Entrepreneurs could benefit by focusing more on the long-term rather than on short-term profits. Here are some top tips on increasing the value of your startup.
Global companies such as Google and Amazon often begin as ideas nurtured in bedrooms, garages and basements.
Elevating them above and beyond these humble beginnings and growing them into world-beating businesses requires talent, hard work and stamina.
However, as Entrepreneur Network partner and Valuetainment founder Patrick Bet-David points out, working in your start-up to increase profits is not the same thing as working on your business to boost its value. One is all about instant gratification, the other delayed gratification.
Furthermore, he describes the former as a “sales mentality” and the latter as a “CEO mentality”.
Here are 9 invaluable tips designed to boost the long-term value of your business.
The value of your business will grow if you own a specific technology that companies may want to buy to boost their own spectrum of services. Even better if you own that technology. In addition, more value is added if that technology increases efficiency and reduces staffing levels.
Focus on your business. Many startups are in danger of multi-tasking − doing more isn’t necessarily doing better. Instead, focus on two or three core things that your company does well.
Bet-David states that “a business that runs on systems, not just you, increases value”. Something as simple as documenting employee training and sales procedures can save time and increase your business’s value.
4) Strategic partners
Strategic partners not only validate a business, they increase its value by championing the company and bringing different talents to the table.
5) Recurring revenue
How much your monthly revenue is recurring and not just single sales? As Bet-David observes, having the highest multiples can increase a business’s value when it comes time to sell.
6) Supporting cast
A startup that focuses on short-term profits may not invest in people. Sounds simple, but the more you invest in your staff from executives to sales the more loyal they are. As a result, the value of your company increases.
Valuable data makes for a valuable company. Why do large companies spend a lot of money buying smaller enterprises with relatively small revenues? Because they need the data that smaller business has access to.
8) EBITDA vs need
Find a need that no other business serves or satisfies. Your startup has more value if it fulfills a gap in the marketplace that will in turn increase another company’s value and profits.
9) Subscribership and distribution
Instagram, for example, is successful because it has a large audience. Increasing the subscriber or customer base of your startup boosts its value.
Bet-David’s final piece of advice is this: stay hands-on. Many business people become CEOs too early. Successful entrepreneurs keep in touch with all the business elements that he mentions to boost their company’s value.
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