8 Key Drivers Of Company Value That Every Business Owner Should Know
Now before we dive into the details of the 8 Key Drivers and why it is important to focus on Company Value, as a business owner, you should first ask yourself why am I in business? Or put another way, why do I get up every morning and do what I do?
I’ve asked many business owners this question and I’ve received a whole range of responses, but probably the most important response, is around building an asset of value or a company that is sellable. Ultimately every business owner hopes, that one day they’ll get a great return on all the time and effort that they’ve put into their business over the years. Does this ring true with you?
As a business coach, I use the Value Builder System™️ to help small business owners grow the overall value of their company’s, specifically with this goal in mind. And to do this, we consider 8 Key Drivers that impact overall company value.
Now as a business owner, knowing about these drivers and how to improve them, you’d be able to grow the overall value of your company, so one day when the time comes to exit your business, you’ll be in a position to ask a premium for it compared to the average business in your industry.
So over the coming weeks, I will be publishing a series of articles that discusses these drivers in more detail, but for now, here’s an overview of the 8 Key Drivers of Company Value:
- Financial Performance – Your history of producing revenue and profit, combined with the professionalism of your record keeping.
- Growth Potential – Your likelihood to grow your business in the future and at what rate.
- Switzerland Structure (Key dependencies) – How dependent your business is on any one employee, customer or supplier.
- Valuation Teeter-Totter (Cash flow) – Whether your business is a cash suck or a cash spigot.
- Recurring Revenue – The proportion and quality of automatic, annuity-based revenue you collect each month.
- Monopoly Control (Key differentiation) – How well differentiated your business is from competitors in your industry.
- Customer Satisfaction – The likelihood that your existing customers will re-purchase from you and also refer you to people they know.
- Hub and Spoke (Company structure, systems and processes) – How your business would perform if you were unexpectedly unable to work for a period of three months.
Being able to cash out the maximum when the time is right, is every business owners dream. It’s the dream of having a long and happy retirement, without financial worries, and being rewarded for all the hard work they put in over the years. But so many fail to get this right, because they never formally worked towards that goal, they thought it would just happen.
So if you’re a business owner who’s planning ahead and considering ways to exit your business on your terms, I hope the information I provide in the coming weeks will help you reach those goals. If you would like to chat to me about this in person, feel free to book a slot in my calendar and we can discuss it further.
If you want to see how you score in each of the “8 Key Drivers” right now, take 15-minutes to complete this survey and you’ll get a comprehensive 25+ page report benchmarking your business against its peers, plus 49 tips on how to improve those 8 key areas.