Substance over size

| 3 minute read
Peter Hall
Author Peter Hall

Build a company of value

The Exit Planning Institute estimates that 76% of owners will exit their company in the next ten years. When a business is up for sale, buyers don’t look at how big it is, they look at how valuable it is.
Traditionally, all everyone cared about was how large your business is, and CEO’s were required to do anything they could to grow, and keep growing. Even if it degraded the business’s value over time.
But we’ve noticed a change. There is an emerging generation of business owners who are focused on growing in value, even at the expense of size.
What sets apart business owners that build value instead of size?
Building businesses that can thrive without them: Owners who build businesses that operate without them add value to their company. Avoid getting stuck in the day-to-day grind and make sure you are working on the business, not in it. If it can’t run without you, it won’t be valuable without you.
Focusing on recurring revenue streams: Transactional business models maybe bring fast growth and can be necessary at times, but they don’t bring long-term value. When a business is being sold, buyers want to see recurring revenue streams.
Guarding equity: Using equity to raise capital and hire employees is a common practice for businesses  who want to grow fast. We’ve all heard the stories from Silicon Valley. But it’s also one of the quickest ways to de-value your business (and your equity stake). Consider other forms of financing to grow sustainably.
Emphasising competitive advantage: Without a strong competitive advantage, your business is continually at risk of being pushed out by other competitors. Some businesses will forgo developing their competitive advantage in favour of undercutting the competition, or riding on the coat tails of other companies. It may allow you to grow quickly and maximise revenue, but it doesn’t build value into your business.
We’re always available to discuss how you and your business can grow in value or achieve a successful exit. If you want to know more or are interested in how Strategic Specialists can help your business, please contact us below. 

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