The Osborne Group spent June 8, 2016 at the Toronto Entrepreneurs Symposium and Tradeshow talking to many entrepreneurs. We asked them “What drives value in your business?”
To keep the discussion somewhat focused we gave entrepreneurs the list of eight value drivers outlined in John Warrillow’s book “Built to Sell” to choose from. To no one’s surprise the top two drivers selected by the majority of people were financial performance and growth potential. These were followed by cash flow and the ability of the business to create recurring revenue. Next was customer service and the level of differentiation that exists between your product or service and that of the competition.
I am sure many of you would agree that these are significant drivers of value in any business, but who really determines value – the Owner, the Certified Business Valuator or the Purchaser? While the first two can provide an estimate of value, it is really the purchaser who has the final say in what they are willing to pay for the business. Warrillow believes there are two other important factors that, from a purchaser’s standpoint, are value drivers. How dependent the business is on one customer, one employee or one supplier and the level of effort the current owner is expending on making the business successful.
Interested in finding out how your business rates in relative to others in your industry? If so, take our 20 minute on line survey at http://www.thevaluebuildersystem.com/osborne-group.
We’ll provide you with an assessment of how your business is doing in each of the value driver areas and what you can do to improve the overall value of your business from a purchaser’s perspective.
It’s never too early to begin to build a value driven business.
