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  • Writer's pictureMike Williams

Common business owner struggles also linked to business valuation

A Blog post on the mybusiness news site has just been released detailing the experience found in the recent TV series The Mentor by Mark Bouris. It listed some of the common struggles experienced by business owners.

Ironically the key problems that Mark Bouris found that were linked to small businesss struggles were:

  • A lack of structure

  • A lack of business systems and processes

  • Not holding regular planning and strategy meetings

  • Failing to keep proper records

It is amazing how often we find exactly these issues when doing business valuations. In fact I have seen businesses increase their value by 100% - 400% simply by dealing with the four issues listed above. These issues not only make the business more attractive and increase the multiple, they increase profits. That is a double-whammy when it comes to valuation.

The blog post goes on to say that the key for small business owners is to:

  • Know the purpose of the business.

  • Ask for help and guidance.

  • Recognise the difference between working in or working on the business.

  • Have a deep understanding of when to make drastic cuts or pull the plug

Ironically we have talked about this in earlier blog posts:

Whilst it gives us warm fuzzies to see other experts recommending the same things that we see are critically linked to business value - it also reminds us that business is hard work and it can take a business owner a while before they see the forest for the trees. Sometimes you do have to feel the pain of wrong choices and low profits before you understand that there are better ways to manage and grow the business.

The key message I take away from The Mentor finding the same key issues that we link to business valuation is that it takes repeated efforts at dealing with these issues before the business owners sees improvements. It is rarely a silver bullet that when implemented the first time brings about dramatic increases in value. It takes several goes at a particular issue before you have really made business improvements.

And therein lies the biggest key - start business improvement now. Don't wait until you need revenue or profit growth urgently to improve the business. Don't wait until you need to sell the business before getting it ready. Critically look at the business now and deal with the issues that are holding you back.

It does give me some confidence that the key issues we find to increasing the value of a business have also been identified by other experts.

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