As a small business owner, you recognize the word ‘value’. The time and money you’ve invested in your company is valuable. Some of your equipment or technologies may be valuable. But is your company valuable? Is it profitable, sustainable, and scalable? Are you creating something valuable to others, or is it only valuable to you? If you ever want your company to become a marketplace leader, if you want investors to invest money in your company, or if you want to sell your business for profit, you must understand what makes your business valuable to others. Then, you must work to grow the value of your small business.
Join me in this new series as I walk you through growing the value of your business.
When I was a novice small business owner, I needed help making business decisions. I was working 80 hours a week for myself so that I didn’t have to work 40 hours a week for someone else. Yet, all I seemed to do was earn enough money to pay my bills. I was working day-in and day-out and not realizing any profit. My landscaping business had grown stagnant, and I wanted advice on how to grow the value of my company. I wanted to increase my sales and my revenue, but I didn’t want to make mistakes that would hurt my business. Therefore, I sought professional help.
In my ignorance, I scheduled an appointment with financial advisors at a national firm only to hear them say, “If you don’t have any money to invest, we can’t help you.” Now, they were a little more tactful than that, but that’s essentially what they meant. Next, I turned to the accounting world and met with Certified Public Accountants for business help. However, they were only interested in completing my tax returns or keeping my books in order. They offered a little bit of insight as to how and when to make moves in my business, but man, I sure needed something more than that. So, I turned to a business coach who I discovered had never actually owned a business before. That professional had me focus on my mission and my vision but did very little to affect the value of my business.
“You need to focus on value rather than on profitability if you want to take your business to the next level.” – Justin Goodbread, CFP®, CEPA®, CVGA®Click to tweet
After some searching, I discovered the people that knew exactly what I needed to do to grow my small business. However, they were much too busy working with much larger companies that were producing 30, 50, or 100 million dollars a year in revenue. And here I was, just a small business owner trying to turn my first little bit of profit to feed my family.
Realizing that I wasn’t going to get the help I needed without paying more than I could afford, I began educating myself. Yes, I did it for personal gain, so my education was a little self-serving. I get that. But truth be told, the more I learned and the more I applied the knowledge I’d learned to my company, my company flourished. My current financial planning company, Heritage Investors, has grown unbelievably because of the knowledge and experienced I’ve gained.
But what exactly have I gained? What have I learned? Well, I’ve learned that business growth and sellability comes down to one question. One question can redefine how you view your existing company and what you do with it:
Do you want to grow a company that is profitable or one that is valuable?
You see, there’s a clear distinction, and I’ll address that in my next article. You can increase your profitability without increasing your company’s value. However, when you increase your company’s value, you’ll almost automatically increase its profitability. Therefore, I’ll show you why you need to focus on value rather than on profitability if you want to take your business to the next level. Essentially, if you focus on growing the value of your small business, your company can rise to the pinnacle of your marketplace. You can attract investors. Additionally, you can position your business in such a way that you can sell it for profit. But it doesn’t happen overnight. This takes time and energy and an in-depth understanding of value and valuation.
So if you want to grow your business to be an industry leader, an investable commodity, or a sellable asset, join me as I dive deep into increasing your business’s value. The first article is gaining the fundamental understanding of Value vs Profitability.
As I say, life is hard. Life is good, and life can be frustrating. You know that. Being a business owner can make you want to pull your hair out. But money doesn’t have to be frustrating. Let’s continue to make our lives, at least, financially simple.