Value Builder System

Build the Value and Sellability of Your Company

Do you want to increase the value of your business while you are still at the helm? Are you considering selling your company in the not too distant future?

The Value Builder System is a free and confidential assessment tool designed to identify ways to sell your business or to help you identify areas to work on in order to get a premium if you decide to sell. And make your business less dependent on you in the process while driving up its value and giving you more options for your future.

If you’re a CT business owner, take 13 minutes and complete the Value Builder questionnaire and you will receive your overall score along with your performance on the eight key drivers of value–each one of which is statistically proven to be important to buyers.

A study of 40,000+ businesses showed that companies achieving a Value Builder score of 80+ (out of a possible 100) go on to sell at a 71% premium compared to average-scoring businesses.

More about the 8 Drivers

The Value Builder system measures and analyzes eight key business drivers associated with a strong, healthy operation that also facilitate the sellability of your company. These drivers include the following:

1)  Financial Performance

• This driver asks the questions: what’s your top line revenue and what’s your bottom-line profit?
• It’s not just about these numbers, but the quality of the reporting of these numbers.
• A simple way to improve your financial performance is to consider investing in an audit to make these numbers as defendable as you can since a buyer may want to know.
• See short video:

2)  Growth Potential

• Business owners often base their value on past performance.
• Buyers don’t purchase the past or what you’ve done, they want to know what your business is going to do in the future so they can capture the future stream of profits.
• This driver covers the future potential of your business and whether it can:
  • operate in a different market
  • cross sell additional products and services to an existing customer base
  • scale up to attract new customers
• See short video:

3)  The Switzerland Structure

• Based on the reputation of the country known for being neutral and independent, this driver covers what is essential to building a sellable company.

You should operate with a sense of independence from:

• Customers – your company needs a diversified customer set, not concentrated on just a few
• Employees – your business cannot be overly reliant on any one individual
• Suppliers – a diversified base is advantageous to your organization
• If a buyer sees your business as too dependent on any of these key groups, they may discount the company as too risky for them.
• See short video:

4)  The Valuation Teeter Totter

• Similar to how a playground teeter totter works, the same relationship exists between the way cash moves through your company and its value.
• When selling a business, the buyer pays you for it and then funds the working capital of the company…this is money the business will need to operate the day the keys are handed over to new ownership.
• The more money required to operate your company, the less a buyer will want your company. Generating more cash for your business and improving your cash flow position will make it more attractive to buyers.
• See short video:

5)  Recurring Revenue

• This driver addresses the question: how is the business going to continue after you, the business owner, leaves?
• The more recurring revenue you have from customers, the more valuable your business.
• There are six forms of valuable recurring revenue. From the lowest to the highest they are:
  • Simple consumables
  • Sunk money consumable
  • Subscription revenue
  • Sunk money subscription
  • Auto renewal
  • Contract revenue
• The higher the proportion of your recurring revenue, the more valuable your company will be.
• See short video:

6)  Monopoly of Control

• This business driver is an attribute of sellability in terms of having control over how you price your product, meaning you’re not being commoditized.
• A differentiated marketing position with a differentiated proposition usually gives you the ability to control your pricing.
• The more different you are, the more control you have over your pricing. The more you control your pricing, the more margin you make. The more margin you make, the more you can invest in sales and marketing which triggers a domino effect that enables your business to stay different in the marketplace.
• In order to affect your Monopoly of Control, scrutinize the way you’re marketing your business by looking at two key attributes:
  • *It has to be meaningful to your customers
  • *It has to make you different                } *Your messaging needs to communicate these approaches
• See short video:

7)  Customer Satisfaction

• A buyer will be interested in how satisfied your customers are with your company. Since they are essentially buying the future, this driver helps demonstrate how business will perform when you’re gone.
• Therefore, it’s best to quantify and measure your customer’s satisfaction. One way to do this is through a Net Promoter Score which measures and benchmarks your performance on the likelihood customers are satisfied and will repurchase from you – valuable data to prospective buyers.
• See short video:

8)  Hub & Spoke

• This business driver refers to how dependent the company is on you personally.
• In your company, you’re the hub when:
  • Your customer comes to you when they need a quote
  • Your employees come to you when they have a question or problem
  • Your suppliers come to when they want you to buy something
• When you’re engaged in the Hub & Spoke business owner operating style, there’s less value in the company. To improve value, the business needs to be less reliant on you.
• One way to achieve less dependence on you is by documenting processes of the way you do things. These are things that have value and are important to operating the company, especially when you’re not there.
• Tweak these processes as needed over time, taking note of any break downs in a process when you were away from the company.
• See short video: