Vitalize Your Value Muscle

“How much is my business worth?”

“Will someone out there really value what I’ve built?”

“I’m hoping my business is my retirement plan. How realistic is that?”

These are real questions from real women. A lot of mystery and misunderstanding surrounds positioning your business for your exit, and yet it is a powerful way to build wealth.

There is great value locked up in your business – even more so when you intentionally build that value over time. So how can you dispel the mystery and build wealth?

‘Positioning’ is about helping potential buyers of your business understand the real value. The more work you do to position your company well, the higher the value.

Ultimately, everything is contingent on who the buyer is and what they care about.

A great example:

Every business needs documented standard operating procedures: how you do what you do.

It is very common exit planning advice to have your procedures in an easy-to-follow format. Now this is good, solid business advice.

However, it only builds the value of your company if your potential buyer cares about how you do things. The buyer may only want to buy your client list, or some of your intellectual property, and may not care at all about your procedures. Especially if you’re in a regulated industry like accounting or financial planning.

Many business owners think documentation is the path to gold, so they get really busy with that. In the meantime, there may be other, more important value drivers that are being ignored.

Today’s Question:

What can you do today to build the real value of your business?

But Here’s the Twist . . .

Did you know there are different types of value? For our purposes, we will use three main kinds:

• Extrinsic value is the value in the marketplace. It’s what the service or product provider says it’s worth.
• Intrinsic value is what the service or product is worth to the buyer.
• Perceived value is the level to which your ideal buyer believes you can solve their problem or help them grab an opportunity.

Building perceived value is one of the most effective ways to expand your business and increase your revenue. Once you learn how to build this type of value, it’s like a muscle you can train and strengthen.

-- Excerpt from Patty’s book, Your Hidden Advantage: Unlock the Power to Attract Right-fit Clients and Boost Your Revenue

In the case of selling your business, it looks like this:

• Extrinsic value is the value in the marketplace. This is the price you expect a buyer to pay for your business.
• Intrinsic value is what the service or product is worth to the buyer. Potential buyers will tell you what is important to them and what they find most valuable. The trick is whether that aligns with what you’ve built.
• Perceived value is the level to which your ideal buyer believes you can solve their problem or help them grab an opportunity. This is where positioning comes in. Building and optimizing intangible assets (like intellectual property), and capital assets (like consistent, predictable revenue based on strong client relationships) builds perceived value and can be very attractive to a buyer.
  
  

Now What?

Determining what is most important to you as you transition out of your business is a good place to start building value. You can’t predict what a potential buyer will value most, but you can stay aligned with what you value.

If you were to rank these in order of importance to you during the sale of your business, which would be #1?

1. Getting the most money I can______            
2. Getting the best terms to transition out______
3. Protecting my staff members______
4. Protecting my clients______
5. Protecting my work______
6. Leaving a legacy______
7. Something else?______

If you’re thinking ‘all of the above!’, it’s crucial to have a dynamic roadmap, which is the first step to an Elegant Exit™. Your exit can lead to wealth if you choose to sell your company, but what brought you here won’t get you there.

An Elegant Exit™ requires a new way of thinking, new skills, a simple and elegant design, and an advocate on your side. Contact me to learn more. 

Discover your Exit Readiness Index™ with this assessment: http://she-exits.com/

What can you do today to build the real value of your business?

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