Facing threats from market forces

Consider a small-town five-and-dime store that saw its business start to erode when the first Wal-Mart moved to town 40 years ago.  Think of the 75 year old family bookstore that started to see fewer customers when the first Barnes & Noble superstore opened at a nearby shopping center.

Even for multigenerational businesses, times change.  Most importantly, the players change, too. All business owners must keep valuation in the back of their minds when they sense that a game-changing company has moved into their marketplace.

But competitors aren't the only market forces that change a company's fortunes.  Look at what outsourcing and more modern technologies have done to established companies.  If they haven't kept up, they have three choices:

• modernise (often though for smaller companies to afford),
• put themselves up for sale (to a market that may not be ready to buy), or
• simply fade away.

Many business owners may not see the end coming, whereas the best valuation professionals do.  Valuation is not all about that final dollar figure; it's about measuring a business's short- and long-term viability as well.  A valuation expert with knowledge of your industry - or access to outsider experts who have that knowledge - is as much a central business advisor as your accountant or attorney.