Targeting
You can target a desired Net Cashflow by creating targeted values in:
- Sales,
- Gross Margin %,
- Total Expenses,
- Purchase Price.
As Cashflow rules, the basis for any decision is cashflow based. That is - what am I getting from this business, in the hand, after everything is said and done.
As a starting measure you want to ensure that at least your cashflow is positive from year one. And if not, what do I need to do to ensure that I can achieve a positive cashflow in the shortest amount of time.
Buyabiz allows you to play with a few variables. Those being; Sales, Gross Margin %, Total Expenses and the Purchase Price. You can systematically change your model to reflect changes in any of these variables based on a desired cashflow position. For instance, you can determine, at what Purchase Price does the business provide me with a neutral or positive cashflow. A valuable number when negotiating. Or even better, you can determine whether the business will every have the prospect of actually achieving a profitable outcome in the short term. All handy bits of information.
Example: To determine at what Purchase Price the business produces a positive cashflow, simply click the "Target" button. Enter "0" in the Net Cashflow box and your Targeting values will show. Action the Purchase Price value and click Target. From there you can "Undo" the change and repeat the exercise with other changes in parameters or "Accept" the outcome and see its effect on your forecasts and adjust accordingly.
