Sudhir Ahluwalia's Blog, page 12

When selling a business, what multiple of EBIDTA can be expected for purchase price? The business generates approximately $800K in gross revenue.

You cannot estimate the asset value of a business purely on its gross revenues. I suggest you create an Information Memorandum (IM) document to give buyers a comprehensive view of the company.
I look at IMs regularly for an M&A funding coalition. Each pitch is different both in structure and in content. Still, an IM should include the following information;
Overview of the company: It should contain the date of incorporation and a historical snapshot of its performance since its inception. It is best to include quantitative and qualitative information regarding your company.
Offerings: The products and services your company sells should be clearly outlined. Kindly include details of the best performing product and service. Include the comparative share of this product or service in the company’s overall revenue. The section should contain a summary of the product features.
Reasons for sale: A buyer will want to know why the asset is being sold. It is important to provide detailed information here.
Financial Snapshot: Company’s assets and liabilities overview is important information that should be included in the IM. I am not recommending that should share the full balance sheet, but a summary and highlights of the company’s financials are necessary.
Ownership details: Buyers are always interested in information on the ownership details of the company. If it is a Founder owned corporation, include the resume summary of the owner.
The estimated sale value of the company depends on the enterprise’s perceived value in the eyes of the buyer. It is driven by the business need of both buyers and sellers.

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Will franchising my financial services business good strategy when entering a new country market?

Franchising a business is one of an organization’s many business models in its toolkit. The larger and more important question is expanding a company to another country.

Let me share a high-level process that corporations normally follow before expanding into another country.
Market sizing: There are two approaches to estimating the market size – top and bottom up. Try to get an estimate down to the sub-segment you intend to target.

Regulatory review: It is important to understand the country’s regulatory, social and political environment that you plan to enter. Jurisdictions have different regulations and socio-political environments. These will influence your business and market entry strategy.

Business strategy planning: Look at the industry and competition in the jurisdiction. Today social listening tools can get you a lot of insight into the prevailing business environment in the country. Your strategy planning should be finalized only after thoroughly testing your business concept in the new market.

Business model innovation: At this stage, you look at the available business models. Franchising is just one of the options. In the financial services segment, there are plenty of fintech-based options available. Consider each available option carefully before making the final decision on the business model.

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Why don’t doctors recommend herbal medicine?

Conventional medicine practitioners prescribe medicine based on their track record. Regulators must approve the medications, like the USFDA and other national regulators. Regulatory approvals require drugs to be tested in human clinical trials. The process of conducting such trials is laid out.
In a nutshell, the efficacy and safety of a medication on a set of people are tested. The data generated from these trials are compared with a group of individuals who have been concurrently administered placebos. The data on efficacy and safety is carefully recorded and analyzed. The findings o the trials are then peer-reviewed by an independent set of experts. Such results are often published in an independent scientific journal.
The trial data is then submitted to a regulator who independently reviews it. If the review concludes that the medicine is safe and efficacious, it is then permitted for use. Conventional medicine practitioners are now allowed to prescribe these medications to their patients.
Herbal medicine conventionally does not follow the prescribed clinical trial process. Herbal medicine practitioners directly prescribe these medications. Regulatory approval for such treatment is not available. Given this limitation of herbal remedies, regulators in some parts of the world also require herbal medicine to conduct human clinical trials and demonstrate its safety and efficacy.
Herbal medicine practitioners must adopt some modern scientific practices to popularise herbal solutions. I do observe moves in this direction taking place worldwide. The change is slow but is happening. Patients are in desperate need of the best available solution that will help provide relief.

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Can Yoga help manage hypertension and diabetes?

I looked at the scientific evidence supporting Yoga’s role in managing hypertension and diabetes in the course of research for my book Natural Solutions for Diabetes. Hypertension is often seen in people with diabetes. Here is the summary of the research:

A systematic review of articles and studies on the health impact of Yoga shows that its’ practice helps in weight control and reduction of blood pressure, blood lipids, and blood sugar. (Yang, K., 2007; Youngwanichsetha, S. et al., 2014)

Yoga and standard physical training exercises both have a positive impact on individuals who have diabetes. It helps reduce oxidative stress and bring about improvements in antioxidant profiles. (Gordon, L.A. et al., 2008)

Diabetic individuals who performed pranayama felt a sense of well-being in 7 to 10 days of practice. Demand for insulin and other diabetes control medicine dropped. In this trial, four types of pranayama were practiced for 30 minutes, followed by 10 minutes of resting yoga posture called Shavasana (a dead person pose posture). (Sahay, B.K., 2007)

