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Instructions for the value calculator
Use it on the site or Download it
How can business "Value" be calculated?
Assumption:
If for the purposes of illustration, we define that "Value" improvement is quantifiable in money terms.
There four main ways to add VALUE to your business are by improving the underlying processes:
- Increase the number of customers you want
- Increase the number times they buy per year
- Increase the size of each purchase
- Streamline processes and eliminate waste
You can calculate the effect of new process performance targets by using the "Value Calculator" link below.
VALUE CALCULATOR Instructions (Excel Spreadsheet):
The calculator is setup with an example company data as a staring point with value potential of Zero.
1- When the "Base Line" is equal to the "Value Improvement Potential" is Zero.
Dollars are entered in whole numbers. Percentages are entered as (.50 = 50%)
2- When you change the "Potential" column numbers , the result whether negative or positive applies in the "Value Improvement Potential box.
3- You can insert your business performance numbers into the "Base Line" and "Potential" column to simulate Value " Improvement Potential" for your business.
NOTE: The Value Calculator is not intended to be an absolute financial modeling tool for your company, since each company has different tax and corporate structures for accounting purposes. But it will serve to demonstrate the Value Improvement has multiplying affects depending on which of the four categories or combination of categories that you adjust. (i.e. improving the frequency of the purchase by one, has a much larger affect than increasing the number of customers by one. Likewise if you reduce the percentage of expenses it has a multiplying affect on all the numbers)