If you’re like a lot of entrepreneurs, you use your Profit & Loss (P&L) statement as your report card at the end of the year. You may even use your P&L to figure out what your company is worth by applying a multiple to your profit. But having worked with more than 17,000 entrepreneurs using The Value Builder System, we’ve seen examples of companies that fetch up to three times more than the average price for companies in their industry. Likewise, we’ve seen cases where companies are worth less than half the average multiple of their peer group.
Why would one company be worth two or three times more than a similar company in the same industry?
Having analyzed the acquisition offers received by more than 17,000 businesses, we have discovered that there are eight factors that actually impact your company’s value more than the industry you’re in.
During this course you’ll learn how to:
- Increase your score on each of the eight drivers of company value;
- Maximize your company’s overall value;
- Find Strategic buyers for your business;
- Structure your business, like Jason Fried re-positioned Basecamp to maximize its value;
- Accelerate the pace of positive word-of-mouth for your business using the same technique as companies like Eventbrite, Intuit, Google and Apple;
- Boost your company’s cash flow in the same way Harley Davidson finances its business;
- Differentiate your business using the same methodology Warren Buffet looks for in the companies he invests in;
- Minimize your company’s reliance on your personal involvement using some of the strategies Tim Ferriss used to reduce the time he spent in this business to just four hours a week.
The foundation of this presentation is a quantitative analysis of the 17,000 business owners who use The Value Builder System. The first step every entrepreneur takes when they start working with us is to get their Value Builder Score. We have analyzed more than 17,000 unique businesses and we’ve identified eight factors that contribute to getting higher than average offers.
To give you an idea of how much these eight factors impact the value of your company, let’s take a look at the numbers. The average Value Builder Score is 60 out of a possible 100. And the average offers our users have received to buy their business is 3.8 times pre-tax profit. When we isolate the cohort of our users who achieved a Value Builder Score of 80 or above, the average offer is 6.3 times pre-tax profit — almost double that of the normal user.
Let’s imagine you have a business generating $200,000 in pre-tax profit with an average Value Builder Score (60 out of 100). Based on the statistics, we would expect your business to be worth around $760,000 ($200,000 x 3.8). Now let’s imagine you take this course, action my recommendations, and improve your Value Builder Score to 80 out of 100. Assuming your business is generating the same $200,000 in profit, we would now expect it to be worth around $1,260,000 ($200,000 x 6.3). You would increase the value of your business by $500,000 without changing your level of profitability.
