Why Every Small Business Should Focus on Creating Value
As a small business owner, your ultimate goal is to create a profitable and sustainable business that will provide long-term financial security for you and your employees. While you may not be thinking about selling your business any time soon, it’s important to start thinking about building value in your company from the very beginning. This means making strategic decisions that will increase the worth of your business and make it more attractive to potential buyers in the future.
So, let’s take a look at the five factors that will make your company appealing to an outsider, as well as the importance of finding a replacement for yourself in order to increase the value of your business.
The Five Factors That Make Your Company Appealing to Outsiders
A healthy income stream – One of the most important factors that make your company appealing to outsiders is a healthy income stream. This means that your business is generating a consistent and sustainable revenue stream that will continue into the future.
Key takeaway – start building a proven track record of generating revenue and profitability.
A tidy profit after all costs and overheads are paid out – Another contributing factor that makes your company appealing to outsiders is a tidy profit after all costs and overheads are paid out. This shows that your business is generating a profit that is not only sustainable but that will also grow over time.
Key takeaway – ensure your business is in a solid financial position and capable of generating returns for investors.
A proven plan of marketing that produces consistent sales – Outsiders are looking for businesses that have a clear understanding of their target market and can effectively reach and engage their customers, so make it a key strategy to develop a well-established marketing plan that contributes to consistent sales and revenue.
Key takeaway – understand whom your ideal client or customer is and how to market effectively to them for lead generation.
A strong client/customer base – A strong client or customer base also makes your company more attractive to outsiders. Nurturing a loyal and diverse customer base actively engaged with your products or services, translates much easier into higher sales than constantly chasing new customers.
Key takeaway – focus on establishing a strong reputation and a loyal customer base that will continue to support the business in the future.
An organised, efficient workflow system – Finally, don’t underestimate the value of an organised, efficient workflow system. Set up clearly defined processes and systems that allow your business and your team to operate effectively and deliver consistent results.
Key takeaway – boost the value of your business by documenting the processes and systems behind your operations.
The Importance of Finding a Replacement for Yourself
While the above factors are instrumental for building value in your company, there is one factor that is often overlooked – the importance of finding a replacement for yourself. If your business relies solely on you, it becomes less valuable in the eyes of outsiders. Your “irreplaceability” may do wonders for your ego, but it does little for your pocketbook when it comes time to sell the business.
Finding a replacement for yourself can be daunting, but it’s essential if you want to increase the value of your business.
Here are some strategies you can use to identify innovative candidates when making hiring decisions:
Look for problem-solvers – Innovation often involves finding creative solutions to problems. Look for candidates who have demonstrated the ability to think strategically and find innovative solutions to challenges they have faced in the past.
Ask about their approach to problem-solving – During the interview, ask candidates to describe their approach to problem-solving and how they have arrived at alternate solutions in the past. This gives you insight into their thought processes, willingness to take risks and present fresh ideas.
Evaluate their learning agility – Innovative employees are often open to learning and adaptable in their outlook. A history of ongoing self development and willingness to take on new challenges usually indicate a growth mindset and learning agility.
Assess their ability to work in teams – Innovation often involves collaboration, so look for candidates who have demonstrated the ability to work effectively in teams. Ask about their past experiences working in teams and how they have contributed to the success of those teams.
Consider their creativity – Look for candidates with a diverse portfolio or creative hobbies or projects outside of work. These attributes often indicate a healthy curiosity and a breadth and depth of experience that is invaluable when running an organisation.
In Conclusion
Building value in your company should be a priority for every small business owner. By focusing on factors that make a company appealing to outsiders and taking steps to replace yourself with an innovative candidate, you can increase the value of your business and prepare for a successful future.
Remember, it’s never too late to set your business up as if you were going to sell it. By doing so, you’ll be ready for any opportunities that come your way.
