As we look forward to the upcoming year, many business owners are taking a step back to evaluate where they can add value to their businesses. Whether you’re looking for an exit strategy or just to make a simple value increase, these tips can help boost company value this year.
If your goal is to build a more valuable company in 2022, here are some New Year’s resolutions to consider:
1. Stop chasing revenue.
A bigger company is not necessarily a more valuable one if the extra sales come from products and services that are too reliant on you to deliver them.
2. Start surveying your customers using the Net Promoter Score methodology.
It’s a fast and easy way for your customers to give you feedback, and it’s predictive of your company’s growth in the future.
3. Sell less stuff to more people.
The most valuable companies have a defendable niche, selling a few differentiated products and services to many customers. The least valuable businesses sell lots of undifferentiated products and services to a concentrated group of buyers.
4. Drop the products or services that depend on you.
If you offer something that needs you to produce or sell it, consider dropping it from your offerings. Services and products that require you to have too much input suck up your time and cash and don’t contribute significantly to your business’s value.
5. Collect more money upfront.
Turn a negative cash flow cycle into a positive one and you boost your business’s value and lessen your stress load.
6. Create more recurring revenue.
Predictable sales from subscriptions or recurring contracts mean less stress in the short term and a more valuable business over the long run.
7. Be different.
Refine your marketing strategy to emphasize the point of differentiation that customers value. Be relentless in highlighting this advantage.
8. Find a backup supplier for your most critical raw materials.
Consider placing a small order to establish a commercial relationship and diversify the sources of your most difficult-to-find materials.
9. Teach them to fish.
Answer every employee question of you with “What would you do if you owned the business?” Your goal should be to cultivate employees who think like owners so they can start answering their own questions without coming to you.
10. Create an instruction manual.
Document your most important processes so your employees can do their work independently.
Here’s to building a more valuable company in 2022!
Looking to build value with an exit plan in mind? NuVescor can help.
Our preparation process is a 60-90 day version of an exit plan that gives business owners what they need to determine what their business is worth, who would be interested in purchasing it, and what the proceeds of the sale might look like. This can help put business owners at ease and gives them the info necessary to decide if and when they want to exit and move on to their next stage of life.