If you’re like a lot of entrepreneurs, you probably assume the value of your company will be determined by its size, and to a lesser extent, your industry. While size matters, there are actually seven other factors that impact the value of your company more than your industry. In fact, after analyzing more than 30,000 businesses using the Value Builder System, it turns out that getting these seven factors right can lead to acquisition offers that are more than twice the industry average. Likewise, we have seen examples of companies getting less than half the industry average multiple because of a weakness in one or more of these seven areas. To see how your company scores, you can complete the Value Builder questionnaire and get a report on how you’re doing in each area.
One of my favorite TV shows is “The Profit” on CNBC. The Profit is a reality show hosted by Marcus Lemonis, CEO of Camping World. Marcus invests his own capital in small businesses across the U.S. If you have seen the show before, you will recognize that he is a very process driven individual. In fact, he has a mantra you may have heard before – people, process, product.
What I find so powerful about the Value Builder System is that it is a very process-oriented approach to building value in a business. And, because the process is also data driven, it reduces decisions that are sometimes made on opinions or gut feel. Ultimately, I’ve found creating value in business is about following a systematic process based on a track record of success.
An important step in creating value in a business is knowing what the current value of your business is. You have probably heard the phrase, you can’t manage what you don’t measure. That is why at the beginning of every engagement we perform an estimate of value, using actual data from businesses just like yours that have actually received an offer. We then cross reference that data with your actual financial data, as well as attributes from the other seven drivers of business value to determine an estimate of value of your business. It is great way to show you what your business looks like from the eyes of an acquirer.
As you think of the coming months ahead, do you know where you want to take your business? Are you aware of the strengths and weaknesses of your business? Have you considered how these strengths and weaknesses impact the overall value of your business? Whether you are planning to sell, or just want to know you are building a valuable business, knowing where you stand is critical.
I invite you to take a few minutes to take the Value Builder Survey. It doesn’t cost anything to take, and you’ll get your score (out of 100) as soon as you’re done. After I receive the results, I’ll personally reach out to you and we’ll schedule 15 minutes to walk through your score on each of the eight drivers of value. Then we’ll talk about ways we can work together in a very structured, process driven way to minimize the weaknesses and enhance the strengths of your business.
The entire process is completely confidential, and I don’t share your results with anyone. The survey only takes about 13 minutes to complete. And, if you have any questions, please, reach out to me directly and I’m happy to chat.
Until next week!