Over the past several months, we’ve covered various aspects of the value building process. With all the pieces laid out, we now want to draw them together to in one index, meant to clearly show how the process works in entirety.
In approaching this process, it is essential to be able to view your business from the investor’s perspective. This process is, ultimately, meant to to build value in the eyes of the investor so you can get a price for your business that makes you happy to walk away.
This isn’t a one time through process. Practically speaking, it makes sense to view the process we’ve outlined as a framework to develop your own internal systems for building value and assessing progress. You can run these systems on repeat, over and over again, as long as you’re at the helm of your operation.
The phases of the process are as follows:
Define your exit strategy > determine how much you need to get for your business >valuate your business to determine how far you are from your goal > identify the areas for improvement that offer the greatest return > implement systems to address those areas > assess progress by valuating again
Throughout the process, your quest is two-fold. You need to improve the value of your business, and improve your ability to talk about it. Building an effective pitch deck and keeping it up to date will help you assess how well you’re able to speak the investor’s language. Meanwhile, running valuations and capturing other data will help you to actually track tangible growth.
The more you invest in these systems, the more your business will improve over time, because you will both improve the systems themselves, and become more proficient at using them. If you feel like you don’t have a lot of time, here are a few insights to instill you with a sense of urgency.
—the things that improve the value in the investor’s eyes will also lead to more profitability, security and freedom for you while you hold the company
—much of this stuff doesn’t need large chunks of time to work, especially once the systems are in place. What is more effective is working on it frequently in smaller chunks of time.
—the more you use these systems, the more efficient the process becomes
— and the more upside they have to offer
—the best thing you can do to create more time for yourself is start today
Build and update a pitch deck
Of course, its all for nothing if you can’t communicate the value to interested buyers. Valuation models are indispensable, but there is no standardized measure of a company’s value. Perhaps more than any other type of transaction, the value is subjective. So you need to be able to communicate what its worth to you — and how you came up with those numbers.
Your pitch deck is the culmination of the entire process, and serves as a useful framework for illustrating the various steps of the journey. The structure of an effective pitch deck is simple and straightforward. You’ll have 10-12 pages/slides:
2. The problem your business solves. This may evolve over time as you tailor your business to provide better value to your customers, your team, and yourself.
3. The solution, aka your product or service
4. The addressable market. Read an overview on market analysis here
5. Competitive landscape. This is also covered in the above mentioned post on market analysis.
6. Go-to-market strategy
7. Financials: for investors, you need to share your history and your projections. For growth, you need to also juxtapose those against your goals. You can read about Key Performance Indicators here you can read about data collection systems here and you can read about presenting the data here
8. Team. The investors, of course, will want to know who they’ll be working with once you’re gone. You can read up on what they’ll want to know here
9. Your exit strategy
10. Your request: what you want in exchange for your business
11. A closing statement or insight that they’ll remember
12. Appendix for their reference if needed
You can read a more in depth explanation of the pitch deck here This is the process in a nutshell. Of course, its easier said than done. But the best way to get comfortable with it is to get your hands dirty. And the best time to start is always right now. Or, at least, this week.
What you can do to maximize results
As we’ve said may times over, time is your greatest ally. As we’ve also said repeatedly, it takes time to get good at this stuff. And there’s one more thing you can do to create more time for yourself. By bringing in an outside consultant, you can put somebody with years of experience in these very matter to the task. An expert can accelerate the process while freeing up some of your time to do what you’re best at. Additionally, by helping you develop the systems you need, they’ll free up future time for you.
So when does it make sense to bring in an expert? There are some aspects where it’s certainly counterproductive not to have help. Its about getting help with the pars you’re not good at. For instance, you hire an accountant just to run the books. You’ll need a lawyer to help with the paperwork when it comes time to transfer ownership of the business. If you need help facilitating the sale or with improving the value of your company, Free Vector Advisors can help with both legal and business matters. Bringing in professionals can be a substantial investment, but you don’t necessarily have to pay it upfront. We’re willing to partner with companies for equity in the sale. To discuss your business goals with an experienced advisor, you can click here and fill out a contact form.