phase, a maintenance phase, an enhancement phase and in some cases a termination phase, signify that these relationships are ongoing. Establishing mutually beneficial and profitable relationships that address the needs of the other party, requires trust and commitment. Franchises should strive to develop profitable relationships, yet distinguishing their profitable custo...

Many small business owners put all their assets and their lives into their businesses. Unfortunately, many remain unaware that unforeseen events could stop their business in its tracks, says Standard Bank. Johan van Greuning, Head: Corporate and Business Insurance, Standard Insurance Limited, says: “Insurance is necessary for all businesses. When you own a small retail business and it has absorbed all you have, insurance is vital.” Several key aspects should be considered when deciding on short-term insurance cover. “The most important thing on the list is making sure that you are adequately insured. Your insurance should cover all your stock, fittings and also take care of costs that may be incurred through customers suffering injury on your premises,” says Mr van Greuning. In the case of stock, insurance should cover additional costs that could be incurred if you are forced, for instance, to fly in stock to replenish shelves rather than wait for a normal delivery. “...

Improve the effectiveness of local marketing and advertising campaigns by getting onboard with geo-location targeting and SMS campaigns Contributed by Demographica At the cost of subverting a popular phrase - it's all about location, location, location. “Franchises that rely on national branding campaigns to build their franchisees' businesses are missing the boat”; so suggests Megan Louw, Brand Manager of Demographica, South Africa's largest digital database marketing agency. Franchise marketing provides an interesting case study for the way in which marketing has evolved - or not, as the case may be. By its very nature, franchising offers tremendous benefits to entrepreneurs who wish to grow a business within the framework of an established brand, systems and infrastructure. National and even international brand marketing campaigns generally form part of the franchise agreement and no doubt contribute to broader awareness and trade. "The questio...

Johannesburg, 5 December 2012:- Following The Fish & Chip Co’s first television advert which was recently banned by the South African Broadcasting Corporation (SABC), the company has announced that they will be launching their second proudly South African television commercial today, 5 December 2012. In keeping with the creative strategy of the first advertisement, the company’s second commercial was also created by popular South African cartoonist Mdu Ntuli, and is again in an animated form. The advert, titled Xamina Xawena, which in Tsonga means ‘mine and yours’, is the first Tsonga advertisement on South African television. With subtitles provided, the commercial depicts a conversation at a taxi rank between two men, both with a fish and chips meal offering in hand, one definitely more appealing to the eye and appetite than the other. Speaking in the Tsonga language, the men proceed to compete as to who has the better meal offering. After some discussion and a humorous pr...