Would you like more information about how to increase the value of your business?
There are many reasons to work on increasing the value of your business. It can help obtain better terms in startup fundraising.
It can help you sell your company for more, or price your shares higher when selling your company or going public.
There are also many other positive side effects of a higher valuation too. Including more positive media attention, attracting stronger talent, and even gaining more credibility and interest with consumers.
Valuation isn’t everything. The terms you get in transactions can be far more important. Yet, too many business owners leave a lot on the table by ignoring the importance of this.
Here are some of the ways that you can start elevating the value of your business, and reap many other increases in important metrics at the same time.
The Ultimate Guide To Pitch Decks
Here is the content that we will cover in this post. Let’s get started.
- 1. De-Risk Your Venture
- 2. Finish Your Product
- 3. Prove Demand
- 4. Assemble A Stronger Team
- 5. Build A Strong Brand
- 6. Invest In Your Branding
- 7. Demonstrate Your Brand Love
- 8. Endorsements
- 9. Revenues
- 10. Establish & Increase Profits
- 11. Traction
- 12. A Strong Moat
- 13. Expand
- 14. Reduce Debt
- 15. Reduce Unnecessary Overheads
- 16. M&A
- 17. Sell It Well
- 18. Summary
De-Risk Your Venture
When it comes to value and securing investors, especially as an early stage or pre-revenue startup, a lot of the equation is about risk.
There is typically a lot more risk and unknowns for investors at this point. The less risk, the more valuable your startup will be seen.
The more investors that are likely to invest. The more they are going to be willing to bet on your venture, and the better the terms they will offer you.
So, what are some of the ways that you can de-risk your venture for investors?
Finish Your Product
Focus on completing a product. If you haven’t yet, get that prototype done, and start getting feedback on it.
If you have a prototype, focus everything on finishing the real product. At least your MVP. It doesn’t have to be fancy or have a lot of features.
It should be clean and lean, and just work to solve the one big problem your startup is on a mission to tackle.
This is a big deal, as many startups never get as far as completing a commercially viable product. Even despite raising millions in capital.
Prove the market and demand for your product. If you still don’t have a product completed, this can at least be in the form of real market research.
Show the results of spending a lot of time talking to real customers, compiling their feedback, and getting early commitments from them.
If you do have a product or are close to completion (and are 100% confident it will be done soon), then prove that people are buying your product with real money. Or show that they are at least pre-ordering.
This strategy will go a long way to comforting investors and giving them confidence that you really have a viable business and something of value.
Just don’t get too far ahead of yourself, and run into the problems that the founder of Nikola recently did. Understand how to increase the value of your business.
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Assemble A Stronger Team
Much of the risk involved in startups and businesses, in general, is about the strength of the team. The strongest team will win the space.
Not just the most intelligent in terms of IQ or who has the most degrees, but the talent that has proven they can execute and make things happen.
This not only applies to the technical team. You also need strong management, marketing, and fundraising talent.
You can augment your team’s strength by bringing in the right cofounder, hiring better executives, and recruiting great advisors.
Highlighting other investors that you’ve brought in and that you have a strong board of credible investors can certainly elevate the perceived value of your startup too.
Ready for more detailed information about how to value your company? Check out this video I have created explaining exacting how to do this. You’re sure to find it helpful.
Build A Strong Brand
A strong brand alone can offer a lot of value. Especially when it comes time for selling your business and attracting appealing M&A offers.
Strong branding alone can make even small startups highly desirable to even the biggest corporate giants and can add millions to their price tag. Skype’s acquisition by Microsoft was a great example of this.
So, what are some of the ways that you can build a stronger brand?
Invest In Your Branding
Make sure you are intentionally working on your branding. Invest in a strong logo and tagline.
Be sure you are presenting a unified brand across your online assets, packaging, messaging, and ads. As well as your pitch decks and other materials.
Demonstrate Your Brand Love
Show how much love your brand is getting. In the early days, this may mostly be rave reviews, repeat customers, and referrals.
Later on, this can be showing the level of brand recognition your company has over your competitors.
High-level endorsements can say a lot about your brand and its perceived value too. These can be major celebrities or respected people within your industry and field.
Who accepts your sponsorships can also have the same effect.
Revenues add value in both traditional accounting and cash flow, as well as by de-risking the investment for angels, VCs, and potential acquirers.
As an early-stage startup, the sooner you can get some revenues coming in and prove your venture the better. It doesn’t have to be a huge amount, but a couple of notable customers and some sales will help you stand out.
As your company matures, growing those revenues directly influences the tangible value of your business as well. For early-stage startups, make sure you and your teams are prioritizing making those sales.
If you already have some, then work on strengthening, expanding, and optimizing your marketing to get more of them.
