When you are in the world of running a business, you should consider different business aspects. One important business consideration is that you should focus on increasing the value of your business.
You may ask why?
The answer is that increasing the business value shows that your business is profitable and/or it has a strong position in the market. It also enables you to have the BIGGEST payday of your life when you want to SELL your business! (One of the biggest lessons that I learned.)
Although the thought of selling your business seems inconceivable, the fact is that you will not run the business forever. At some point, every business owner steps down from the helm. It can happen because of controlled (i.e. retirement) or uncontrolled (i.e. health issues) factors.
Unfortunately, most business owners don’t think about having an exit route as they are deeply involved in running the business. It was the same for me when I ran my first business around 20 years ago. So, the question is, how can we enhance our business value?
As you likely know, there are countless considerations when enhancing your business value. The key to increasing business value is to understand how others (e.g. customers, buyers, investors, etc.) view your business.
As part of increasing your business value, you should consider three key aspects related to the business value. These aspects are:
- COST,
- REVENUE, and
- MARKET SHARE.
You need to properly monitor and control each one of these aspects as it enables you to build and run a valuable business in the eyes of external (and internal) people. I am sure you have heard that whatever we can measure, we can improve. So, if the goal is to increase the business value, we should have metrics to measure these three key aspects. These metrics are:
1) Reducing COST
This is potentially the easiest and most weighted metric that you should focus on. The success of any business largely depends on how strategically you manage costs compared with that of competitors. Your business focus should be on reducing (operational) costs without affecting the quality of your work.
2) Increasing REVENUE
We all know that revenue is what keeps your business alive. By reducing your costs and increasing your revenue, you can increase your profit. Revenue is one of the basic financial components of operating a business. It is vital for your business to generate enough revenue to cover business costs and earn a profit.
3) Expanding MARKET SHARE
Market share is all about positioning your business in the market. Expanding market share is one of the most important business metrics as it shows how your business is operating compared to your competition. In other words, a higher market share puts your business at a competitive advantage.
Thus, as a business owner and/or a top decision maker, it is one of your key responsibilities to monitor and control these three business metrics. You cannot focus on just one of them, as they are all co-dependent and you should have the right strategy for each one of them.
Yes, it is true that most businesses invest more effort into reducing their costs. But, without increasing revenue and expanding market share, it is hard to build and run a profitable business for any extended time.
This article is the first part of The Secret Of Successful Business Growth in relation to the importance of increasing your business value and I hope you could find it useful. In the next article, you will find how you can increase your business value in the market and what strategies you can use.
If you are a service-based business owner and you want to know how these concepts could be applied to your business, please request a complimentary customer opportunity evaluation session now.
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