This document discusses how to build a valuable business that provides freedom and options for the owner. Most businesses get caught in "The Owner's Trap" where they are dependent on the owner's involvement. There are eight key drivers that increase a business's value: financial performance, growth potential, business structure independence, recurring revenue streams, product differentiation, customer satisfaction, and removing the owner as a single point of failure. Building a valuable, sellable business that can run independently of the owner provides the optimal freedom and choices to scale, sell, pass down, or take a non-executive role.

1. How to build a business for
Value
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2. This Webinar is about building a valuable business.

3. Building a business for Value gives you options:

4. • the freedom to do things your way

5. • to work with who you want, when you want

6. • financial freedom

7. Only about 4% of owner managed businesses make it to the stage where the owner
can really say they have achieved the freedom they are looking for.

8. Most get caught in something called “The Owner’s Trap”.

9. Signs you’ve fallen into the trap are:
• business slows when you take a vacation

10. • customers come to you with problems

11. • your growth has reached a plateau

12. The ultimate freedom is to own a valuable, sellable business.

13. Your business is sellable if it is not dependent on you.

14. That means you can do the following without being involved in the day-
to-day:
• Scale it
• Sell it
• Pass it down
• Run it as the chairman

15. So what drives value in a business?

16. There are eight key drivers to your company’s value:
•Financial Performance
•Growth Potential
•The Switzerland structure
•Valuation See-Saw
•Recurring Revenue
•Monopoly Control
•Customer Satisfaction
•Hub & Spoke

17. 1. Financial Performance
Financial buyers only buy one thing when they make an acquisition:
they buy your future stream of cash.

18. What drives up the value of your company?
•how much cash your company will make in the future

19. •how reliable your estimates are

20. 2. Growth Potential
This is your potential to scale up and grow in the future.

21. Scaling up requires you to isolate a small set of products or services to
sell that meet the Trifecta of Scaleability:
•Teachable
•Valuable
•Repeatable
The secret to scaling is to sell less stuff to more people.

22. The secret to scaling is to sell less stuff to more people.

23. The Switzerland Structure
10a. You too should be obsessed by making sure your business is
independent of any one customer, employee or supplier.

24. That means:
•No one customer makes up more than 15% of your revenue

25. •You should be able to switch any of your suppliers without significantly
impacting your business

26. •Reduce your reliance on one or two key employees

27. The Valuation See Saw
The value of your business moves in the opposite direction of your cash
flow needs.

28. The bigger the check the buyer needs to write for working capital, the
smaller the check you’ll end up getting.

29. Recurring Revenue
A buyer buys your future stream of cash. The more reliable the cash flow
the more valuable your company.

30. The best way of doing this is to create a subscription model .
There are 9 Subscription models from simple Membership through
Private/ VIP club through Simplifier – but that’s a whole topic in itself.

31. The Monopoly Control
This refers to how well differentiated your product or service offering is.

32. The key thing in looking for differentiation is to ask your customers
whether they care!

33. Customer Satisfaction
Your goal should be to have customers who are not only happy, but also
willing to re-purchase and refer you to their friends.

34. Hub & Spoke
To what extent does the business rely on you personally?
Instead of hiring sales people, the owner seeking to maximize her profits
would do all of the selling herself
While this may maximize her profits, she would also grow a worthless
business.

35. So to build a valuable business, you need to take yourself out of the
hub!

36. Summary:
Most of us started our businesses for the freedom to build something on
their terms.
Most of us fall short of this dream and become trapped in our business.
The ultimate goal of any business owner seeking freedom should be to
build a valuable, sellable business because that gives you the best set
of choices: scale, sell, pass down or become/ take on a non-executive
chairman role.

37. BizSmart aims to help business owners of small and medium sized
businesses to create value and scale their businesses through
sound practical business support by providing insight, Clarity
combined with a real determination to help you succeed.
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38. •Need a sounding board for your ideas?
•Need to know what to prioritise?
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39. BizSmart –
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Smart people, to gain business success.