5 Ways Business Owners Increase Their Business Value by Having a Value Builder Mindset
What is a "Value Builder"?
Value Builders have one objective and that is to build a valuable company that is able to thrive without them having to be constantly involved. They can take a 3-6 month vacation and the business would continue to grow. They have a management team in place who can make business decisions without having to run it by the owner. They build wealth and gain personal and financial freedom through creating a valuable business.
What are Value Builders doing?
1. Value builders start with the end in mind. What are your long term personal goals for yourself and the business? Are they aligned? Many business owners don't think this far out because of being so busy working in the day to day of the business. Do you plan to work in the business when you're 80-90 years old? Most likely not. Write down what you'd like to be doing 5, 10, 15, or 20 years from now so you can keep track if you are moving in the right direction in support of your vision.
2. Emphasize growing value. Rather than prioritizing to consistently increase revenue, value builders focus on building value. There are many ways to increase the value of a business. Several include making a large financial investment in hiring a qualified candidate to join your team, upgrading your CRM (client relationship management) system, creating Standard Operating Procedures for your top 5 core processes, or an investment of your time and energy into improving your client onboarding process. All of these are examples of growing value. Listen to Episode 6 of the "Business Exit Success" podcast for more details on building value.
3. Focus when others diversify. Value Builders focus on selling a specific set of products and services to a specific niche in the market place. Conversely, selling lots of products and services will decrease the value of the business. Having a broad list of products and services may provide the opportunity to bring in more revenue but in the long run, it will make your business owner-dependent. How will it make your business owner dependent? By having a laundry list of products and services, the owner is most likely the only one with the most industry knowledge and experience to successfully deliver on it all. It will also make training your sales team more difficult because of the breadth of your offering. Sell less to more people.
4. Win subscribers over seeking customers. Customers are transactional. Subscribers are recurring. Value Builders try to incorporate a recurring revenue model within their business. Recurring revenue happens when you sell a customer once and they continue to pay you as long as you continue to add value. Examples can be a subscriptoin based offering or maintenance contract. The benefits to recurring revenue include having an ongoing stream of income, allows you to accurately predict what your future stream of income will look like and how much you will get from a subscriber. Because it can be so predictable, having recurring revenue can add a ton of value to your business depending on your industry.
5. Value Builders create businesses that thrive without them. Most small business owners are the hub of their business. Picture the owner is the hub within a wheel where employees, suppliers, and customers are the spokes. All business decisions usually get made in the center at the owners level. Not only does this model limit the growth of your business but functioning this way makes your business unattractive for a potential sale because everything needs to funnel through the owner. If the owner were to leave, the business would greatly suffer, or at worst go out of business. So what do you do? Identify your top 5 core processes that are essential to running the business. Create Standard Operating Procedures on how to exactly complete these 5 tasks and then start delegating them to your team. The goal is to get as much off your plate as possible. Listen to Episode 10 of the "Business Exit Success" podcast on "The Art of Delegating" to learn how to do this.
If you enjoy this content, check out the "Business Exit Success" Podcast! We'll bring you episodes bi-weekly on topics laser focused on how owners can grow the value of their business and position themselves to exit successfully on their terms.
Never miss an episode by subscribing via Apple Podcasts, Spotify, Stitcher, Google Podcasts, Amazon Music or by RSS!