Individuals who practiced 30 to 40 minutes of Yoga showed improved blood glucose and nerve function compared to another group of individuals who followed a regime of light exercise and medication. The yoga asanas included in this trial were: Suryanamskar (Sun salutation), Tadasana (Mountain pose), Konasan (Angel pose), Padmasan (sitting cross-leg Yoga sitting posture), Paschimottasan (Seating forward pose), Ardhamatsyendrasan (Half spinal twist pose), Pavanmuktasana, (Wind releasing pose), Sarpasan (snake pose) and Shavasana (Deadman pose). These individuals also practiced breathing exercises -Pranayamas. (Malhotra, V. et al., 2002)

I also learned that the role of Yoga, meditation, tai chi, qi gong, and herbal medicine in diabetes management is supportive. The thrust of diabetes management still sits with modern medicine.

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Clearing an entrepreneur’s confusion on business, strategy, marketing plans

The purpose of a business plan varies with the need of the company. When I used to work as a global business consulting head in TCS, the business plan for my group included strategy and marketing.
Many startups on platforms like UPWORK equate a business plan with a business pitch made to secure investments from investors. Then we have companies request experts to create a digital marketing plan when they need to ensure business growth for their enterprise. These entrepreneurs somehow believe that Google Ads, SEO, social media, blogs, and adverts will drive growth for their companies.
The type of document you create depends on your enterprise’s needs. For a purist, the terminology is important, but for the entrepreneur, the focus is on meeting their objective. As a consultant, I try to focus on my customers’ business requirements. The customer’s need dictates the advisory document contents.
It is, therefore, important to spend a bit of time understanding the needs of an entrepreneur before deciding the contents of your analysis. The diversity of terms often used interchangeably is causing this confusion in the minds of management purists.
Therefore, I recommend that entrepreneurs focus on clearly explaining their requirements and let the experts describe what and how they will meet these needs. You should then determine if the consultant has the skills to service your needs.

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What must be the first in putting a business? Is it planning or strategy?

A business plan is a subset of strategy. Without a strategy, a business plan will be a ship without a rudder. As an entrepreneur, you have a vision for your business. The vision is reached by defining long-term and short-term goals.
You start thinking of how you should want to reach your business goals. What services or products should I take to the market? I ponder some questions about who is my customer and where they are located. You get the crack team together and start discussing these questions. These discussions lead to you collectively agreeing to decide to pick the product or service, the mode, the market, and the resources required that you will deploy to take this to the market.
What I have outlined in the above paragraph is the strategy. It includes the following: the product, the market, the customer, the organization, and the mode of taking the product to your customers. The method of taking the product to the market is the business model. There are multiple business models in theory. Some of these are- platform, subscription, user-generated sharing, etc.
You begin testing the strategy with the help of a business model. In a while, you start seeing the results of the test. You may need to make changes to the strategy at this stage. It could even be a change in the business model. Ultimately, you get the right product, mode, market, and customer segment.
Now comes the business planning part. In the plan, you get into the details of launching the product into the market. The costs, projected revenues, the organization, and timelines come here. You start preparing to market the product, build the brand, and connect with your customers.
I see many businesses asking consultants to prepare a business strategy, business plan, marketing plan, etc. Others ask for content strategy, SEO services, and digital marketing services. They are flooded with responses from consultants. They select the consultant and invest in the service. In the end, they find they are not getting the desired results.
The reason should be clear to you. Your SEO, content, Google Adwords, YouTube videos, email marketing, and branding plan will only give you results when you have aligned your strategy, business model, and marketing plan.

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What are the medicinal properties of mint?

