How to Triple Your Business Value in 5 Years

By Cheryl Powers

In business, bigger often seems better. We applaud companies bursting with staff and swelling their revenues year over year. But if you're steering your business toward the day you can sell it for a healthy profit, you'll need more than just piling on sales. You could be growing, sure, but not in ways that actually up your company's worth. Sometimes, this kind of growth could even hurt your value.

The Real Deal About Growth and Value

Let's get straight to the point: When the big fish come hunting – those strategic buyers with deep pockets – they're not just buying your sales figures. They want what they can't make or buy easily elsewhere. They're after that special something you've got, whether it's a product, a service, or a market position that's a cut above the rest.

Adding on every service under the sun might make you look versatile, but to a buyer, it can make you look less like a specialist. It's like being known as the go-to person for one thing – say, the best at making software for brake manufacturers, as Michael Lieberman did with Datastay. Because of his razor-sharp focus, when Autodesk came looking, they saw a golden opportunity they couldn't pass up and offered him a deal that was hard to refuse.

What Buyers Really Want

Think about it this way: Private equity groups might be all about your EBITDA—that's your profits before tax, interest, depreciation, and amortization. But strategic buyers? They're playing a different game. They usually have the resources and want that one thing that'll fit into their plans. The less you're scattered over different areas, the more they'll probably want to pay for your business because you have exactly what they're missing.

The Challenges You're Up Against

You're not just running a business. You're trying to increase its value to have something worth selling when you're ready for your next act. That means not just chasing sales but making sure those sales are reliable and profitable, especially those that keep coming in regularly.

It's tough out there. You're trying to get a team that's on the ball and on board with where you're heading. You must keep the money flowing in the right direction, stay profitable, and ensure you're not the only one making decisions or doing the heavy lifting. Finding and keeping the right customers can be a battle, especially when you're trying to offer real value without slashing prices left and right.

You might think a good strategy on paper means you're all set, but the truth is in the execution. And that means building a business that runs like a well-oiled machine, even when you're not in the room.

How to Build a Business That's Worth More

It's about setting up an ecosystem where your business can thrive. That means pulling in customers who aren't just passing through but are here to stay, bringing in more business as they go. It's about making a place where your employees don't just work – they belong and contribute to a cycle of success.

If you focus on the right kind of growth inside the right type of operation, you're really turning your business into something buyers will pay a premium for. It's not just about you and your hard work anymore; it's about what your business represents—a well-running, profitable operation that'll keep churning out the goods long after you've stepped away.

Think about what makes your business unique and double down on that. Build a team that can take your vision and run with it. Create a base of customers who are so happy with what you offer that they wouldn't dream of going anywhere else. Get these things right, and you're not just building a business; you're building wealth – for you and the future owners of your company.

You're working toward a day when you can hand over the reins and know you're handing over something valuable. That's not just growth – that's smart business.