Discover the key indicators of business readiness and learn how to increase your company’s value with the book ‘When Do You Know If You’re Ready to Increase the Value of Your Business’. This comprehensive guide covers financial stability, market demand, organizational structure, and other critical factors that determine a business’s potential for growth. Get the insights and strategies you need to succeed in today’s competitive business landscape.
- You have realistic expectations about the value of the business as it is today.
Even though you might be profitable, revenue and profits are the only reason a buyer finds your company valuable.
- You have good systems in place that don’t depend on you.
- Most business owners store a wealth of knowledge in their head and not on paper. If that isn’t expressed in procedures and formal systems, the business can become worthless.
- You have thought about your next act in life
- Everyone likes to feel needed. When you sell, a lot of the responsibilities you had running the business go away and can end up feeling regretful. Beyond simple thoughts like “I will travel.” What are the things that will fulfill you?
Coming Up – Business Attractiveness Threats – Getting away from Flashiness and Building Substance
Business Attractiveness Threats– Getting away from Flashiness and Building Substance
If you don’t know what drives value, you don’t understand your business.
You also have an unrealistic value of it, especially when you hear #AdamNeumann getting a pre-revenue valuation of $1B for Flow after blowing up #WeWork and Masayoshi San’s #Softbank.
There are three types of business buyers:
- Strategic – Those who want to grow their footprint, diversify their revenue stream, or eliminate the competition.
- Private Equity Investors – Fiduciaries with a clear mission and defined box of what they want and how long they can be there before they exit and meet investor promises.
- Owner/Operator – Those who want to buy a job or diversity their cash flow and build wealth.
A business attractiveness score is not valuable based only on profits.
Culture. Customer Engagement and the owner’s attitude play a big part.
Business, forecast, and market factors along with investor considerations determine the substance beyond the hype.
Attractiveness focuses on 25 factors including:
- Management Bench Depth – Can the business run with minimal oversight of the owner?
- Customer Loyalty – The longer the tenure of customers, the better.
- Brand Awareness – Does the customer recall or recognize the company under different conditions?
- Barriers to entry – Fewer barriers means higher competition.
- Reason for selling – Is the sale forced due to the 5 “D’s”? See my article on the 5 “D’s” Here.
Your business could be worth double the amount depending on the buyer in the room.
How are you maintaining your business attractiveness? Drop it in the comments.
Coming Up – Business Readiness Threats
You have no idea what your business is worth if:
- Your brand adds no value to your industry/client base,
- There are pending compliance issues like taxes, environmental, and regulator,
- There are no management systems to generate 12-36-month forecasts quickly,
- There are no systematic marketing processes in place,
- You have no idea how buyers create value and who they are in your marketplace,
- Have few strategic alliances with your customer base to solidify revenue streams
These types of business readiness considerations can double or triple your enterprise value once you are ready to sell.
Coming Up: Personal readiness threats affecting the value of your business.
