(1) Why: What is the purpose of the valuation?

(2) Who: Value with whom owning and managing the business?

• Your current value with current ownership and management?
• Value with a new business owner with less experience?
• Value with buyer like you with similar business management experience?
• Value with an upscale buyer who has the financial ability to build on what you have accomplished in your business?
• These WHO questions make a huge difference to the final appraisal.

(3) Normalized Net Income: I must understand what questions to ask to be able to determine the real 'Normalized Net Income.' This figure is seldom what you see in your year-end accounting, which is generally calculated to determine the lowest amount of tax legally payable.

• Owners and families are often overpaid or underpaid depending upon individual tax situations.
• What would the owner have to pay someone to fill his/her position in the business?
• There are about twenty more normalizing questions that must be answered and these can be different depending upon the answers given to previous questions. This is where experience counts.

(4) Leasehold Improvements: These need to be covered regardless of whether the building is leased or owned.
It is important that the right questions are asked in any comprehensive appraisal.

(5) Hard Assets: Determining fair market value.
Book value means nothing if we want to know the true value of the business.

• Business Equipment
• Business Inventory

(6) Intellectual Property: Copyright, Proprietary Processes, Business Operation Manuals. These are your operating manuals; the step by step instructions on how to run your business and how to train others to operate your business. This greatly affects value; positively if it you have them and negatively if you don’t have them, and much more negative if it would not be possible for you to have a practical manual that would allow for your business to continue if you were unable to function.

(7) Value of Cash Flow: This is calculated by finding the normalized net income then multiplying it by a ratio determined by risk, opportunity, and the intellectual property affecting the means to produce.

(8) Soft Assets: Do you have intellectual property that has fair market cash value outside of your business?

(9) Risk: What are the possible risks to your business?
No appraisal can be completed without properly understanding risk.

• How long is the business lease?
• Are there reasonable options to extend the lease?
• If the owner of the building also owns the business has the rent been paid at market rates?
• Are you in a one industry area, or is the area changing?

Los Angeles

Start Your Business in L.A.

Whether you are starting your first online business, chasing the next big thing, or finally acting on your dream, our Business Startup Organizer can help you to get your business off the ground in Los Angeles. This new tool will assist you in exploring all of your options and keeping track of your progress as you start your new business.

New Business Tax Holiday The New Business Tax Holiday exempts any new business from paying City of Los Angeles business taxes during its first three years of operation. Find more information on this valuable incentive for new LA businesses.

Step 1 : Get the Basic Info
Starting a business is a major commitment. To get you started, we provide some useful tools and resources.
Step 2 : Create a Business Plan
One of the most important steps in starting a business is creating a business plan.
Step 3 : Register Your Business
Most new businesses require tax and employer identification documents.
Step 4 : Obtain Additional Permits and Licenses Depending on the type of business activity you are engaged in, your business will most likely require some permits.
Step 5 : Find Business Incentive Zones
The location of your business can make available a number of incentives provided by the city, state, and federal government.
Step 6 : Find Real Estate
The City of Los Angeles can help you find property within city limits or buy or lease publicly-owned property.
Step 7 : Assess Business Incentives
New and existing businesses located in the City of LA can access a number of business and tax incentives to help grow their business.
Step 8 : Find Start-Up Financing
A number of different lenders in Los Angeles help small-businesses get started.
Step 9 : Assess Employment Needs
When you are ready to expand your company and hire employees, you can find qualified job-seekers through one of our job-training centers.
Step 10 : Find Business Assistance Programs While you may want to seek out additional legal, financial, and accounting advisers, here are several free services available to you as a small business owner.

http://www.wpp.com/wpp/companies/added-value/office/added-value-los-angeles/
http://www.businessmodelalchemist.com/2012/09/test-your-value-proposition-supercharge-lean-startup-and-custdev-principles.html
http://www.bizjournals.com/losangeles/news/2013/02/11/consumers-finding-more-value-in-online.html?page=all
http://www.discoverlosangeles.com/hotels/value
http://www.propertyshark.com/mason/info/Home-Value/CA/Los-Angeles-County/
http://www.slideshare.net/IBMIndiaSS/the-business-value-o-f-la-ge-scal-e-serve-r-consol-i-d-a-t-i-o-n
http://www.hautehorlogerie.org/en/fondation/fight-against-counterfeiting/intellectual-property/value-intellectual-property-rights-business/
https://itunes.apple.com/es/app/lean-business-value-calculator/id554366372
http://www.datacore.com/Libraries/Document_Library/The_Business_Value_of_Software-based_Storage_Virtualization.sflb.ashx
http://www.itnation.lu/news/main-story/ibm-pure-systems-marre-du-tco-parlons-enfin-de-la-business-value/14245/
http://uber.la/2013/02/calculating-value-of-social-media/
http://www.ecosystemvaluation.org/
http://pages.stern.nyu.edu/~adamodar/New_Home_Page/valuation/val.htm?ref=Guzels.TV
https://angel.co/valuations
https://www.nationwideappraisals.com/
http://www.lakelandcollege.ca/academics/business/.../appraisal-assessment/
http://www.accuval.net/services/appraisals/stock-valuation.php
http://bioscience-valuation.com/
http://www.cga-pdnet.org/Non_VerifiableProducts/ArticlePublication/ValuationOfABusiness/ValuationOfABusiness_p1.pdf
http://www.accuval.net/services/appraisals/stock-valuation.php
http://www.appraisaleconomics.com/stock-valuation/
http://www.cbc.ca/news/business/smallbusiness/story/2011/09/26/f-smallbiz-business-valuation.html
http://smallbusiness.yahoo.com/advisor/valuing-business-190018352.html
http://www.thestar.com/business/small_business/exitstrategy/2012/04/17/small_business_tools_valuation.html
http://mbastudent.degroote.mcmaster.ca/program-information/specializations/strategic-business-valuation/
http://www.mccombs.utexas.edu/ExecED/.../Business-Valuation.aspx
http://www.lakelandcollege.ca/academics/business/programs-and-courses/appraisal-assessment/


• Are industry trends your friend or enemy?
• Are there any Government regulations?
• Staffing?
• Competition and pricing challenges?
• Changes to accessibility? Road changes?
• How good is the succession plan, and do you even have one?
• Operations and Training Manuals - How complete?
• Additional questions depending upon the answers given.

(8) Value of Cash Flow: This is calculated by finding the normalized net income then multiplying it by a ratio determined by risk, opportunity, and the intellectual property affecting the means to produce the cash flow.

Depending upon the complexity of your business, you can expect 48 hours to get a report back to you.

As you can well understand, no computer program, gross sales or other rule of thumb guessing techniques are going to be helpful for you in determining the real value of your restaurant. In fact, these techniques could harm you. Valuation and appraisal is our full time business. We do a lot of business valuations.