Profit and Value go Hand-in-Hand

Posted by sandramunier on August 2, 2016

Every business owner knows the importance of profitability in their business and they all want to have as high profits as possible.  But what about growing value in a business? Business owners often do not think of the importance of growing value, which one day in the future can greatly impact a business and what the owner wants to do with that business.

Business owners who take the time to learn what specifically adds value to their business can receive a very positive result with multiple outcomes.  By knowing what adds value and implementing specific activities to build value, owners will build more profit as well.  So what are the ways to build value in a business?

One of the main ways to build a valuable business is for the owner to develop systems and processes that enable the business to become less and less dependent on the owner.  We call this value driver the “hub and spoke” part of the business.  Other ways are to be focused on growth in other areas of the business (new products/services to existing clients, expansion into new geographic areas) and setting up a system within the company’s accounts payable and receivables to generate more consistent cash flow.  Also, a business should not be in the position to be overly dependent on a few customers, vendors, or even employees.

One newer method for creating value is to develop a recurring revenue model (think the “Automatic Customer”) in the business, and there are opportunities for doing so in every business.  If a business owner wants to eventually sell or transfer his/her business for the most competitive and possibly highest amount possible, starting right away with building value within the business is crucial.  And your bottom line and bank account will be thankful!

By Sandra Munier, Owner, EndGame By Design, LLC

www.EndgameByDesign.com

 

Comments are closed.