A successful business has it all. Happy customers, happy staff, a good profit, plenty of recognition – all the hallmarks of long-term success that could make you very rich one day! Any small business owner would be proud to tick off all of these elements and they’ll always be great things to aim for.
However, did you know that a successful business doesn’t necessarily equate to a valuable one? If you ever plan to sell in the future, your success will only form part of the picture. There are a lot more business value factors to creating value than just your cash flow forecast looking good!
With that in mind, let’s figure out where the value lies in your company right now.
Let’s explore three business value factors that determine business value:
1. How Many Products Do You Have?
Expanding your product line is a surefire way to send the value of your company soaring. When you’ve got more than one product to sell, you have more than one line of income – even if you get the majority of your revenue from your flagship item that made you such a success.
If you’ve got loyal customers and repeat custom, and your current offering is popular and has always sold well, you should have the necessary funds to invest in product development. This can then expand your stock and provide more for your customer base. Remember, the more money you can make off of them, the better your conditions for growth and the better your potential for value!
2. How Much Debt Do You Have?
Making money will always be a good thing; cash assets are a good sign your company has value, especially if you can continually top up from how much you’re bringing in. The most valuable businesses out there are in the green, are routinely bringing in new customers, and have an emergency fund in case something goes wrong.
Safe to say, these businesses are doing well financially and there isn’t any sight of a cash flow issue on the horizon!
However business value factors, this doesn’t account for the amount of debt that might be going on behind the scenes. Whether you’re paying off loans, taken on risk, or you’ve got a lot of start-up debt that you’re still in the throes of, debt is going to drag down your company’s value until the moment it’s all paid off.
3. What are You Doing to Grow?
Growth is at the core of what makes a business valuable. If you’ve got plans for the future – realistic, actionable plans – your company will be able to expand steadily over time. Current success is a fine thing to have, but if you can see success in the future as well, your business will end up with a very valuable price tag on it!
Make sure you’re investing in what might happen next, and what you’ll be able to achieve in the coming months.
A successful business isn’t always a valuable one, but you can change that! Take business value factors like those above to increase your value over time.
