What are your BHAGs (Big Hairy Audacious Goals) for your business? Is it to expand it overseas? Is it to sell the business for a huge profit? How about franchising or licensing it? Whichever path you want to go for, one thing that you will definitely need to work on is getting top valuation for your business. And as a business owner, keeping your business’s value increasing is as simple as ABCD.
A: Asset Accumulation
What better way to increase the value of your business than having more assets. Asset Accumulation is very simple, it is concerned with making decisions to allocate funds and investing it into tangible assets that, preferably, has value that appreciates over time. Bigger business means it has bigger value. However, as simple as Asset Accumulation is, many entrepreneurs fail to put Intangible Assets into their sights. Brand positioning, customer base, contracts, and receivables are just as important as tangible assets like Cash and Equipment. Successful businesses are committed to constantly growing these tangible and intangible assets, which sets them apart from their competitors. How about you, what are your assets and what are your plans to grow these assets?
B: Business Profits
What sets apart good business owners from great ones is that good owners only look at the sales numbers, while great ones look at the profit margin and the net profit. What’s the use of getting huge sales numbers if none of it actually ends up in your pocket. There is no doubt that profit is profit, and that having a positive net income is a blessing. However, if you want to keep on increasing the value of your business, then you should start looking at not just profits, but also the Profit Margin. Higher Profit Margin means more profit / dividends, which means that your ROI is much better. Just because a business is turning a profit, doesn’t mean it automatically is doing a great job.
Investing in a business coach that can help you analyse the ins and outs of your business is probably the best way to achieve the maximum profit margin. A business can lose tens of thousands of dollars per year right under their noses due to unnecessary spending and weak value proposition. Great entrepreneurs implement “Kaizen” which means continuous improvement. Sometimes implementing one small strategy at a time is better than ten strategies that don’t get implemented well. To determine what’s the best strategy you can use to improve your profitability you may want to dive deeper into the financial statements, inspect every detail, and look at your Profit/Loss numbers.
C: Cash Flow
Poor Cash Flow management can easily put a business in a very problematic situation. Remember that Cash is the blood of every business, and just like in the human body, poor circulation can quickly put you in a bad spot. Having a healthy Cash Flow shows that your business runs like a well oiled machine. Any potential buyers / investors would definitely look at your business’s cash flow to see how healthy it is, and any hiccups can give off red flags. Improving Cash Flow will not only make your business increase in value, but it will also save you the stress of struggling to collect receivables. Although it is best to hire an accountant to gain clarity on your Cash Flow situation, a simple way to improve your Cash Flow is to look at your payables and receivables. You can also check out my other article: How to Manage Your Cash Flow Like a Boss for some tips that you can quickly implement. Just remember that the healthier the Cash Flow movement, the more valuable the business.
D: Diverse and Recurring Revenue Streams
If you look at your revenue streams, how many percent are one time transactions and how many percent are recurring? It is always wise to make sure your revenue stream doesn’t come from just one major client. The more recurring purchases you have, the less effort you need to keep acquiring new ones. Having more recurring purchases also demands less effort from you to run your business, and more importantly, it will make your business more attractive to potential investors / buyers. A good way to diversify is to make different kinds of products, look for more clients, maybe create a side hustle for your business. Recurring Revenue Streams are good indicators of the continuation of growth in clientele and loyal customers which increases the valuation of your business.
With the Big Hairy Audacious Goals you have for your business in mind, how close / far are you from achieving them? The ABCDs will help you inch closer to your BHAGs and hopefully reward you for all the hard work you’ve put into your business. And if you find yourself stuck, feeling like your business isn’t growing anymore or you aren’t growing as fast as you can or want, email me at [email protected] to get your complimentary business strategy session.
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About the Author
Coach Felie is a business coach and experienced trainer, having a successful track record of growing companies across various industries by 100-500% within a year. With her firsthand experience working with companies and their leaders, Coach Felie transforms disengaged employees into fully engaged leaders that create long-lasting results. Having seen the troubles people experience as they try to start their own business, she has made it her mission in life to help others help themselves in growing and succeeding in their businesses.
