[caption id="attachment_2812" align="alignright" width="300"]increase the value of your business Reducing costs can help you increase cash flow and, as a result, the value of your business.[/caption] The value of a business is based on two factors: the expected future cash flow of the business and the risk that future cash flow will occur when and in the amounts expected. Cash flow and risk are the meat and potatoes of business valuation. The valuation report that is produced is just a detailed analysis of these factors.

  [caption id="attachment_2355" align="alignright" width="300"]business valuation Rules of thumb may be easier, but considering factors such as cash flow and risk lead to a more accurate business valuation.[/caption] From time to time, I receive a call from someone who wants me to tell them the value of a business that they want to buy or sell. They provide a few items of information, such as last year’s sales or net income and expect that I will apply a multiple to quickly and easily come up with a value*. What they are asking me to do is apply a rule of thumb.