Double the value of your business

How to double the value of your business

Anything you do more than three times with more than three steps, document it.

This creates an Standard Operating Procedure (SOP) database.

If you don’t have systems and processes, then you have a job, not a business.
Do this for every department and this will increase the value of your business.

Make it easy to see the critical things in your business that should be measured.

KPIs (key performance indicators) should be shown:

These should be shown for sales, finance, and operations, and they should be captured daily, weekly and monthly and compared with the same data from the previous year.

The longer the history of KPI’s in a business, the smaller the risk.

You don’t want any single customer to make up more than 15% of the revenue for your business.

Diversify and spread the risk of losing a client.

Lose clients that take up a lot of your time for very little money.
Do stock of all clients and cut the ones that you spend two much time on or up the price to them.

Some companies don’t even have a P&L, so you start there.

But also show WHY you spend. Do a monthly budget and measure your monthly spend against that budget.

Where is your spending compared to your competitors?
Cashflow is king. Understand it. This will increase the value of your business if you are showing positive cashflow every month.

Keep your overall debt-to-income ratio at or below 40%.

It varies wildly by industry and size

…But if you leave room to add debt, you’ll make more when you go to sell the business.

Get all your traffic from Facebook? What if they shut down your account?

Single- Social platform risk means decreased multiples.

Run a traffic gap audit and figure out how to diversify.

Option 1: Clean: Your accountant creates a financial statement.

Option 2: Reviewed: Accountants review your financials to add a layer of confirmation.

Option 3: Audited: Accountants certify your financials at their liability.

Option 3 is the best solution if you are a big enough business to bear the cost.

Be consistent.

What are you going to spend & make for one year? Track it.

Less variance between estimated and actual = a forward-looking valuation. Not one based on your last 12 months.
Control all costs. Use accruals to have a balanced budget.

Eliminate as much owner dependency as possible.
Any knowledge, relationships, or operational duties that a new owner would struggle to assume or more importantly, wouldn’t want to assume should be eliminated as much as possible.