Actionable ways to increase the value of your business
Last week, following our expert interview with corporate finance expert Barry Lee, I conducted my weekly live masterclass on actionable ways to increase business value.
That’s why I wanted to post a summary of this workshop with all the elements you should consider now to start increasing the value of your business.
Start with the end in mind
No matter where you are in your business journey, what do you WANT in your life? When might you want to sell it? How much money do YOU need to be financially free? And do you have any idea who might buy your company one day?
Why it’s a good idea to start creating value NOW!
The things that are attractive and valuable to a buyer are also very attractive and valuable to you now and in the future, whether you sell or not.
A valuable company generates and maintains more profits, it has more cash, it has a healthier balance sheet, and it continually increases your personal wealth
A valuable business can invest in your retirement, business growth, or other investments — all things that increase your personal wealth while increasing the value of your business.
Maybe circumstances change and you want to sell. This could be due to health or family circumstances, you could have fallen out with a business partner, or you could have lost love with your company.
And maybe you’re approached out of the blue by someone who wants to buy your business — so you want your business to be valuable and sellable, and not have to give up because you’re not ready.
So what is valuable to a buyer?
Pay:
- Increase your profits year after year
- Improving cash flow
- Solid financial information and control
Customers and sales:
- Recurring Revenue
- Contracted revenue (this is the most valuable)
- Diversified customers, meaning you don’t rely on one or more key customers
- Customer retention – Do your customers keep buying or do you have to constantly be looking for new customers?
- Show that you have the ability to bring new products or services to market
- And a solid marketing process that continually generates sales
People and processes
- A company that is NOT dependent on you and can run without you is always very important to a buyer
- Smooth, repeatable routines and processes
- Employee engagement and retention – no one wants to buy a company where employees are miserable and keep leaving!
Potentials and strategic areas
- Scalability – Does your business have the potential to scale from its current state?
- Differentiation – what is your unique selling point, how are you different or better than your competitors?
- Do you have a strategic plan?
- Brand and reputation
- Low risk of commercialization and disruption to competition
- Intellectual property
So WHAT exactly can you do to increase the value of your business on a practical level?
- First, make yourself redundant – withdraw from day-to-day business
- Establish processes and routines, document them, and ensure everyone follows them
- Increase your gross and net profit margins
- Focus on customer service and customer retention
- Strong financial controls and reporting
- Have a clear vision and strategy for the company
Then you should measure the right things often
Find out how your business would be valued, then track your value at least quarterly.
Make sure you have great financial information with graphs and key performance indicators so you know the whole story (and not just a crappy profit and loss report from your accounting system).
Measure your customer loyalty, average order value and how often your customers order. Make sure you always know what percentage of your sales your biggest customers represent. No one should ever exceed more than 10%.
Measure your recurring and contracted revenue every month.
Measure team loyalty, satisfaction and engagement using an online employee survey.
And measure your progress towards your vision.
It’s always worth building the most valuable business you can because it will create the BEST business you can. For now and for your future.
It’s too important to leave it to chance!
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PS: You can watch the entire live workshop on replay Here
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UPCOMING EVENTS
EXPERT INTERVIEW: SUSAN HALLAM MBE – How to successfully scale and sell your business (Attention, pay attention to new content)
April 22nd 2 p.m
Join me for my interview with the one and only Susan Hallam MBE, founder of Hallam, the multi-award winning digital agency.
Susan founded Hallam over 20 years ago and grew her business into one of the most respected digital agencies in the UK. She recently won the “TOP Digital Agency in Europe, Middle East and Africa” award from Google.
We are discussing:
- Susan’s story of working alone for many years before deciding to scale up
- How she planned her exit from the business
- The most difficult aspects of building a valuable business
- How she managed to make herself “superfluous” from her business
- Building a management team that could replace her
- The biggest mistakes she made that we were able to avoid
- The best thing she has done to create value
- And what it was like going through the sales process and moving on to a new life in Hallam.
It will be a fascinating and valuable discussion; If you are an ambitious business owner, don’t miss this book!
Book here
Robert Craven What high-performing companies do differently than the rest
May 5th 12.30 p.m
Robert Craven is a top international keynote business speaker, digital agency expert, author and business growth consultant.
Known for his no-nonsense approach to business growth, Robert has worked with agencies around the world and is the author of 10 business books (two of which even have a foreword by Richard Branson!) and counts Google and Barclays among his clients.
We will discuss this in this factual event
- The magic triangle of the best performing companies
- Why relying on a company sale is high risk
- Why the best performing companies spend the least on marketing
- The big problem with famous entrepreneurs and how they tell their story — why the great success stories are actually very rare and we need to know what we really want from our company instead of chasing an impossible ideal
- Why there are very few differences between the very successful companies and those that fail
Known for his rants and unique perspective, this will be a most compelling and fascinating interview!
