Is there value in your financials?

Financial Performance - Is there value in your financials?

Most business owners want to create wealth, exit on their terms, and empower the next generation to continue the legacy of their blood, sweat, and tears. There is only one way to make this happen – maximize the value of your business, NOW.  
 
Because if you wait, you will run out of runway and won’t maximize your business value. It happens all the time.
 
The first value driver to focus on in the Value Builder System is financial performance. I haven’t met a business owner who isn’t trying to drive top line revenue. But the smarter owners are focused on growing profitable top line revenue, and the best focus on profitable top line revenue that quickly converts to cash.  As the adage states, ‘Revenue is vanity, profit is sanity, and cash is king.’
 
Revenue, profit, and cash are not only important for today’s performance, but they play a key role in valuing the business.  It is important for a business owner to get out of his own head, to step away from his ‘baby’, and look at his business from an investor’s eyes, because that is who is going to buy it (family or third party, it’s an investment someone is going to make).  Anyone with business sense is going to favor a company that is consistently growing both top line and bottom line and is able to covert P&L profit into cash quickly.  That’s what you want, and that is what your buyer wants.
 
Buyers will pay for less risk.  The more you accelerate these three factors while you own the business (part of the value acceleration methodology we employ) means more income to you today, and more wealth for you at transition. 

  1. Consistent growth
  2. Healthy cash flow
  3. More predictability

But there's another sort of hidden component of financial performance, and it has everything to do with reducing risk.  It’s the defensibility of your numbers.
 
Buyers are looking for gaps in your performance, so they can discount the price they pay for your business. They might look and say, "Hey, these numbers are great, so, are they true?  And how defensible are they?"
 
So, how would you make your numbers defensible? There are a couple of ways.  One well known method is an audit conducted by a traditional accounting firm.  Another way is a report called a Quality of Earnings Report.  Both reports are a way to ensure the numbers have been validated by a third party. This is a Very, Very important part of the financial performance value driver.
 
Value acceleration is not about the end game.  It is about what you are doing today to drive value that in turn provides income and options.  Get your business working for you.
 
Check out my video here on Financial Performance.