How much did your home increase in value last year? Depending on where you live, it may have gone up by 5 – 10% or more. How much did your stock portfolio increase over the past year?
Now consider what portion of your wealth is tied to the stock or housing market, and compare that to the equity you have tied up in your business. If you’re like most owners, the majority of your wealth is tied up in your company. Increasing the value of your largest asset can have a much faster impact on your overall financial picture than a bump in the stock market or the value of your home.
How Anders Uses the Value Builder Assessment to Evaluate Your Business
Anders Business Transition Planning team works with a variety of businesses, from startups to multi-generational companies, on how to create, harvest and preserve wealth in the company for a successful transition when the time comes. Our team of Certified Exit Planning Advisors (CEPA) utilizes a Value Builder Assessment that helps business owners get a better idea of the value of their company before they decide to sell or entertain offers.
The Value Builder Assessment provides insight on what areas to focus on to build value in your company and receive higher offers from buyers. Companies with a Value Builder Score of 80+ out of a possible 100 typically receive offers to buy their business that are 71% higher than what the average company receives.
How long would it take your stock portfolio or home to go up by 71%? Years, maybe even decades. Your Value Builder Score helps you track your overall business value along with your performance on the eight key drivers of company value. You can quickly zero in on which of the eight drivers is dragging down your value the most and then take corrective action.
Your overall Value Builder Score is derived from your performance on the eight attributes that drive the value of your company:
- Financial Performance: your history of producing revenue and profit combined with the professionalism of your record keeping.
- Growth Potential: your likelihood to grow your business in the future and at what rate.
- The Switzerland Structure: how dependent your business is on any one employee, customer or supplier.
- The Valuation Teeter Totter: whether your business is a cash suck or a cash spigot.
- The Hierarchy of Recurring Revenue: the proportion and quality of automatic, annuity-based revenue you collect each month.
- The Monopoly Control: how well differentiated your business is from competitors in your industry.
- Customer Satisfaction: the likelihood that your customers will re-purchase and also refer you.
- Hub & Spoke: how your business would perform if you were unexpectedly unable to work for a period of three months.
To find out how you’re performing on the eight key drivers of company value and start your journey of increasing the value of your largest asset, contact an Anders advisor to get your Value Builder Score assessment.
