TIME 7 What.. : iF MONEY ss Fr aa~., (f Vresentiy ic ar d », et ’ oS Sn > ‘ha pleasure of participating in Kelowna’s Neighbourwoods program. For those of eparilicr itis an annual program promoted by the municipality whereby they sell subsidised) trees to homeowners, in an effort to increase the percentage of canopy 0 coverage within the City. I selected a Northwood Maple, because I thought it would do best in the SL Pvorciip,y! a n that! intended to plant it. My neighbour, who tipped me off to the program, informed me < that she had shopped around at various local nurseries, and equivalent trees were priced 2-3x <_Wwhat we'were charged through the program. While planting the tree (and congratulating myself on scooping a great deal), | began to think about how trees are priced. | imagine it’s 4a lot like most other retail items, there are pretty standard input costs, things like: soil, seeds, ferllizer, plastic pails, as well as other general overhead expenses such as: labour, land usage, property toxes, efc. Naturally, there also needs to be @ reasonable amount of margin added to the price to not only cover the expenses, but also allow for some profit. It occurred to me, that the people cultivating these saplings, were effectively planting money, which made my mind wander a litle further and think, If money grew on trees, how would they assign a price to them? Yield is King The most relevant analogy | could think of for pric: ing a money producing ie is that of valuating a business. Generally speaking, the more money business makes, the more its worth to a buyer. One of the key values we use in calculating a busi ness's value is that of Seller's Discretionary Eornings (SDE), which is essentially the fotal monetary benefit (or equivalent) that an owner receives in the course of one year concen | Summer 2017 of operations. Typically, most businesses fall within a mul- tiple of 2-3x their SDE. It would be nice if the valuation process was just that easy, however, there's a lot more fo it than just a simple calcula- tion. To get he full picture we need to dig «litle deeper (pun intended), and look at numerous other factors: 1) History. How long has he ee been producing cash, and how much? A consistent and reliable track record obviously bolsters the underlying value. Producing a “bumper crop” one year, won't have a huge elec’ fit appears to be an anomaly 2) Future. Is there a lifecycle o the ree, and just how advanced isthe tree in that cycle? Are there any evident threats that could present a threat down the road (climate change, Fine Beetle outbreak)? 3) Owner involvement. The same tree under the care of two different gardeners can produce dramatically differen results. f the tree requires constant nurturing, and only produces worthwhile output at the hands of a very dutiful professional arboris, itis likely to be worth less than a money tree requiring litle attention. If the upkeep ofthe tree is relatively nominal, and can be done without any special skil, it is much more marketable, and appealing to a buyer.4) Intrinsic Value. Beyond providing shade, and pleasant looking foliage, ifthe tree, for one reason or another, should stop producing cash, ‘what is it worth beyond thai? If it is @ rare and exotic tree with ‘wood that can be turned into furniture (or lumber for that mat- tor), then there is definitely some inherent valve. Alternatively, if what remains ofthe tree is good for nothing more than fire- ‘wood, or worse: mulch, then that needs fo be factored in os, well If you would like fo have @ dollar amount assigned to your “*money tree", don't hesitie fo get in touch with the profes- sionals at, Business Finders Canada. For what i's worth, my recently planted Northwood Maple is thriving, now if it would just start producing some cash! ‘Andrew Pohl About Business Finders Canada Professional Business and Commercial Real Eta Brokers Connecting buyers and sllers of Businesses ond Commercial property. [ATEAM of Decimakors with confidential processes and proven systems which are 6x mere effective han the industry average We bring 200+ years of experience, while streamlining « complex process. We have helped 100's of business owners Let us know if we can help you! : cs. yo" Business Finders Helping you BUY or SELL Business and Commercial Property our vehicle maintained by the Two Time Business of the Year? ¢ Vintage Service * Contemporary Maintenance (Greater Westside Board of Trade Awards) MAINTENANCE & REPAIR FIFTH AVENUE —— i FAMILY DRIVEN 2447 Apollo Rd. West Kelowna VAT 1P7 250.768.4485 www.fifthaveauto.com ICON OKANAGAN 51