Mint belongs to the Mentha genus and has dozens of species and cultivars. Hybridization between species occurs naturally. The four most commonly cultivated species are Mentha arvensis (Japanese mint, menthol); Mentha piperita (peppermint); Mentha spicata (spearmint); and Mentha citrata (bergamot). Mentha sylvestris is another wild mint that grows much larger than M. spicata. This species was used in the Middle East and Israel as a condiment and medicine.
Mint is rich in vitamins A and C. It also contains small amounts of vitamin B2 and the minerals calcium, zinc, copper, and magnesium. Spearmint oil is similar to peppermint oil but slightly sweeter and pale yellow to greenish. Dried peppermint typically has 0.3–0.4 percent volatile oil containing menthol (7–48 percent), menthone (20–46 percent), menthyl acetate (3–10 percent), menthofuran (1–17 percent), and 1,8-cineol (3–6 percent).
Tayarani-Najaran et al. (2013) indicate that the essential oils of both M. spicata and M. piperita have antiemetic effects in chemotherapy patients. Experiments with essential oil on rats indicate its antitumor properties (Hajighasemi, 2011). Studies by Kazemi, Rostami, and Shafiei (2012) suggest that M. piperita has antibacterial and antifungal activities, though less than that of M. spicata. Carvone possessed the highest antibacterial and antifungal activity among the tested components.
M. piperita is widely used in medicines to relieve digestive problems, including heartburn, nausea, vomiting, morning sickness, irritable bowel syndrome, cramps, upset stomach, diarrhea, liver and gall bladder complaints, spasms during endoscopy procedures, and as a stimulant.
I have just listed some of the mint’s medicinal properties above. There is much more to this herb. Mint was extensively used in Biblical times and found mentioned in the Holy Bible.

My books on herbs and natural medicine:

Holy Herbs: Modern Connections to Ancient Plants

Asian herbs and their wondrous health-giving properties

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Is there any proof that natural remedies work?

The science of natural remedies is as old as man. Humans observed and learned from nature. Through centuries of trial and error, natural solutions for various diseases were written down. Hippocrates and a host of ancient Greek scholars wrote some of the first Pharmacopeia.
In the East, in India, Charaka and Susruta compiled the natural remedies knowledge available to man in their magnum opuses Susruta Samhita and Charaka Samhita. This documentation is dated somewhere in the first millennium BC. The exact date of these works is not available. These formed the basis of Ayurveda.
In China, Sheng Nung’s similar work on natural remedies was done, and from there was born Traditional Chinese Medicine.
These ancient works’ common themes are food, lifestyle, and herbal remedies. Yoga, tai chi, and qi gong all have their origin that goes back to early parts of human history and would be dated to the first millennium BC.
Most modern medicine stands on the shoulders of these ancient systems. Indeed, a majority of current drugs are of plant origin. Vincristine used in cancer chemotherapy has its origin in Vinca rosea. Aspirin, the common drug origin, is plant-based. There is vibrant and active research worldwide to study and validate solutions mentioned in ancient natural medicine-based records. Curcumin found in turmeric spice is another chemical likely to provide us with cancer medicine.
As I researched for my books on herbal medicine and natural remedies, I encountered hundreds of scientific studies supporting many ancient applications in Ayurveda, TCM, Yoga, meditation, and tai chi.

My books on natural remedies:

Holy Herbs: Modern Connections to Ancient Plants

Asian herbs and their wondrous health-giving properties

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How useful is Digital marketing over Traditional marketing?

Digital marketing tools enable the marketing message to be delivered to a specific customer segment. Traditional marketing is more broad-based and less focused when compared to digital marketing.
The choice of the marketing tool -digital or traditional depends on the customer segment, target area, and customer profile that includes demographics and barriers to buying the offered product or service.
Marketers often make the case that marketing will help in business growth and that using digital marketing tools will bring exponential returns to your enterprise. I have been consulting for over twenty years, and I can safely say such claims are inaccurate. The question is not what is good digital marketing or traditional marketing. Both have a role in conveying the marketing message about your company’s products and services.
An entire organization, leadership, business strategy, value chain, and business models undergo periodic restructuring and re-alignment in companies that show consistent business growth. Marketing sits on the foundation of strategy and business models to be effective.
Digital marketers alone cannot help drive sustained business growth. It is a much more complex exercise.

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How do design my company for sustained growth?

Look at the target customer profile when designing a business portfolio. A comprehensive profile of the customer demographics and barriers preventing the customer from buying the product you intend to bring to the market should be documented.

Customer profiling should be done systematically. Take the help of secondary research and primary survey-based data. Tabulate the profile data and average the results.

The next step is to size the market. There are two approaches to market sizing. There is a bottom-up and top-down approach. I prefer the bottom-up approach because the sizing estimates are more accurate. The bottom-up approach starting point is authentic industry statistics on sales and growth in the product segment of your choice.

Once you have the target customer profiles ready and have a good estimate of the available market size, you can begin designing your growth strategies. Let me share the growth model that I follow for developing and implementing growth strategies:

At the base sits the business strategy. The business model drives the business strategy. The business model, in turn, is driven by the marketing strategy, with the latter being implemented with the help of marketing tools.
Many people believe that growth is achieved through marketing. Marketing alone does not lead to sustained growth; it is based on business strategy, business model, and marketing strategy.

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