Have you ever wondered what determines the value of your business? When we take a look at the data provided by The Value Builder System™, we’ve found there are eight factors that drive the value of your business,and they are all potentially more important than the industry you’re in.
There are three factors that make your business much more valuable than industry peers, and they are the same things you can focus on to drive up the value of your company:
1.Cultivate Your Point Of Differentiation. Acquirers do not buy what they could easily build themselves. If your main competitive advantage is price, an acquirer will rightly conclude they can simply set up shop as a competitor and win most of your price sensitive customers away by offering a temporary discount.
2.Recurring Revenue. Acquirers want to know how your business will perform after they buy it. Nothing gives them more confidence that your business will continue to thrive post sale than recurring revenue from subscriptions or service contracts.
3.Customer Diversification. In addition to having customers pay on recurring contracts, the most valuable businesses have lots of little customers rather than one or two biggies. Most acquirers will balk if any one of your customers represents more than 15% of your revenue.
Using this strategy, you can build a valuable company regardless of size or industry.