A successful business is one that is making a profit, paying the bills, and letting you live comfortably, right?
Wrong. A healthy profit does not guarantee a healthy future. You might have made profit this month, but what about next month... Can you guarantee future success?
Profit measures what has happened, but it does not recognise everything that enables your business to generate that profit today and into the future. Your daily efforts, employee contribution, marketing and most importantly, client perception and trust, will all contribute to future success. Developing these aspects of your business adds value - and it is value that measures what will happen in the future.
To better understand this concept, think about how you would prepare yourself to invest in a company. You could either look at its current profit level, or you could look at the price, its future potential, the value of its stock and whether this value will increase over time.
Making a judgement based on profits would seem unreasonable, and like an investment, your business has the ability to increase or decrease in value overtime. Thankfully, unlike profit, you have full control over how much value your business holds for as long as you continue to invest in it.
Once you believe and understand that it is value driving your business success, you can look forward rather than back, and profit will naturally drive everything in the background.
Here's how to increase your business value?
• Differentiate your business: a business that has unique capabilities and stands out from its competitors is more likely to be recognised, and rated, by customers. Providing an unparalleled service creates long-term, profitable customer relationships. If you don't have a differentiating factor, create one. Whether you make your focus about being the fastest, most reliable, or most customisable service, there are two rules to follow. Ensure your differentiating factor is as specific as possible, such as 'Delivered within 24 hours - always', and make sure you can always fulfil it.
• Form strategic and collaborative alliances: strategic alliances can be a great source of growth, for example; connecting with a complementary company may allow you to tender for work you may not be able to deliver on your own. To make the most out of a strategic alliance, be clear on your desired outcomes, prepare a business plan and SWOT analysis of your joint alliance, and set specific time lines and trial time frames.
• Develop your brand: an established and recognised brand builds market credibility over time, and such a reputation can help sustain revenues through growth. Perform some internal research and understand what three things define your business. Use these as the building blocks of your brand. It's also important to enhance the emotional appeal of your brand, whether it be touching imagery, or a reminder of your company's longstanding role in the community. A brand will endure far longer if it doesn't appeal purely to the rational side of people's brains.
• Retain important staff: key staff members who are experienced are a valuable asset. Provide a work environment that is enjoyable to be in, create opportunities for career progression, empower your team by encouraging an open dialogue, and acknowledge individual contributions. Provide these opportunities and incentives and your team will want to help you create a valuable business.
• Strengthen systems and structures: having procedures and training manuals in place strengthens your business value. They provide the ability to quickly train new staff, create accountability and ensure everyone is working on the same page. Create training documents, incorporate a project management system, and regularly hold team meetings to keep track of everyone's expectations and outcomes.
Creating a valuable business is not a difficult process, but one that relies on an understanding of what it is that determines your success; not your profits, but the employees, customers, operations and services bringing it in.
