x10 Home Automation - Control Lights, Irrigation, Appliances

Is The NPV Method Also Valid For Your Home Business?

When you want to stop your Home Business the worst thing to do is to stop suddenly or slowly with the thing that has made your Home Business so successful. Why? Think of all the hard work that you have put into building your business into a success. It is probably still going strong and generating a lot of income for you. Why not try and sell your business because it is obvious that it has some sort of value?

Before selling anything you need to assess your company and calculate the possible value of your Home Business. In that way you are able to defend and justify the price you are asking. Important to note is that value is subjective and not the same as price. The question is how to value a company. There are several methods to value, but one of the better methods is the net present value of future cash flows, abbreviated as NPV 1).

The NPV takes into consideration three variables. First of all, value is being calculated with the forecasted cash flows (and not profits). You need to think very carefully how much cash your Home Business will generate in the next years. These assumptions are based as well on historical performances as on future trends. Why cash and not profit? Cash pays your bills and food. Profit doesn??t do anything for you. It is a term that is used for all kind of (accounting) purposes, but it is influenced by many factors. Due to that you might even see an increase in profit but a decrease in money you have left in your pocket.

Second of all, the NPV method wants to know when that cash will be generated. It is important to know if you get US$ 100,- now or in 5 years. Most people will prefer to have it now, also because in 5 years that money cannot buy them the same things because its value changes in time. But even more important is that when you have US$ 100,- now you can decide to invest it in order for it to increase.

Third of all, any buyer wants to know what the risk is of his investment, which is shown in the rate of return. Your Home Business is not risk free. The higher the risk the less people want to pay for it.

Even though the formula seems easy enough, calculating a company value is not as straightforward as it involves a lot of estimating and knowledge of the market. And as it is not an objective measure everybody will end up with a different outcome. Even better than calculating a single value you should actually calculate a band width. And as mentioned before, you need to know how you value your Home Business in order to negotiate a good and fair price.

1) NPV = cashflow at time 0 + (future cashflows /[ 1 + rate of return])

Robin Zweedijk is the owner of http://eBusiness-Advice.com and writes on a variety of subjects. To learn more about this topic Robin recommends you visit: http://www.eBusiness-Advice.com or http://www.pluginprofitsite.com/main-18145

MORE ARTICLES:

Autonomic Controls Announces Touch Panel Software For Home Theater and Whole-House Audio
Autonomic Controls, the leading provider of media integration software for AMX, Crestron and HAI systems has announced a new product that enables remote access to digital music and video media using UMPC's and touch panels.

Automated Forex software review
For the time being automated trading in forex is the buzzword.

Outdoor Motion Detectors & Motion Sensor Lights
Who goes there? In this day and age, it might not be feasible for you to hire a 24-hour watchman to guard your house or property, but we can provide you with the next best thing

Ebay Auction Software: Automated Gold Mining For Auctions On Ebay And Elsewhere Using Software
You may already know how to grab great bargains on eBay and other auction websites because the titles are misspelled. In fact, you may spend a great deal of time hunting around for them, one by one. You may even know of a website or two that offers you a free list of these misspelt auction listings. Do you ever wonder if you're missing out on a bunch of them, just because it's too tedious to plow through them all by hand?

Comcast Selects Approva to Automate Controls Monitoring for Oracle E-Business Suite
Approva® Corporation, the leader in continuous controls monitoring, today announced that Comcast Corporation has licensed Approva?s BizRights® CCM Platform and Enterprise Controls Suite to monitor both general computing and user access controls across its enterprise-wide deployment of the Oracle E-Business Suite.

Cyber-Rain Expands Distribution Network, Now Available Through Home Automation Retailer Smarthome
Award-winning sprinkler control system saves users 30-70% on watering bills.

