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Do You Own a Marketing Machine?
At some time in the future, you may want to sell your business. What would a buyer value? Even if you donít want to sell it, and want them to carry you out of your office in a pine box, you might still like to know where the value truly lies for yourself, if not for anyone else.
A buyer will be brutally objective in looking at your assets. How do you think they will value your equipment which is starting to show the signs of wear, and certainly is not the latest model? How will they value your great location with a lease expiry in 2 years, and a potential big rent rise for a new lease? Will they value your staff who may leave when you do?
Often what a buyer pays for is your client list, but that is only the value of your existing clients who may also leave when you do.
While all these assets are valuable to you, a buyer will discount them heavily, which is why so many retiring business owners are very disappointed on the price they get when they sell their business.
What a business buyer really values is a marketing system that turns your business into a Profit Machine. That is you have a way of predictably generating enquiries that turn into new, profitable business. A system that does not rely on you.
Typical business valuations are often around 2 times net profit (after the owners wages). That is what people pay for a client list. Franchises , which do have marketing systems in place will attract 4 times the net profit. Listed companies are typically valued at 12-15 times their net profit. The more systematised the business the higher the valuation.
Of course, even if you donít intend to sell your business any time soon, the attraction of owning a business that is a marketing machine is obvious. You know where the next monthís sales will come from, be confidant that you can bring in new staff and can afford to pay them and invest in growth, and know, when you are not there, the sales are being made just the same way as if you were.
When you make the effort to turn your business into a marketing machine, it is an investment that pays for itself many times over, year after year.
May Your Business Be - As You Plan It!
Dr Greg Chapman - The Australian Business Coaching Club
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