As a business owner, you’re likely proud of the results you’ve achieved in the past, but when it comes to the value of your business, your future is critical. That’s why your growth potential is one of eight factors that drive the value of your business.
One metric that acquirers may use to evaluate your growth potential is your revenue per employee.
Alphabet (Google’s parent company) generates around $1.3 million in revenue per employee. Compare that to the advertising agency WPP Group, whose…
You've likely heard the adage that it is far easier to cross-sell an existing customer a new product than it is to find a new customer.
And if your goal is to grow at all costs, then cross-selling makes sense.
However, all of that sales growth may not do much for the value of your company. If you cross-sell your existing customers too much stuff, it could make your business far less valuable.
When you cross-sell a customer so many things that they begin to account for more than 15–30% of you…
Repeat business drives the value of your company, and you can categorize these sales into one of two buckets:
1. Reoccurring revenue comes from customers who purchase from you sporadically. They’re satisfied with what you offer, and they buy regularly yet not according to a specific timeline.
2. Recurring revenue is predictable, and you get it from customers who buy on a cadence. Usually in the form of subscription or contract revenue, the main difference is your recurring revenue comes in on a re…
Many people mix up re-occurring and recurring revenue, but one is much more valuable than the other.
Re-occurring revenue comes from customers that have a re-occurring need for whatever you sell and buy from you on an unpredictable yet regular basis.
Imagine a health food store. Customers come in to replenish their supply of vitamins when they run out. The owner is never quite sure when a customer will be back, but she’s pretty sure they will return when they run low on…
Is it better to own a big chunk of a small business or a minority stake in a big company?
It’s one of the fundamental questions all owners must wrestle with. Owning a relatively small slice of a big pie has worked out well for both Elon Musk and Jeff Bezos, who recently traded places on the list of the world’s richest person. Musk still owns around 20% of Tesla, and Bezos controls about 10% of Amazon, so they both have chosen to sell most of their company to fund their ambitions. The success o…
Finally, 2020 is in the books.
If your goal is to build a more valuable company in 2021, here are some New Year’s resolutions to consider:
- Stop chasing revenue. A bigger company is not necessarily a more valuable one if the extra sales come from products and services that are too reliant on you to deliver them.
- Start surveying your customers using the Net Promoter Score methodology. It’s a fast and easy way for your customers to give you feedback, and it’s predictive of y…
Have you struggled to identify a recurring revenue model that will work in your business?
If so, you’re not alone.
Most owners understand the benefits of recurring revenue, such as predictable cash flow and an increase in their company’s valuation, but struggle with where to start. Just changing your pricing from a one-time transaction to a smaller, recurring fee does not make a sticky subscription model.
The first step of creating a recurring revenue model for your business has nothing to…