Two Steps to Increase the Value of Your Business
Wind Mobile Founder Anthony Lacavera: Two Key Tips for Business Success Wind Mobile founder Anthony Lacavera has started 12 businesses, six of which he has exited. His exits have ranged in value from the $6 million he got for one of his recent start-ups to $1.3 billion when he sold Wind Mobile. He did it by following two key tips. 1. Understand What Kind of Company You Are Running Lacavera has owned hyper-growth unicorns and lifestyle businesses and urges entrepreneurs to be clear about their long-term prospects. Lacavera started a business supplying hotels with internet access and understood the company would be a good cash generator but would never sell for a mint. He ran the business for almost two decades and used the cash it generated to fund various other ventures. Recently, he finally sold the business, which was generating $1.5 million in pre-tax profit, for $8 million — a relatively modest 5 times earnings, which was fine by Lacavera, because it had served its purpose of funding other companies along the way. 2. The Role of CEO and Owner Are Not the Same Lacavera encourages entrepreneurs to separate the role of CEO and business owner. Even though they may be the same person, they have different functions, and, at some point, your business may be better served by separating the two roles. Entrepreneurs who are comfortable handing the reins to a professional manager may do better in the long run than those who need to control everything. Lacavera had great success, which is visible in the fact that he has won just about every business award there is, including: 2010 CEO of the Year Top 40 Under 40 Deloitte Technology Fast 50 Canada’s Fastest Growing Company One of the top secrets to Lacavera’s success? Knowing when to bring in a CEO to replace himself in any of his ventures. How Healthy Is Your Business? Our research shows that companies achieving a score of 90+ out of a possible 100 get offers that represent a multiple of pre-tax profit which is twice that of an average-scoring business. Research also shows companies achieving a score of 90+ are more than twice as likely to have received a written acquisition offer in the last 12 months compared to the average-scoring business. If you’re like a lot of entrepreneurs, you use your Profit & Loss (P&L) statement as your report card at the end of the year. You may even use your P&L to figure out what your company is worth by applying a multiple to your profit. But having worked with more than 40,000 entrepreneurs using The Value Builder System™, we’ve seen examples of companies that fetch up to three times more than the average price for companies in their industry. Whether you want to sell your business – or just know that you could – you’ll learn the eight things that drive the value of your company and suggestions on how to dramatically increase the value of your business.
How to Avoid One of the Biggest Mistakes Owners Make When Selling
One of the Biggest Mistakes Owners Make in Selling Their Company Is Being Lured Into a Proprietary Deal When selling your business, one of the biggest mistakes you can make is getting lured into a proprietary deal. In these deals, acquirers target business owners without creating a competitive marketplace, which allows them to make weaker offers with more unfavorable terms. What is a Proprietary Deal? Acquirers use a proprietary deal (also called a “prop deal”) to approach business owners without competition. They often start by complimenting the business and building rapport. As this process unfolds, the owner becomes more emotionally invested. They may reveal key facts that ultimately put them in a weaker position when negotiations become serious. Acquirers know there’s no competition, so they take advantage of this. How to Avoid a Proprietary Deal To avoid falling into a proprietary deal, create a competitive process for your business sale. Take Dan Martell, founder of Clarity.fm, as an example. When Martell decided to sell, he invited multiple potential buyers to a meeting. These buyers knew each other, and the competition for the business became clear. By doing this, Martell made sure that no one had an unfair advantage. Key Takeaways Create competition: Don’t settle for one offer. Set up a competitive environment. Be cautious: Beware of early compliments and friendly invitations. Protect your position: Always keep your business’s value in mind and ensure a competitive sale process. By taking these steps, you can avoid proprietary deals and ensure you get the best offer when selling your business. To learn more about how to maximize your company’s value while reducing unnecessary risk, click here. Whether you want to sell your business – or just know that you could – you’ll learn the eight things that drive the value of your company and suggestions on how to dramatically increase the value of your business.
3 Ways to Make Your Company More Valuable Than Your Industry Peers
3 Ways to Make Your Company More Valuable Than Your Industry Peers Increase Company Value Beyond Industry Norms Wondering how to increase your company’s value? Many business owners assume that their company’s value is tied directly to industry standards. However, eight factors influence business valuation, and some of them are far more impactful than the industry you’re in. Jill Nelson, for example, sold Ruby Receptionists for $38.8 million, well above the industry standard. At Value Builder, we’ve worked with over 40,000 businesses. Companies with a Value Builder Score of 90+ receive offers that are twice the average multiple of pre-tax profit. How to Increase Company Value: 3 Key Strategies Cultivate Your Point of Differentiation Acquirers seek businesses with unique strengths. If your competitive edge is simply price, they may choose to build a similar company and attract your customers with temporary discounts. For Ruby Receptionists, the competitive advantage was advanced technology for routing calls efficiently during surges, giving them an edge over low-tech competitors. Establish Recurring Revenue Streams Acquirers value businesses with predictable earnings. Ruby Receptionists achieved this with recurring service contracts, ensuring consistent income and making the company more attractive to potential buyers. Diversify Your Customer Base Companies with a broad customer base are less risky. Ruby Receptionists had 6,000 customers, which minimized the impact of losing any single one. Acquirers favor this type of diversification for stability. By focusing on these strategies, you can increase your company’s value and differentiate it from industry peers, regardless of the sector you operate in. Are you ready to learn more? Take the assessment or learn more here. Whether you want to sell your business – or just know that you could – learn the eight things that drive the value of your company and suggestions on how to dramatically increase the value of your business.
