Part 1 – Ultimate Guide Of How To Value Your Company: Strategic Value
Jean was ready to get out.
She had run this company for 10 years, and it felt like time to hand it over to someone with fresh ideas.
Her business, a software company, had a productivity product that was selling well into companies doing large projects.
Revenues were up and sales projections were looking strong for the rest of the year.
Was it time?
For many business owners, it’s difficult to recognize when it’s time to prepare the company for transfer. It’s best to start to process with an examination of the six value drivers of any company.
Let’s start with Strategic Value.
What is Strategic Value?
Industry forces like barriers to entry, economic impacts, and regulations are all part of Strategic Value. A company’s ability to innovate, including product technology advances enabling a competitive advantage also plays a part in determining Strategic Value.
All of these items are included in brand identity. Companies with a strong brand are valued higher than their competitors.
For a software organization like Jean’s, the barriers to entry might be considered lower than when she began. As mobile devices took over the market, her company adapted by creating their own app. That kept her software product in the same league as some new upstarts.
Why Is Strategic Value Important?
It’s important for your company to be good at handling issues such as regulatory changes and updates in technology to ensure your organization stays ahead of your closest competitors. If your product has fewer features or less functionality than your close competition, your customer base may deteriorate or defect, reducing the company’s value.
Innovation is a large part of Strategic Value. Companies who lead their industry in product and service innovation are valued more highly.
How Is Strategic Value Calculated?
Your company’s score is higher if:
- Your brand encourages customer loyalty and positive feedback
- Your products and services are prized by customers
- Your company’s market share is growing through innovation or acquisition
Innovative companies with strong brands are worth more.
Improving Strategic Value
There are many routes to improving this value driver to increase the value of your business.
Improve your brand recognition
Brands have definite “personalities.” If your brand is not familiar to prospects or even your customers, take steps to improve your marketing efforts and get the word out. Know what you’d like potential customers to think and feel about your company. What is unique about your business that engages customers?
Encourage greater innovation
Companies that are seen as innovative are valued more highly. Encourage your employees to improve your product or service offerings. Track your progress through the sales cycle as well as the customer experience. Are your innovations actually helping customers?
Expand your market share
A valuable company is always looking to increase market share. Are those efforts working? If your organization is already the leader in market share for your industry, begin thinking nationally or globally – or perhaps consider an acquisition. The goal is to leverage assets to increase margins and scale.
Get An Exact Roadmap
Jean is at the beginning of her journey to determine the value of her business. A great option for her is Forward Insights™. This evaluation gives her the data she needs to improve the value of her company through an Action Plan that includes increasing Strategic Value.
Is your company’s brand strong and well-known? Are you and your staff considered innovators in your industry?
If not, the Action Plan provided through Forward Insights™ gives you the path to greater Strategic Value and a business that is worth much more.
If your company is a leader in Strategic Value for your industry, check out your strengths within the remaining 5 Value Drivers with Forward Insights™.
Want to know more about the value of your company? Rest assured 35 years of experience is behind Management Insights™, Forward Insights™, and Expert Insights™ – the tools you can use to increase the value of your company.
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