Why would two companies in the same industry, with the same financial performance, command vastly different valuations? The answer often comes down to how much each business is likely to grow in the future. The problem is that a lot of successful businesses reach a point where their growth starts to slow as the company matures. In fact, the price of doing a great job carving out a unique niche is that the specialty […]
Tag: Business_Finance
How To Scale Up Your Service Business
Increase the value of your company by training others in your area of expertise. It can be tough to grow a service business. Clients are typically buying your expertise, and if all you have to sell is time, the size of your business will always be limited by the number of hours in your day. One way to scale up your service business is to launch a training division to teach others what you know. That’s […]
Thinking Vs. Doing: The Owner’s Dilemma
There’s a steady breeze from the northwest, which cools the warm Caribbean afternoon. Framed between a palm tree and the turquoise water, you notice a man reading. He appears to be working, which seems strange given his appearance: shaggy blonde hair, linen shirt, surf shorts and flip-flops. You squint and realize the man is Richard Branson and he just happens to be running Virgin Group Ltd., a multibillion-dollar conglomerate. He is working where he usually […]
You-proofing Your Business
Making your business less dependent on you has a number of benefits: you can scale your company more quickly if you’re not acting as a bottleneck; you get more time to enjoy life outside of your business; and a business less dependent on its owner is much more valuable as an investment. Pulling yourself out of the day-to-day operations of your business is easier said than done. Here are three specific strategies for getting […]
The Surprising Secret To A Big Exit
We get to see a lot of company founders who are contemplating an exit. Some of our customers get lucky early in life, but in the vast majority of examples where a founder is getting a seven- or eight-figure offer, it is not their first rodeo. In fact, most owners have had multiple failures and modest successes before their first big exit. One of the most compelling reasons to consider selling your business is to […]
One Way To Decide When To Sell
How do you know the right time to sell your company? One answer to this age-old question is that the time to sell is when someone else is willing to invest more in your business than you are. When you start a business, nobody is willing to invest in its success more than you. You’ve already worked a 40-hour week by Wednesday and, if you’re like most founders, you’ve invested a big chunk of your […]
The Anatomy of a Successful Exit
Stephanie Breedlove started Breedlove & Associates in 1992 as a way to pay her nanny. The big payroll processors weren’t interested in dealing with one person’s wages and doing it themselves was complicated and time-consuming, too much for the then overwhelmed Breedloves. Breedlove saw a business opportunity and started a payroll company for parents who needed to pay their nannies. By 2012, Breedlove & Associates had grown to $9MM in revenue and then she […]
3 Surprising Reasons To Offer A Subscription
You can now buy a subscription for everything from dog treats to razor blades. Music subscription services are booming as our appetite to buy tracks is replaced by our willingness to rent access to them. Starbucks now even offers coffee on subscription. Why are so many companies leveraging the subscription business model? The obvious reason is that recurring revenue boosts your company’s value, but there are some hidden benefits to augmenting your business with a […]
The Downside of Selling Someone Else’s Product
Are you tempted to re-sell someone else’s product to boost your topline revenue? On the surface, becoming a distributor for a popular product can appear to be a simple way to grow your sales—simply find something that is already proven to be successful elsewhere and negotiate the rights to sell it in your local market. While distributing someone else’s product may be a relatively easy way to grow your topline, all that revenue growth may […]
Will this be the year you seriously drive up the value of your company?
If you have resolved to make your company more valuable in 2017, you may want to think hard about how your customers pay. If you have a transaction business model where customers pay once for what they buy, expect your company’s value to be a single-digit multiple of your Earnings Before Interest Taxes, Depreciation and Amortization (EBITDA). If you have a recurring revenue model, by contrast, where customers subscribe and pay on an ongoing basis, […]