As leaves start to fall, you hope your profits don’t follow suit. The pandemic is still playing havoc. Supply chains have been severely disrupted. Consumer confidence is not what it was. So, at times like this, what can you do to boost the value of your business?
Here are ten tips:
- 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. Think about what is likely to make your business valuable in the eyes of an investor or buyer. Revenue doesn’t always equal value.
- 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. To grow your business you don’t just need to understand the people who work for you, you need to know the people who buy from you.
- 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.
- 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 your attention suck up your time and cash and don’t contribute significantly to your business’s value.
- Collect more money up front. Turn a negative cash flow cycle into a positive one and you can boost your business’s value and lessen your stress load.
- 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.
- Be different. Refine your marketing strategy to emphasize the point of differentiation that customers value. Be relentless in highlighting this advantage. You need to get noticed.
- 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. A fragile supply chain can seriously hinder the value of your business.
- Teach them to fish. Answer every employee question of you with one of your own – “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. It also enhances loyalty and job satisfaction.
- Create an instruction manual. Document your most important processes so your employees can do their work independently and know precisely what your strategy and values are.
If you haven’t ticked all ten of these boxes, it’s worth paying attention to the areas where you fall down. The business that grow in value are those that evolve, and continually ask – what could I be doing better?