Do you know the X-Factors that increase enterprise value and EBITDA?
If you’re thinking about an exit or liquidity event, you have one chance to get it right, and you want to make it count.
A liquidity event is the largest and most important financial decision of your life. But, of course, you don’t want any deal. Instead, you want the best deal.
Most business owners believe the skills that built their businesses are the same ones to sell it.
The statistics say otherwise. Up to 90% of liquidity events fail. Of the “successful” liquidity events, sellers leave 50% to over 100% of the deal value in the buyer’s pocket.
Who am I, and how do I know?
I started my eLearning business after graduating from my MBA program. I had no money, experience, or team. The truth is I had no business being in business.
My saving grace was my grit and determination, which had me welcome success.
With success, I received a 7-figure offer from a smart and experienced buyer.
I said “no” to the 7-figure offer and “yes” to mastering the art and science of a liquidity event. Two years later, I said “yes” to a 9-figure offer from a different buyer.
Today, I pay it forward. I help business owners through the 90-day Deep Wealth Experience. At the heart of the Deep Wealth Experience is the exact 9-step roadmap that I created for my 9-figure exit.
How did I go from saying “no” to a 7-figure offer and “yes” to a 9-figure deal?
Five powerful X-Factors increase enterprise value.
How can you leverage these five powerful X-Factors that increase enterprise value?
No one can whistle a symphony. It takes a whole orchestra to play it — Halford Luccock
When it comes to X-Factors that increase enterprise value, here’s a question.
Does your business run without you?
For most business owners, the answer is “no.”
Why is a strong management team critical?
As your business grew, you shifted away from working on the business to working in the business.
As a result, you stopped finding new painful problems to solve. So say goodbye to creating a new market disruption that has your business thrive. Instead, say hello to having competitors and a changing market put you out of business.
At the same time, a fatal mistake most business owners make is thinking like a seller instead of a buyer.
Your future buyer knows what you did today and yesterday. It’s what your business will do tomorrow and beyond that’s of interest.
Your buyer will walk or lower enterprise value if your business doesn’t run without you. Neither scenario is a good one.
You give your future buyer two things with a strong management team that runs the business: confidence and hope.
Your future buyer has confidence that your business will be around when you’re not. At the same time, your future buyer has hope of a high ROI for the investment made to buy your business.
Words the wise: ensure you have a strong management team that runs your business.
Read for another one of the X-Factors that increase enterprise value (in a big way)?
Show m your business model and I’ll tell you your future — Jeffrey Feldberg
One of the X-Factors that increases enterprise value is your business model.
But when it comes to your business model, the chances are that your business model sucks.
There are three vital components to a business model that skyrocket profits:
The problem with the traditional business model is that you don’t know when clients return, if at all. Both cash flow and forecasting are problematic.
The first step in transforming your business model is implementing recurring revenue. Again, you can look to Software as a Service (SaaS) for inspiration. Chances are, you pay a monthly fee for your favorite movie streaming service.
Customers don’t miss hidden billing surprises as they know exactly what they’ll pay. You enjoy the predictability of cash flow and now have accurate budgets.
The second step in transforming your business model is creating long-term exclusive contracts. Your mission is to show clients why they are better off with a long-term commitment.
The “holy grail” of the business model is revenue sharing. So how do you have your customer agree to revenue share with you?
The problem you solve must be so painful that your customer is worst off without you.
As an example, in my eLearning company Embanet, our clients enjoyed revenue sharing.
Embanet was able to fill the online seats with more students than the university. As a result, the university was more profitable working with Embanet than on its own.
Read to master the next X-Factor that will help you create a market disruption?
Opportunity is missed by most people because it is dressed in overalls and looks like work — Thomas A. Edison
A blue ocean is an X-Factor that is a game changer for your business and liquidity event.
What is a blue ocean?
W. Chan Kim and Renee Mauborgne wrote the book Blue Ocean Strategy in 2005.
A blue ocean is a market space that does not exist today. You create demand instead of fighting over it. There is a massive opportunity for rapid growth that’s profitable.
Most businesses are in a red ocean.
What is a red ocean?
A red ocean is an existing market space with competition. Products and services are commodities because of cutthroat “bloody” competition. It’s the bloody competition that creates the red ocean.
