The business value myth debunked

Business-value

It’s time to smash a myth about the value of your business.

All too often the comment is made “your business would fall over if you were hit by a bus, it has no value”. This seems like a sales pitch to create concern, right?  Well, let’s look at this from a different angle, rather than being negative to create alarm, let’s look at it from a positive angle with the business owner taking control of the issue.

“I add value to my business every time I take a step to improve the business, so, if I choose to move out of the business or take a step back, someone with an appropriate skill set and attitude can step into that space I created”.

Yes, it’s more words and doesn’t roll off the tongue or hit you in the face, but how much more powerful is this statement?

Does this make growing business value seem possible?  Does this make you feel in control of creating business value?

You do have the power to create business value.  It’s your choice – there’s no false promise here that you will create a business worth $10M tomorrow starting from scratch, but just take a moment to think about it.  How would your life be different if you took your business to a place where it had value?

People pay money to purchase a system that will generate income for themselves and their family.  The ultimate example often used is McDonalds – the most recognised systematic business in the world.  People pay $2M to earn an annual net profit of $300,000 for a McDonalds franchise because they are so confident that the system will provide this return on investment.

Let’s bring it all back to a less recognised example.  We know that people will pay money to buy a shop, let’s use a clothing shop situated within a shopping centre for example.  How do they determine value?   The purchaser makes an assessment of how much net profit they could generate annually using “the system” they will be purchasing.  They will then determine how many dollars they are willing to pay using that system to earn that annual income.  The system includes, location, point of sale equipment, brand recognition, relationship with suppliers, bookkeeping systems, marketing plans, team culture, etc.

The stronger the systems, the more the purchaser will be prepared to pay to earn that income as confidence and trust in the future earnings is higher – hence McDonalds being so valuable.

Look around at your business.  Where can you put in place a system that reduces the reliance on you?  Every time you do this you raise the value of your business and personal wealth.  Remember, this is not making you redundant in your business – just replaceable by a person with the right skill set and attitude when you make the choice to reduce your day to day involvement within the business.

If you would like more information on how you can systemise your business please contact the team at http://www.mcmahonosborne.com.au

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s