So profit is important every business.

But if you want to increase the value of your business dramatically, you need to look beyond profit.

When it comes to valuing a business, one of the calculations that you can use is to take your profit multiplied by an earnings multiple.

So let’s say you have a business making a million dollars a year in sustainable profit, you’re putting a million dollars in pre-tax income in your pocket.

But with a multiple of, say, five times earnings, you’ll have an asset worth $5 million. 

That’s why as we’re working with our coaching clients, we look beyond just the profits and look to also increase value.

Now in general, your multiple is a reflection of both your business and your financial risks. So if you want to increase the multiple, you need to reduce the risk. 

There are many factors involved in increasing the multiples. So what I’m going to do today is give you ten of my top favorite opportunities to look for in a business. 

So number one, are the processes in the business systematized and documented? 

Two: do you have reoccurring dependable income? Or is it all one-off projects, reoccurring income is worth more? 

Number three: Can you charge more premium pricing and still have climate clients lining up to do business with you? (In other words, you’re not commoditized.) 

Number four: how unique are your company’s products and services? 

Number five: how dependent is the company on the business owner or key employees? 

Number six: how many different lead and sale sources are available? Or are you largely dependent on just word of mouth? 

Number seven: does the business have a strategic growth plan? 

Number eight: are the KPIs clearly identified and monitored monthly? 

Number nine: does the business generate more than 30% of its revenue from less than 10% of its customers and clients? 

And finally, number ten: how do you stack up against your competition? 

So those are my top 10 areas of opportunity that I look out for making a dramatic increase in the value of your business.

Of course, if you have any questions, feel free to reach out, and we can discuss those in more detail.