There are over 30 million small businesses in the United States in 2018. SBA reports that in recent years, approximately 200,000 businesses startup annually. Washington Post reported that in 2016, over 7,000 companies were sold. For most, our company represents our largest retirement vehicle. As business owners, we are constantly thinking about how to protect and grow our biggest asset — How can I grow? How can I innovate? How can I build value?
There are hundreds of measures we could look at to examine and analyze our business success. InfoVera, the only market value reporting agency in the US, uses 5 key areas in their TEVO® Score platform that are “make it or break it” factors of your company’s business value and ‘going concern’.
No money, no business, right? We all know this fact, but the importance of this goes beyond whether or not you’re making money. Consistently tracking, reporting, and analyzing your financials will make a big, positive impact on your company value. Be consistent with tracking metrics or KPI’s, both financially but also operationally. Doing so will create added visibility to trends in your financials before they become an issue.
Who is buying what, and how? The area most directly connected to revenue generation is an area that many feel confident in but often forget a few key points. How turn-key is your sales department? How reliant is sales on you? Regularly analyzing your client base minimizes the risk of having ‘all your eggs in one basket’.
This focuses on the heart of your business. Without a strong foundation, our businesses will likely crumble under the pressure of growth. This area is about ensuring and protecting long term value — people, technology, and infrastructure. Have you covered all your bases?
Are you working “ON” or “IN” your business? From day one, many business owners get caught up in the cycle of getting more clients and minimizing costs, and it’s not easy to get out of that focus. We’ve made ourselves an integral part of the day-to-day operations. How self-sufficient is your management team?
If we only ever look backwards, we might just stay there. It is common that business owners have many ideas, but don’t act on them. Buyers and investors place little value on ideas and place more value on opportunities that are planned and implemented.
These 5 areas are the keys to building value in your business. If you are examining these areas, you are putting yourself ahead of the curve and ahead of your competitors.
Do you know your company’s TEVO® Score? Want to know your company’s multiple?
Contact us to find out if your company already has a TEVO® Score and to get your company’s free multiples report.