Common Problems
The Number 1 challenge with building asset value is that the majority of businesses sadly fail to build a business with characteristics that drive value from the outset.
Moreover, having come to the party late, many businesses still fail to build value whilst fully integrating the owner’s personal and financial objectives into the plan, and consequently significantly reduce the options to exit on the owner’s timeline and terms.
These all too common challenges/failures frequently stem from 2 key issues, namely that building asset value with an exit in mind is about creating a strategic plan to build a business that is transferable through strong human, structural, customer, and social capital. Second major challenge is around building the knowledge with regards to what drives a business’ asset value i.e. what the key drivers of value are.
Successful entrepreneurs focused on building asset value will develop a strategic plan that accelerates;
- The organisation’s overall financial performance
- The organisation’s ability to scale-up
- The strength of the organisation’s cashflow position
- The organisation’s market position, USP’s, and intellectual property
- The organisation’s contracted and/or recurring revenues
- The organisation’s Net Promoter Score
- The organisation’s reliance on key customers, suppliers and staff
- The organisation’s reliance on the founder/shareholders
In doing all of the above, ambitious entrepreneurs drive asset value significantly and ensure that their business is primed for an exit whenever that may come.
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