How Do I Create Value?
For business owners, there is a subtle balance between making the necessary decisions to successfully run their business day-to-day and focusing on the long-term value of their business. The actual realization of that value, an eventual exit, should always be present in the owner’s current strategies. The objective is for owners to make decisions that are good for today’s success, but also preserve the company’s long-term value.
Business owners should make periodical analysis of the value drivers of their business. Owners should consider obtaining a preliminary valuation with detailed analyses of the business’s value drivers to provide a more strategic and tactical plan for current operations. Preliminary valuations/analysis not only establish value, but also provide a tool for owners to re-engineer their businesses, even when a sale of the business is not imminent.
Informal valuations are a very valuable tool for running a business. Experienced mergers and acquisitions advisors agree that what makes a business valuable upon its sale is also what makes it valuable while it is being run. Business owners, who are willing to take the long view, will find this approach very successful.