ClarityBV Blog

Whether you run a service business or any other kind of business, it’s important to focus on your target market.

Matthew Hoffman just posted a terrific Client Worthiness Index cheat-sheet for assessing potential clients. Especially when times are tough, a tool like this could be the difference between selling out and staying true to yourself and your business!

Speaking of being true to yourself, Automotive News ran a great story this week about the top-selling Volkswagen dealer in the U.S. They do it by, “offering cutthroat deals and breaking lots of rules”!

What is “clarity”?

Clarity: Free from obscurity and easy to understand; the comprehensibility of clear expression.

Why use clarity in the name of our business?

The concept of clarity resonated with me in two major ways.

1. Having a clear sense of direction and focus to start and run a business.
2. A goal to make the valuation process straightforward and transparent.

There is no perfect valuation formula. Experience, intuition, and judgment are an intrinsic part of the process. We try to add value by stating the facts and summarizing judgment calls as clearly as possible.

Many “sages” have noted that it is better to be approximately right than precisely wrong. Uncertainty is inherent in valuation. So, we try to avoid the traps of false precision or of needless complexity.

Confession: Since I like to string together long complex sentences, tools such as “reading ease” and “grade level” are a big help. This post has a reading ease of 57.0 and a grade level of 8.1, according to a popular word processing program. Our last valuation report had a reading ease of 26.4 and a grade level of 14.1, including every footnote, technical definition, etc. How low can we go on grade level? Don’t know yet, but we’ll keep working to find out…

Can an appraiser be confident putting a price on a business enterprise when they can’t put a price on their own services?

It seems ironic that many valuation firms will gladly tell you what your business is worth, but won’t provide a fixed price quote upfront due to the “difficulty” of estimating their fees.

Recent Experience

I recently encountered a proposal from a national firm with a fee quote that ranged +/- 25% plus direct and indirect expenses. Correction: The fee ranged 25% top to bottom, which would be +/- 12.5%. There was no estimate of how much the direct expenses might be. The “indirect” expenses consisted of an additional charge of 5% of fees. Why couldn’t these indirect expenses simply have been included in the initial quote?

Oh, and the proposal didn’t state exactly what valuation standards would be followed. At best, this seems gimmicky. At what point does pricing like this become bait and switch?

Thoughts

The experience above and my personal frustration with the “billable hour” are just some of the reasons the VeraSage Institute has captured my attention of late.

Of course, there are situations where a client prefers an hourly or variable pricing arrangement. In my experience, that is rarely the case though.

Questions

• What has your experience been as a consumer or provider of professional services?
• Have you ever seen a firm bill much less than the upper end of their quoted range?
• How should these things work in an “ideal” world?
• Are there any pricing resources you’ve found to be especially helpful?

Are price and value synonymous? Does it matter?

I was prepared to write a wonderful, wordy post on the topic, until I realized the folks at VeraSage covered it much more succinctly with a pretty picture in a recent blog post…

Your Customers Earn a Profit from You Too

A similar concept is expressed in a quote by Warren Buffett. “Price is what you pay. Value is what you get.”

Contrasts running through my mind as we head off for a long holiday weekend…

• Me vs. You
• Price vs. Value
• Features vs. Benefits
• Know-How vs. Know-Why
• Cheap vs. Bargain
• Luxury vs. Premium
• Marketing vs. Sales

Looking forward to meeting with Chad Root from Spearhead Sales in early June. Want to flesh out ideas for some “creative destruction” of business valuation services in Michiana.