5 Things That Will Instantly Increase The Value and Revenue of Your Business!
By Matt and Liz Raad
Hey, Matt here!
Thank you so much for opting in to learn more about Liz and I and how we can help you increase the value and revenue of your business.
You made a very wise decision for checking out this free report.
Because the five business value adders that we will be sharing with you on this page today have literally added 5, 6 and even 7 figures almost instantly to our clients that we have shared them with.
How does increasing the overall value and adding multiple figures to your businesses revenue almost instantly using nothing more than your current existing business sound to you?
I hope you said GREAT! Because that is exactly what we are going to help you do on this page today.
Knowing and understanding how to implement these 5 "areas of value" in a business is the secret to keeping you well ahead of most of the business operators and owners out there.
So make sure you read this report in its entirety, this information really is that important.
Let's jump right into it and take a look at the 5 "Areas of Value" that will increase the overall value and revenue of your business.
Systems are highly prized and valuable because they are what frees the owner from the business and gives them back lifestyle – remember the right-hand side of the quadrant? Systems are what allow you to be a true Business Owner and Investor.
Buyers and Investors will pay handsomely for a highly performing system because a well-systematized business will not only produce consistent and reliable results, it will deliver those results with the least amount of effort from the owner.
The more systematized the business, the more valuable it is plain and simple!
Franchises are a great example – they are sold for 3-5 times multiples of profit and even fetch hundreds of thousands of dollars when they are brand new and showing no profit. This is mostly because of their strong systems.
Wealthy buyers look for businesses where they can systematize or automate processes such as:
- Getting new customers
- The delivery of the product or service
- Customer follow-up and relationship building
- Handling common problems
- Running staff
- Customer Service
- Sales Processes
MATT & LIZ's INSIDE TIP!
We have found that the most keenly sought after and highly valued businesses are those that require very little time from the owner to run. When you are looking for a business to renovate, the best choice will be one that has the potential to run on “autopilot” (if it doesn't already).
The property from which a business operates is a vital part of its value and success, especially for retail businesses that rely on passing traffic.
The classic example is McDonald's – when Ray Kroc was asked what business he was in, he didn't say “burgers “or “food”, he said “real estate”.
You can use the cash-flow of a business to create a valuable asset by buying the commercial property of the business - all our wealthiest clients have done this to reach their multi-million dollar net worth in such a short space of time.
Consider this example, if two business owners made the same net profit of $50,000 a year over 20 years of owning a business, but one paid rent of $30,000 a year and the other invested that $30,000 into buying the business property this would be the result:
$1 million net profit,
$600,000 paid in rent,
$1 million net profit,
$600,000 paid on buying premises (worth $1.2 mil)
$1.2 million in assets.
When looking for a business to buy, the wealthy look for ways that the value of the business property can be quickly and easily increased:
- Physical renovation – just like on a house Lease renegotiation
- An option to buy
- Website “property” such as domain names, web-sites, links, page rank and position on search engines for relevant search inquiries.
The wealthy look for strength in brand – that is the public perception of the business. There is value in a brand because it reduces the risk of the business, and it can increase the profit multiplier significantly.
Again, take franchises as an example, where the value of the brand and systems means that a well-known retail franchise can sell for up to 6x net profit, and over $1 million for a new store with zero profit.
However a brand can be fickle – it only takes one negative event or piece of bad publicity to dent reputation and reduce its value. The brand value can be reinforced by strengthening the businesses relationship with its LIST (more on that later).
We suggest that this is not one of the areas that you would focus on when buying and selling a business, but it is worth being aware that it's an area of a business that can affect valuation.
The intellectual property of a business relates to the unique aspects of the business. This may be a unique product or service, a specialized design or a unique system. These things may be protected with patents or trademarks, or they may be hard to replicate because of the time, research or money required to develop them.
These qualities increase value by making a business more competition proof. The more unique and protected the intellectual property, the lower the competition, so the more valuable the business is.
In larger businesses, a great deal of money may be spent developing Intellectual Property (take Pharmaceutical Companies for example), in smaller businesses and online business you can increase value by developing unique ways of providing your service or creating small software programs that are unique to your industry or niche.
One example is a building company we knew that developed a software program for quoting jobs. They were bought out for multi-millions by a big publicly-listed company who wanted to own and use the program.
Uniqueness increases value because it separates your business from the masses.
We saved the best for last, building a list of both leads and customers will not only increase the value of your business, but your list can also greatly increase revenue many times happening INSTANTLY!
Your list of customers and prospects is a vital part of your business's overall value, and it's one of the easiest areas of a business to improve quickly.
The value of a customer list is often overlooked by business owners - most businesses we see don't have good records or regular contact with their customers, many have none at all.
This is a huge area of potential opportunity, and one you should be looking for when you are buying a business!
Always ask yourself – “Can I build a list” and “Can I leverage the list?”
Why build a list?
Building a list of customers and leads will do a few things for your business...
- It adds instant value to your business.
- It increases sales with very little effort.
- It helps to build a relationship with your customers and prospects.
- It adds more money to your businesses bottom line without any additional marketing or advertising needed.
People buy from people they know, like and trust.
Think about your own shopping behavior – do you have favorite stores and businesses you go back to because you like and trust them (even if they are a bit more expensive)?
Or think about this...
Who would you be more likely to buy something from based on their recommendation, your friend or a stranger on the street?
Your list will help you and your business to be viewed as a trusted advisor and friend rather than a stranger or just another faceless business trying to sell them stuff. The more you build a relationship with your customers and back it up with good reliable products and service, the more they will trust you, the more they will keep buying from you and the more they will recommend you to others.
Frederick F. Reichheld, author of “The Loyalty Effect: The Hidden Force behind Growth, Profits and Lasting Value” reported that:
- Acquiring a new customer can cost 6 to 7 times more than retaining an existing customer.
- Businesses who boosted customer retention rates by as little as 5% saw increases in their profits ranging from 5% to a whopping 95%.
So the fastest, easiest way to increase the overall value and revenue of a business is to look at your existing customers first, and make sure they are coming back to you to buy again and again.
On average, a person needs to be exposed to your message or business 7 times before they buy.
Again this is to do with trust – you wouldn't expect someone to agree to a marriage proposal on the first date, and your prospects probably won't buy the very first time they encounter your business.
But if you give your potential customers the chance to have more contact with you, you allow them the time and space to get to know and trust you.
Big companies do this with big budget branding and advertising campaigns, but you can be just as effective at a tiny fraction of the cost by building and nurturing your list and audience.
Here’s another statistic showing why building a lead and customer list is so important
80% of sales are made on the fifth through twelfth contact with a lead and only 2% of sales are made on the first contact.
So that means that if you are not properly following up with your leads and customers than you are literally throwing away 80% extra sales that could be spent in your business.