Do you know what your business is worth? Getting a business valued before you invest in major new marketing might make a lot of sense and can be an unfair competitive advantage if your goal is to sell in the next few years.
A fresh thought for me about marketing emerged in the last few years from several business owner-clients who reach out to me for marketing advice. Typically, these folks own a business with roughly $3 to 50 million dollars in revenue. They wanted to grow their brands through a new, more strategic approach to marketing. Several of them shared with me that they are also considering selling the business in a few years.
During the discussion, I have started to ask if they ever had a business valuation done?
A business valuation is just as it sounds – where you evaluate what similar businesses have sold for and understand how they are valued. Did those businesses sell for multiple sales, earnings, EBITDA, EBIT? How did CAC (customer acquisition cost), lifetime value of each customer, or something more intangible like brand awareness impact their value? What about customer mix, product mix, gross profit margin, and inventory turnover?
Understanding how people value a business can play a role in where you might want to focus your marketing investment.
Market View
My good friend Britt Carter introduced me to his brother Jay from San Diego, who does this type of work at his firm www.market-view.com
Jay refers to himself as an entrepreneur and professional Pre-Sale Business Consultant. He has an extensive background in business valuation and creating strategic plans and exit options across various industries. Through Jay’s work, he shows CEOs and business owners how to increase the value and marketability of their company in preparation for a future sale.
Examples:
• Industrial fastener business sold for more than $30M, receiving a record-setting valuation after following pre-sale value-enhancing recommendations.
• Food distributor received $1M more for business due to Jay’s working capital analysis before the sale transaction.
• Self-storage business obtained more than $10M in start-up capital due to meticulous planning and the strategic pre-transaction guidance provided.
One of Jay’s past clients said,
“The value of the work that MarketView did for us was at least 10x the cost. We have never had a clearer picture of the value of our business and how to grow it. The team at MarketView provided a perspective that we would have never obtained without their help.”
— Derek Norris, Founder, and CEO, Ram Jack Pacific
Jay and I are currently working on a confidential project together. He has opened my eyes to see how this “pre-marketing” phase of work makes sense for business owners considering an investment in marketing AND thinking about a sale or exit in the next few years.
There are other companies that do this type of work. Often, larger organizations will hire investment bankers to assist in the sale of a business. That’s how my wife and I sold our wholesale bakery business in 1989 to Goodmark Foods.
There are also small, business brokers like another friend Neal Issacs at VR Brokers who specialize in assisting small companies in the Triangle. (Raleigh/Durham/Chapel Hill area).
Do you know what your business is worth so you can put your marketing spending in the right place?
You can set up a time to chat with me about your marketing challenges using my calendar. Email me jeffslater@themarketingsage.com Call me. 919 720 0995. The conversation is free, and we can explore if working together makes sense. Watch a short video about working with me.
Photo by Den Harrson on Unsplash
