The Second Driver of Company Value

Even though I called this the second driver, these are really in no particular order and not necessarily in the order in which we would focus on for your business. If you missed the first driver of company value that I spoke about, you can check it out here.

To grow your business and to build a valuable asset, this is likely the most common area we think about for a business: Financial Performance.

Financial Performance is simple to understand but not necessarily easy to achieve.

It takes into consideration your topline revenue and then your profit on that revenue (profit is what’s left after you subtract expenses - or specifically your EBITDA (earnings before interest, taxes, depreciation, and amortization)).

And, the greater your profit percentage, the more value you generate in terms of attractiveness to a buyer. It shows that your company has a higher operational efficiency which contributes, in part, to a lower level of risk in your overall operations. (However, it’s not the full picture of health and risk…that’s why we’re looking at multiple drivers in this series).

Another consideration when you think about your own Financial Performance is how defendable are these numbers? If someone was looking at your company in the future, should you ever wish to sell, how defendable are your numbers in terms of your accounting? What is the quality of your accounting? Have you ever had an audit?

This is not a push for you to go and have an audit completed now, but simply to consider how stable, accurate, clear, and defendable your numbers are. And, when you’re ready, an audit could provide some financial security (proof) to a potential buyer.

Some questions you could consider for your own company might be: What would you have to accomplish in order to increase your profit percentage? How stable is your revenue? What’s the quality of your book-keeping now?

If you wish to chat more about how to create a more valuable business, let’s talk.

NOW is YOUR time.

Ariana

PS. To read the first driver go here.

PPS. To explore ways to improve your company’s value, let’s book a time to speak together.

Read the Third Driver of Business Value here.

Canadian Business Coach, Leadership Coach