Today, I want to introduce you to the 8 Drivers of Company Value, a framework that identifies key areas to significantly increase your business's worth.
- Financial Performance: A strong track record of revenue, profitability, and financial management is crucial for attracting potential buyers or investors.
- Growth Potential: Demonstrating the ability to scale your business and increase profits in the future is highly desirable.
- Switzerland Structure: Reducing over-reliance on any single employee, customer, or supplier mitigates risk and enhances stability.
- Valuation Teeter Totter: Businesses that generate consistent cash flow are far more valuable than those that constantly require capital investment.
- Recurring Revenue: Predictable, recurring income streams are highly sought-after, as they provide a reliable foundation for future growth.
- Monopoly Control: A unique selling proposition or strong market differentiation significantly increases your business's value compared to competitors.
- Customer Satisfaction: Loyal customers who repurchase and recommend your business are a powerful asset.
- Hub & Spoke: A business that can function effectively even without your direct involvement for an extended period is significantly more attractive.
By focusing on these 8 drivers, you can:
- Boost your company's cash flow: Each of these levers can be used to drive profit, a goal of every business. This cash flow builds the assets of the business and for the owner.
- Greater Market Value: A higher market valuation is what you want in the event you sell the business. However its more than that, greater value means greater leverage and access to capital and a lower cost. This capital can be applied to accelerate the business growth..
- Stability: A stronger ship can weather more turbulence. This applies to the employees as well as the customer base. People want to partner with the best.
To understand your business value and prioritize your improvement efforts, let's set up a call.
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