As a more mature business, hone in on growing your revenues. This can be done with different pricing packages to get more revenues in early, and to increase the value of each customer.
Or it can be through adding new channels of revenues. There are creative ways to do this, without necessarily having to create new products of your own.
Bundling services and products with others, and creating strategic partners, and obtaining new distribution channels are all options.
All of these are valuable strategies to adopt when exploring how to increase the value of your business.
Establish & Increase Profits
Revenues and cash flow are great. Though profits are even better. There are decade-old companies that have sucked in billions of dollars, and have even gone public, and are still losing a lot of money.
There are times when this is an acceptable and even desirable trade-off for growth. Yet, the real value in a traditional business sense is really about profits.
If you don’t have profitability yet, you should at least focus on nailing your unit economics so that they can be profitable. And have a quick path for breaking even and securing profitability should you need to.
Be sure you are documenting your profitability too. Be ready to show a clean and organized track record of your profitable performance to maximize value.
If you are not profitable yet, or your profits are subpar for industry benchmarks and of similar companies at your stage in business, look for ways to cut costs or increase the top line to get there.
Traction is often a great substitute for some of the above metrics. You may not have large revenues or net profits, but if you can prove you are growing in the right direction fast, that helps a lot.
It shows demand, that you are on the right track, and that growth in itself can be highly valuable to big mature companies who lack it.
Growth in your users and customer count can be what some startup accelerators, investors, and acquirers want to see the most.
Make sure you are tracking it, recording it, and have the strategies and tactics to keep growing in the right direction consistently.
Side by side, search around for the best practices for how to increase the value of your business.
A Strong Moat
The future value and strength of your business directly influence value too. You can increase the value of your business and reduce risk by showing that your position is well defended. That it is sustainable.
This means relying on more than price wars alone. Do you have real IP, or have done the hard work others can’t or won’t?
These things will keep competitors out, and hold up the value of your company. It will make it more attractive for others to acquire you for a high number than to try and recreate or compete with you.
Perhaps you are firing on all of these factors well already. It may just be a matter of multiplying those results. There are various ways to expand, and keep up that traction, sales volume, revenues, and profits.
You may enter new markets and expand geographically. This may be within your existing region, nationally, internationally, and now, perhaps interplanetary as well.
It could be focusing on more market share within your existing markets. It may be expanding who you serve and how you serve customers.
For example, adding more products to your store. Or expanding to enterprise customers or B2C instead of only B2B.
Perhaps you can scale even faster and more efficiently through licensing or franchising and partnerships too. Work out the best ways for how to increase the value of your business.
Keep in mind that in fundraising, storytelling is everything. In this regard for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Debt can be a valuable tool for getting started, growing, and achieving some of the metrics we’ve already covered. However, it can also be a detractor from profitability and may add perceived risk too.
Can you retire debt with new injections of equity capital? Can you optimize your financial strength by accelerating the payoff of debt, converting debt to equity, or through refinancing and other forms of debt restructuring?
Reduce Unnecessary Overheads
Overheads are a risk. Static expenses that can be a weight around your neck. Especially since it can remain fixed when other factors, like revenues, fluctuate on uncontrollable macro factors. Like the COVID pandemic lockdowns.
Overheads will sap your value and sink your business faster than anything else. Trim any unnecessary expenses. If you don’t have to have it and aren’t getting a VC-worthy return on it, you can’t afford it.
One of the most obvious and impactful areas of this today is office space and physical workspace. Unless you are in manufacturing, then you probably don’t need it.
Office space is choking so many startups and big businesses today, and it isn’t necessary. There are plenty of billion-dollar startups that have been built on fully remote teams from the beginning.
M&A deals can be a great way to increase the value of your business. You can merge with or acquire other companies to become a stronger force in your market.
You’ll dominate market share, fend off competition, accelerate and maintain growth, and increase profitability. As well as to better position your company to receive strong acquisition offers.
You can do this with peer businesses, smaller ones, and even larger ones.
Sell It Well
Wherever you are at with all of these factors, the reality is that it really all comes down to how well you present and sell it.
You can have the best product and profits and future potential, but it won’t matter if you don’t sell it well.
Many other startups with far weaker fundamentals have probably raised a lot more or sold for a lot more, all because of their ability to market and sell it.
This shows up through your storytelling, the vision you cast, the projections you formulate, and in your marketing, pitch decks, and pitch books.
Are you looking for the best ways for how to increase the value of your business? These are a variety of ways that you can tangibly increase the value of your business, as well as optimize the perceived value for potential investors, financiers, and acquirers.
You may find interesting as well our free library of business templates. There you will find every single template you will need when building and scaling your business completely for free. See it here.