While many startup entrepreneurs have experience in a corporate setting, few have had experience actually running an entire operation on their own. In a corporate setting, there are already established relationships, financial resources, and managerial depth across other key functional areas of the business. Usually, in a corporate setting, the functional areas are also managed … Continue reading 7 Deadly Sins of Startups from a Valuation Perspective: Lack of Startup Managerial Experience
The 7 Deadly Sins Articles
Explore deeper insights from The Seven Deadly Sins of Business Valuation series through our curated collection of expert articles. These pieces expand on the book’s core themes and provide practical applications for SBA lenders, business owners, and advisors. Each article is designed to help you recognize common valuation pitfalls, understand key concepts from the SBA SOP, and improve your underwriting or advisory approach. Whether you’re dealing with goodwill, normalization, or strategic pricing missteps, these articles offer guidance rooted in decades of real-world valuation experience.
7 Deadly Sins of Startups from a Valuation Perspective: Operating On Shoestring Budget/No Working Capital
Too often, entrepreneurs believe the business will quickly generate enough cashflow to sustain operations and, thus, enter into the new business with insufficient financial resources. They may try to operate on a shoestring budget until the business reaches cashflow break-even out of necessity due to a lack of access to additional financial resources. This may … Continue reading 7 Deadly Sins of Startups from a Valuation Perspective: Operating On Shoestring Budget/No Working Capital
7 Deadly Sins of Startups from a Valuation Perspective: No Break-even Analysis
A key part of the financial projections and business plan is for the entrepreneur to conduct a break-even analysis. The traditional break-even analysis reveals what level of sales a business must achieve to cover both the variable costs (cost of goods sold) and the fixed costs (overhead), resulting in $0 profitability. Beyond the break-even point, … Continue reading 7 Deadly Sins of Startups from a Valuation Perspective: No Break-even Analysis
7 Deadly Sins of Startups from a Valuation Perspective: No Formal Business Plan
Along the lines of the first deadly sin, the lack of a formal business plan is also common among small businesses and startups. New entrepreneurs often mistakenly believe that opening a business and putting a sign outside is enough. It is usually the business plan that segregates viable businesses from an entrepreneur’s hobby that they … Continue reading 7 Deadly Sins of Startups from a Valuation Perspective: No Formal Business Plan
7 Deadly Sins of Startups from a Valuation Perspective: No Financial Projections
The value of most businesses is the sum of the present value of the cash flows expected to be generated in the future. Amazingly, many entrepreneurs and new business owners are unable to provide a set of financial projections or budgets and the underlying assumptions. Many believe that growth of the business will just happen … Continue reading 7 Deadly Sins of Startups from a Valuation Perspective: No Financial Projections
Highland Global Business Valuations 