Written By: Maya Keenan-Gallagher
In the fast-paced world of business, it’s easy to get caught up in the relentless chase for revenue. But here’s the thing: focusing solely on revenue is like trying to win a marathon by sprinting the first mile. The true key to long-term success lies in valuing the journey and nurturing the often-overlooked intangibles that makeup around 80% of a business’s valuation. Yes, you heard that right—80%! These qualitative aspects, like company culture, brand reputation, customer loyalty, processes and procedures, and employee satisfaction, form the backbone of a thriving enterprise. When you focus on these elements, revenue doesn’t just follow—it skyrockets!
The Hidden Power of Intangibles
For many business owners, the challenge lies in recognizing and quantifying these intangible aspects. Unlike straightforward financial metrics, it’s difficult to attach a dollar amount to elements such as employee engagement or customer satisfaction. This ambiguity can lead to uncertainty and inaction, as owners are unsure where to begin or which areas to prioritize for maximum impact.
Turning Guesses into Facts
I was sitting with a business owner recently, having just completed a valuation for his company. As we reviewed the findings, I noticed a look of surprise on his face. Concerned, I asked, “Does this feel like it’s resonating with you?” He responded thoughtfully, “The solutions to the things I knew we needed to improve have always been guesses for me. This sounds good, that sounds like what others are doing, etc. You’ve just laid out a path forward for me and turned guesses into facts.”
This moment was a revelation, showcasing the magic of our work: transforming uncertainties into certainties and providing a clear, actionable path forward. Identifying and enhancing the four key intangible aspects—company culture, customer satisfaction, employee engagement, and brand reputation—creates a solid foundation for a business that is not only valuable but also transferrable and attractive.
The Growing Importance of Transition Planning
According to the Exit Planning Institute, 69% of business owners have transition planning high on their priority list. With a significant rise in valuations being completed nationwide, this preparation for eventual transition is more crucial than ever. Not only does it help owners stay competitive, but it also ensures that their businesses are positioned for long-term success.
The Path to Increased Value and Revenue
To truly increase a business’s value, owners must first identify their strengths and areas for improvement. This initial step is vital, setting the stage for targeted efforts and strategic investments. Once these areas are pinpointed, relentless execution is required to enhance value, which in turn drives revenue growth.
A Journey to Success, Not a Destination
Think of focusing on your business’s value as embarking on an exciting adventure. Every step you take to improve company culture, boost employee engagement, and enhance customer satisfaction is one additional step towards a successful eventual transition.
Imagine your business as a vibrant ecosystem. Every positive change you make, every employee you inspire, every customer you delight, adds to the health and vitality of this ecosystem. It’s not just about hitting revenue targets; it’s about creating a thriving environment where your business can flourish.
We must keep our eyes on value! By nurturing the qualitative aspects of your business, you’ll not only see your revenue grow but also build a legacy that’s strong, sustainable, and incredibly rewarding. Here’s to turning guesses into certainties and embarking on a path of relentless, value-driven success!
If you would like to learn more about Twelve Points Business Advisors, please reach out to Maya
Keenan-Gallagher today!