Control The Air Flow Of Your Home: Ceiling Fan Remote Control
If you market something that is effective but caters towards convenience then you are on a winner at the moment. People specifically buy convenient items for their household because they just want to unwind at home after a long and stressful day?s work. They do not want to be bothered with technical things anymore because their hectic lifestyle does not allow it. Take the TV remote control for example. Why get up to change the channel if you do not have to? They will pay anything for a little extra comfort, which is why the ceiling fan remote control has been such a hit!

SmartLabs Introduces HouseLinc 2 - INSTEON Desktop Software w/ USB Interface: Easy INSTEON and X10 Home Automation Control and Management from a PC
SmartLabs, Inc. announces the release of HouseLinc 2, the next generation of the award-winning the HouseLinc - INSTEON Desktop Software. Building on the original software designed for the management of INSTEON-compatible devices in the home, HouseLinc 2 includes new features like background link management, enhanced product support and an all new look. It is available as a kit for first time users or as a free upgrade kit for original HouseLinc owners. Each kit comes with a required HouseLinc 2-enabled INSTEON PowerLinc Modem.

Tomorrow Incorporated Lights Up the Holidays with Motion-Sensing Britepack(TM) Apparel
New consumer products company ushers in next craze in technology-forward and trend-setting school accessories.

Skylink, Leader in Wireless Automation Products, Announces INSTEON Motion Sensor
Skylink unveils the release of the Skylink INSTEON Wireless Motion Sensor, a battery powered motion detection module for indoor and outdoor applications. It reliably communicates via INSTEON radio frequency (RF) to turn INSTEON compatible devices or scenes on and off. Skylink has assigned Smarthome (www.smarthome.com) as Master Distributor.

Strategic Healthcare Programs (SHP) and Thornberry Ltd Announce Automated Interface between Healthcare Software Programs
Web interface enables SHP clinician-level analysis of NDoc® clinical point of care patient data. New automated web interface speeds the transfer of data from the NDoc clinical system to Strategic Healthcare Programs (SHP) software. Web services technology transfers OASIS assessments with clinician-level detail from NDoc to the SHP database.

Smarthome Hires TigerDirect Executive to Lead Home Automation Category: Bruce Matthews Joins Smarthome as Vice President of Marketing to
Smarthome, www.smarthome.com (http://www.smarthome.com), a SmartLabs, Inc., www.smartlabsinc.com (http://www.smartlabsinc.com), company and the world's leading provider of home automation products, has hired Bruce Matthews as vice president of marketing. Matthews joins SmartLabs from TigerDirect, www.tigerdirect.com (http://www.tigerdirect.com), where he was vice president of business development.

AlterPoint and Compliance Spectrum Partner to Automate Network Compliance Controls across Multiple Regulatory Mandates
AlterPoint, Inc., a leading provider of open network management software, today announced that it has partnered with Compliance Spectrum, a leading provider of governance, risk and compliance (GRC) solutions, to help enterprises ensure the continuous compliance of networks with multiple regulatory mandates. The agreement will pair Compliance Spectrum's in-depth policy controls solution with AlterPoint's automated network governance solution, enabling network stakeholders to proactively reduce compliance exposures and mitigate liability.

Automate Your Work Using Macro System Module
Every webstore owner should take online store solutions for updating hundreds and thousands of products. They has to be edited quite often, thus making your store flexible and up-to-date. Large and medium stores have a lot of products with similar descriptions, however you have to go over each product separately and edit every piece of text manually. This is how it used to be. Now, you may automate this time-consuming operation using Macro System by MagneticOne. This module allows you to change similar parts of text in product descriptions just with one click. It is especially useful if you are the owner of a large store with lots of products: the module will help you to change parts of multiple product descriptions at once.

SmartLabs Introduces NetLinc - INSTEON Central Controller: Turns iPhone into a Home Automation Touch Screen
SmartLabs, Inc. announces the release of NetLinc, a plug-in web server that puts the power of controlling an INSTEON home automation network in the palm of your hand. This revolutionary new product allows communication from an iPhone, iPod touch, the internet or any mobile Wi-Fi / web-enabled PDA or cell phone to remotely control and set timers for INSTEON devices.