Measuring your business’ value

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What’s your business worth? 

How often do you think about value? I mean, really think about value?

Quite often, in the cut and thrust of daily reality – cashflow and profitability are the two things driving activity. They are, of course, our immediate concerns.

But circling back to your ‘why’ – value comes back into the picture. The reason we work so damn hard to build our business is not only for personal satisfaction – it’s to create an asset. An asset that one day, is worth something and gives us and our families a better life.

So, what’s your business worth? Most people don’t really know.

In this day and age, that’s bloody frustrating! If you want to know what your house, your car, your bank balance, your super is worth, you go online and look it up. If you want to know what your business is worth, where do you go?

I have been thinking about this a lot lately. We have been involved in a number of recent engagements where we have put together capital raising documents, or a sale transaction and in those circumstances, value is obviously a key consideration.

We are in a privileged position, to be able to answer the question. To see the fog of uncertainty replaced with an educated view1 is quite exciting.

Our advantage comes from a couple of things:

  1. We have access to market intelligence and the ability to interpret and apply it to your circumstances
  2. We have a ‘dispassionate’ view – the opportunity to sit on the outside looking in, the opportunity to cut through the crap that blinds your own view because you are enveloped by detail.

The other thing that falls out of that is the learning.

  • What are the things that create real value in your business?
  • What would a buyer – any buyer – really view as unique and attractive?
  • What can you do to enhance the value of your business?
  • Of all the things you can do, what should you do?

I think it’s a shame that these questions aren’t asked more routinely. In other words, why wait until there is a transaction in the offing to think about it?

Why not use these learnings to inform your strategy right now?

Are you running in the right direction, or are you just running?

If you would like to inject some market intelligence into your business, call us on 1300 656 141 to discuss next steps.

1  It goes without saying that the only true determinant of value is what someone would actually pay but we can get a pretty good idea of theoretical value – i.e. what you should be asking for in any transaction

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