Value – the truth behind the myths

Value – the truth behind the myths

value downloadEntrepreneurs rarely think about what the value of their business really is, and even less about what the concept of value really means.

When I’m asked about what value I may get for a business at exit, I am tempted to (and sometimes do) say

“its how much you satisfy the needs and wants of your customers and turn them into clients which return time and time again so that you have a systematic, sustainable and structured earnings stream that your ultimate purchaser will part with hard earned cash to buy”.

A mouthful, but a very important concept.

The numbers are a re- PRESENTATION of value (or lack of) in the business.  And THAT’S what an investor will “buy”, whether that is the sale of your business, listing or indeed a share purchase – its an emotional look at value delivery.

And how and when do you prepare your earnings for sale – answer – TODAY.  You need to have value creation at the forefront of every action in the business.  Value creation is the end result of systemisation of your earnings stream through marketing, selling and delivering on a product promise consistently and constantly.

The numbers show how well the earnings are systemised and the trend is the friend – the trend shows where the ‘goods and bads’ are in the business.  So, look at your numbers trend and if you don’t understand the language of numbers, engage someone that DOES understand them in depth – it could mean the difference between selling at value or not.

 

phil@philolsen.com

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