In the Deep Wealth Experience, step two of the nine-step roadmap focuses on X-Factors. The nine-step roadmap has you create a blueprint to optimize enterprise value.
How do you create a blue ocean and position yourself for a market disruption?
You find a painful problem that you’re passionate about solving. The problem is so painful that people are only too happy to pay you to take the pain away.
By solving a new and painful problem, you’ve created your category, and as a result, you’re in a blue ocean.
Without competition to drive down prices, you catapult growth and profits. Enterprise value soars. Your future is bright.
Buyers become excited about companies operating in a blue ocean. As a result, your future buyer has a huge upside and will pay a premium.
Do you know an X-Factor that increases enterprise value but money cannot buy?
For individuals, character is destiny. For organizations, culture is destiny — Tony Hsieh
Your competitors with their capital can buy the same technology that you use. In fact, your competitors can copy almost every aspect of your business.
But what your competitors cannot buy or replicate is your company culture.
Why is culture one of the X-Factors that increase enterprise value?
A rich and thriving culture is the foundation of your business. It’s your culture that plays a role in the customer experience. Your culture determines if you leverage a market opportunity or not.
Buyers look for a culture that promotes resilience, innovation, and accountability. Your future buyer knows that people come and go in a business, including you. A rich and thriving culture transcends people and takes a life of its own.
A rich and thriving culture includes Key Performance Indicators (KPIs). From the CEO to front line team members, everyone has KPIs. What gets measured is what gets done.
A rich and thriving culture embraces your business mission and statement. A rich and thriving culture becomes your North Star.
Both your clients and employees share the same narrative about your company. As a business your culture ensures that you say what you do and you do what you say.
When you have a rich and thriving culture you are in a position to create a market disruption. While you’re at it, your culture helps catapult revenue, profits, and enterprise value.
Do you know why clarity is key when it comes to X-Factors that increase enterprise value?
The precursor for magnificent success is clarity — Jeffrey Feldberg
If you have a management team, does your business run without you?
For most business owners, that answer is a resounding “no.”
Most businesses are missing one of the X-Factors that increase enterprise value. This X-Factor is four kinds of clarity.
Sustainable success in life and business is moderation. Even with a management team in place, business owners are often too hands-off or too hands-on.
What can you do?
Enter the four kinds of clarity:
Structural clarity ensures that every position in the business has a defined role. There is no guesswork.
Job clarity ensures that the person in the role has clear expectations of what to do and not do.
Task clarity can be both an X-Factor and Rembrandt on its own. Task clarity ensures that you document your systems and processes. It’s no coincidence that buyers place a premium on businesses that embrace documentation.
Performance clarity is ensuring that there are KPIs for every position. As discussed earlier, everyone from the CEO to front-line employees knows their KPIs.
Before you can welcome magnificent success, you must have clarity.
The combination of the four kinds of clarity creates an X-Factor that gets things done.
The magic happens when you stack X-Factors. Combining a management team and four kinds of clarity catapults your business.
Your business becomes unstoppable. Your future buyer takes notice, and you enjoy a higher enterprise value.
It comes as a surprise that up to 90% of liquidity events fail for many business owners. But, unfortunately, the news goes from bad to worse. Most business owners leave 50% to over 100% of the deal value in their buyer’s pocket and don’t even know it.
On the art side of a liquidity event are X-Factors that increase enterprise value.
There are five proven and powerful X-Factors that help you get the job done. Your liquidity event is the most important financial decision of your life, and you want to make it count.
I created the 9-step roadmap in my liquidity event journey after I said “no” to a 7-figure offer. Two years later, I said “yes” to a 9-figure offer due to the 9-step roadmap.
It’s no coincidence that at the heart of the Deep Wealth Experience is the exact 9-step roadmap. Through the 90-day Deep Wealth Experience, I pay it forward and help business owners do two things.
First, protect you from being a statistic. Second, master the strategies that help you capture the maximum enterprise value.
What can you do, and where do you start?
Begin with the first strategy for X-Factors that increase enterprise value. Master the strategy and put it in place in your business. Then, move on to the next X-Factor and do the same.
In time, you leverage the power of all five X-Factors that increase enterprise value.
You can do it. I know you can.
Here’s to you and your success!
Your Biggest Raving Fan,