Your company has value. No matter what stage in its existence that you find yourself - and even if you’re not making any profit whatsoever - it still has value. It matters to you. It matters to your employees (if you have any). And it matters to the people who matter to you. It’s not always just about money.
Whether you’re hoping to sell your startup, or simply looking to grow and get better, there are many things you can do to boost its value. Some will increase profit, and others will increase the intangibles that add up to better value.
Any company that relies too heavily on only one product or service is walking on thin ice. Remember that saying about putting all your eggs in one basket? This is what “they” were talking about.
Valuable companies spend money on research and development. They add to their product catalogue. They provide value-added services.
Of course, you need to be mindful about spreading yourself too thin, but companies that diversify their catalogue inevitably end up increasing in value. Google could have been content as the number one search engine, but they added Adwords, Android, Google Glass, Google Apps for Business, Gmail, Calendar, the Chrome browser as well as the Chrome OS and a slew of other services. As a result, they increased their revenue streams and their recognition and authority within their industry. That’s a major boost in value. Ditto for Apple when they introduced the world to the iPod, and the iPad, and the iPhone. They didn’t rest on their laurels as the maker of some very fine desktop and laptop computers. Which leads us to…
Do One Thing Really, Really Well
With apologies to Steamwhistle Pilsner for borrowing their slogan, the other side of the diversify advice is to have a cornerstone or flagship product or service. In other words, have something that you are most known and respected for in your niche. Google spends the bulk of their time and development on their search engine. To boost the value of your company, you need to establish at least one proprietary product or service. Something that revolutionises your industry the way the iPod did. A service or process to which you have exclusive ownership and rights. Easier said than done (although it doesn’t necessarily have to make you a multi-millionaire), but if you have one proprietary product, service, or process, that’s tremendous value in terms of both revenue and public awareness.
Hire the Best
Eventually (if not immediately), you’ll need others to help out: Employees and administrators, supervisors and managers. The best managers and CEOs surrounded themselves with the best and the brightest. Avoid the pitfall of trying to do everything yourself, for two reasons. First, you can’t. It’s that simple, and your company will suffer for it. And second, in terms of the perceived value of your business, those that rely too heavily on one single person are ultimately not as valuable as those that have a fantastic infrastructure of top people in place. One person can get sick, leave, pass away, quit...and then what? Apple is only just now recovering fully from the passing of Steve Jobs, as there really wasn’t anyone else there with his drive, ambition, and abilities.
Hire the best. Invest in those you have. Promote independent thinking. And listen to them.
Manage Existing Costs
You’re going to be spending a lot of money: salaries, facilities, research and development, distribution, marketing, production and so on. It’s unavoidable. But what you can do is manage your existing costs, especially the smaller amounts that might otherwise be overlooked.
Start saving money on the little things. Rather than paying high per-user licensing costs for Microsoft Office, for example, investigate a cloud option like Google Apps for business. Instead of having your own servers and IT network on site - with the requisite IT department and personnel - consider a full-service provider like Box. They pay for servers, personnel, maintenance, development, and everything else, while you simply pay to use them and reap the benefits. There are plenty of ways to save money on the products and services that you need to run a business. Look into them. Money saved is value added.
Better Your Public Opinion
Value isn’t just money. It’s not always measured by the bottom line. The opinion that people - the general public - have about your company can be very valuable. Present the best picture possible. Make charitable donations. Support and enhance your community. Network within your industry. Cultivate a reputation as a fantastic place to work (which has the added benefit of attracting the best people out there...they’ll want to work for you, they’ll come to you). Google goes out of its way to make it the best place on earth for its employees. Free snacks, drinks, meals, training and education, nap pods, facilities for working on pet projects...and the public loves them for it. Offer your time and services to worthy projects. Be environmentally conscious in your business practices. Far from being manipulative, these things are all worth doing anyway, and they simply come with the added (and VERY valuable) benefit of enhancing your public opinion.
Plan for Growth
Plan ahead. This ties into the advice to diversify. New products. New markets. What else could you be offering your clients? Where else could you provide your existing products or services?
Optimise your Capital Allocation
You need to know where the money is, where it’s going, and where it’s coming from. What sort of cash flow do you currently have? If you suddenly needed money for something, could you get it, or is everything tied up and inaccessible? Look at your debt load. Pay it off as quickly as possible, as you don’t just save money on interest (which is good), but you increase your overall value by existing mainly (or at least more) in the black. Another consideration is your sources of income. If you get more than 15% of your total income from one single person or entity, you could be looking at trouble. What if that person/entity decides to stop purchasing, for any reason? That’s a big hit. 15% might not seem like much, but imagine if it suddenly vanished from your bottom line. You want to cultivate healthy, varied, and numerous sources of income. Those are the most valuable and robust companies.
Utilise Social Media
You should be reaching out and engaging with your customer base. It offers a host of benefits, from public opinion to visibility, and approachability to immediacy. Facebook, Twitter, Google+, Pinterest, Instagram...pick at least one or two of them and develop a strong social media presence. But do it right...engage, discuss, communicate, and promote. Do not simply promote your company, though. Offer useful information. Curate material from other sources. Engage in the conversation. Get people talking. And yes - occasionally - you can promote your business. But don’t overdo it.
Public opinion is valuable. Visibility is valuable. Infrastructure is valuable. Diversification is valuable. There is so much beyond the bottom line that you can do to increase the value of your company. Pick a few from this list and start today. A healthy profit is great, of course, but so is being seen as an environmentally-conscious and charitable organisation with their finger on the pulse of their industry. You can’t put a dollar value on that.
Photo Courtesy of Pixabay