DISCOVERY CALL

Grow Your Business Faster by Building Value – The Eight Drivers You Need to Know

bulding value business growth capital customer score drivers of value entrepreneur exit strategy financial performance gowth growth potential key driver market control revenue revenue model scaling value builder wealth creation May 13, 2022

What makes a business great? Is it the sales? The revenue? Its reputation? Or is it something else? Find out the answer.

You’ve started working on your business. 

You’re looking at the process, formulating a plan, and preparing to create the perfect environment to sustain growth.

Everything right now is about optimizing your business from the inside out to allow for scaling exponentially.

This is an exciting period of wealth accumulation for every entrepreneur – not only in business but also in life.

Now, if you’re set on using the best approach to wealth creation, then you have to look after the greatest asset you can ever build in your business – value.

So, what drives value?

Value creation is jumpstarted by the owner’s mindset and is accelerated by eight key drivers. The better you understand these fundamental aspects of your business, the more value you can create.

Your financial performance will grow, your power to raise capital will increase, and even your exit strategy can stand to benefit.

If these sound like things you want in your business, this article will cover what you need to know.

Be a Value Builder

Traditional business owners get stuck in a narrow mentality. That is, they would prioritize growing revenue instead of growing value. 

But I don’t want you to be a traditional business owner and perhaps go through the same mistakes as many of your peers.

Instead, I want you to be a value builder.

This is someone who thinks differently compared to traditional business owners who often think narrowly.

What do I mean?

A typical business owner’s priority is to grow their revenue. Meanwhile, a value builder would emphasize growing value. And they will look at what the revenue is driving from a financial performance standpoint.

Also, they would offer products or services with a durable competitive advantage. Whereas traditional business owners use proximity as their competitive advantage.

Simply put, value builders have a different, more modern way of thinking.

It’s also worth mentioning that traditional business owners are concerned with selling more products to a single customer.

This is another area where a value builder takes a different approach. 

They devise ways to sell a few things to more customers. It also allows for a standardized sales process. That means it’s easier on the owners, salespeople, and the development team.

Why?

There’s no need to worry about creating and differentiating 100 unique products. 

Building a Company That Can Thrive Without the Founder

If you’re anything like me, you probably had the same impulse – build value through your relationships.

There’s nothing wrong with that at first. But as you attempt to grow, your company will need more than your relationships and connections.

It’s important to drive away from that to avoid making your organization fully dependent on you.

That’s why value builders spend their time figuring out how to create sustainability and profit without their direct involvement.

This is particularly vital if you’re thinking about an exit. After all, your company’s value could increase tenfold if you can demonstrate that your business operates the same with or without you.

The Eight Drivers of Value

As mentioned, eight key drivers accelerate the mindset of a business owner in terms of creating value. So, what are those eight drivers of value?

Financial performance is arguably the greatest value driver inside your business and organization. Improving this area requires a keen understanding of your financial optics.

Another key driver is your growth potential. And to identify this, you need to ask yourself about your business’s opportunity to grow.

Can you thrive in your market? Is it stable? And does it offer the chance to drive greater results going forward?

Once you nail down these areas, you can look at your revenue model

Perhaps you’re running a one-off business. 

Maybe you’re using a recurring revenue model, and you can set up a subscription-type business. You could add value to your customers as well as earn more from them during their stay with you.

Then, you’ll want to look at market control

Your level of influence over the market will be a massive driver of value. And a large enough share can enable you to control the pricing not just of your business but the industry.

Now, let’s talk about a driver that business owners overlook: owner dependence

If your business is owner-dependent, it can’t succeed without your direct input. You’re the only one who provides value. But if you have a great team and customers don’t need to work with you specifically, you can generate even more business.

The more your business is dependent on you, the lower its value becomes.

Then, how about other relationship dependencies

Some organizations can’t function without key employees, vendors, or customers. Building a business around specific relationships can lower the company’s value should the relationships change.

Here’s another vital driver of value – customer score

By this, I mean the ratio of happy to dissatisfied customers.

Some people will promote your business, while others will be classified as detractors. Those are the ones unhappy with the results you deliver. That’s why it’s critical to understand how your customers would score you.

Finally, you have the cash requirement or cash cow element

What do I mean by this?

Your business doesn’t necessarily need to make huge profits. 

But suppose your business keeps printing money and cash flow is positive. In that case, you won’t need considerable reinvestments to accelerate your growth and increase your performance.

Know that each of these drivers will dramatically affect your company’s value. And remember that as your business creates more value, financial performance will come along with it.

Business Growth Starts in Your Mind

Many business owners have the foundational knowledge to run a company. However, it doesn’t mean they’re approaching things from the proper perspective.

With that in mind, know that your mindset is either narrow or broad. And the latter always opens up more opportunities to grow and turn a profit. 

It’s also important to understand that you’ll only make money based on the value you offer. That means if you create more value, you’ll increase sales and the average customer order, gain freedom from the business, and secure a fantastic exit.

Ultimately, it all depends on your willingness to focus on being a value builder and leveraging the most critical drivers. That’s what will enable you to scale your business exponentially.

 

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