Every business has driving factors that determine its success. Key variables that have to work in order to be considered a winner. It’s important to take a hard look at your company and understand exactly which factors drive these outcomes so you can continue to maximize their positive impact on revenue and net income.
What components of your business are making the biggest difference to your bottom line?
Here are some possible drivers:
It might be a combination of these variables, or something even more distinctive, that creates the value added that separates your business from all others in your industry.
As a business owner or leading executive, it is imperative that you have a strong understanding of what these factors are. You can then discuss each one in detail with employees, service providers, and suppliers. Bring in your outside consultants and service providers, such as accountants, financial institutions, and investment advisors, and discuss how these advantages can support future growth and investment.
When independently valuing the business, or when contemplating a merger or sale, inform your appraisal professional and advisors about these success drivers so they can highlight and factor them into their analysis.
Everything may not be black and white, and it may not be easily determined on your balance sheets and financial statements; therefore, it’s vital to create a straightforward way to break down the numbers further and show interested parties how it all works in the day-to-day operation.
In summary, by understanding these winning formulas and knowing how to highlight them in your business model, you will create ongoing opportunities both internally for growth and sustained success, as well as future investment, partnership, and eventual sale.