how to build a business that’s worth your efforts

How To Build A Business That’s Worth Your Efforts

Most entrepreneurs create a

company for one reason – to

provide themselves with an

income. However, you

should consider an

important, second reason –

to create an asset that is a business.

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Let’s consider the question of how to sell

your business. But,

before you can sell it,

you have to build a

business worth selling.

This article is about establishing value.








If you will, think about the difference between renting and owning a house. If you rent a house, you use it for a fee; and when you no longer need the house, you just move. The renter receives nothing when you

vacate the property. If you buy a house, you may still pay a monthly fee in the form of a mortgage. When you move on, you sell the house, and you will receive a bonus payment at the end of its use.









Businesses are the same.

Most entrepreneurs build a

business that creates an

income for them, but cannot

be sold when they no longer

want to operate it. Then

again, you can build a

business that creates both an income and an asset.







Why don’t more entrepreneurs build assets? I honestly believe that they don’t think about it because it is only considered a matter for the distant future. Their immediate concern is the here and

now. This is one secret to Silicon Valley start-ups: from day one, the objective is to create a company that has value, not just one that provides livings for the workers.








What creates value for a company?

Consider for a moment, why a buyer would

want to acquire a company?

There’s more to it than just sales and profit.

Let’s look at some of the major issues.







1. Your business must be able to run without you. The owners or founders presence are not required. Buyers don’t acquire one- or two-person companies because then they are just hiring

employees. The business must have a life of its own. Now, this means that you must have a team that is incentivized to stay with the company for the long haul.








2. Your business must have a diversified customer base. As a rule of thumb, the top 10 customers should account for less than 50% of sales and no one customer should make up more than 10% to

15% of revenue. When it comes to buy-outs, lifetime customers are best; repeat customers are good; and one time customers are the least desirable.








3. The product or service must

be able to be delivered consistently and the identically to

all customers. Businesses need

to show good feedback from their

customers or demonstrate that

they dominant a market. It’s usually best if small businesses

specialize. It’s difficult to sell a general company or an ‘anything-

for-a-buck’ business. www.cynthiakocialski.com







4. No one wants to acquire a

company with declining

revenue. Company

growth should show a steady

5% to 10% growth, and even

better, rapid growth. The buyer

wants to know how big your

business can be. It also

requires a repeatable and

predictable sales process.








How do you focus on creating value? Here is a simple basic tip. First, focus your attention on the value propositions. Most people think of projects in terms of milestones and deadlines. A business is a project. In Silicon Valley, the completion

of every milestone creates additional value to the company. This is important because it is possible to meet an internal milestone, but not to add value. An easy technique to implement is to have a ‘to-do’ list.








The solution is to prioritize your ‘to-do’ list according to goals; to look at the tasks on your ‘to-do’ list and determine how the output of those tasks is to be used. Often, tasks are done out of tradition or in a ‘business-as-usual’ manner and the results aren’t used by someone else. Other times, entrepreneurs get too involved in the nitty-gritty, tangible work and lose sight of the bigger picture.








When you create a company, your business has two end-

products: the first is the product or service you offer to customers, and the second is the company itself. There is a market for the business you are building and there are

buyers for it somewhere. So when you start your business

always keep in mind how to sell it. Another secret of Silicon Valley start-ups is that it takes just as much effort to create a company that has no value as it does to build one of value. So, make sure that you get the most from

your efforts.









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how to build a business that’s worth your efforts

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