What drives the value of a business? This is a primary concern for most business owners, whether they’re looking to sell in the short-term or position their company for future success.

On the previous two blogs, I shared tips 1-4 for creating company value. The remaining tips are:

  1. Create Customer Value

The traditional notion of customer value, where benefits minus cost equal customer value, may seem simple but can be much more complicated in practice. Customer benefits and cost can be both direct and indirect, as can be customer value. Moreover, the right set of customer benefits can create barriers to entry and/or competitive advantages.

Many business owners argue that customer value is created by providing consumers with the lowest price, highest quality, and best service. Unfortunately, those three factors are often at odds with one another. Instead, consider adopting a customer-centric approach, taking into account factors like:

  • The value drivers of your customers and would-be customers
  • What customers feel about your product or service offering/delivery
  • The cultural landscape of your target customers
  • Your customers’ value proposition determinants
  • How you can create a value-added experience for your customers
  • When to create value through a collaboration with customers
  • Measurements of customer value creation include increasing customer acquisition, satisfaction, retention, and add-on selling. Additionally, companies that can enhance their customer’s perception of the value of their products or services are likely to enjoy higher margins.
  1. Plan Ahead

Business owners who don’t plan often find that they spend most of their time putting out fires. Planning allows company owners and managers an opportunity to set proactive goals and objectives for the intermediate future, as well as identify solutions for key business issues. A great starting point for long-term planning is to conduct analyses around issues like:

Why your company is relevant to existing and future customers

  • Current market trends in your industry
  • Why customers buy from you or don’t
  • Current competitors and their competitive advantages
  • Your company’s competitive advantages and weaknesses
  • How you can build or reinforce barriers to competitors
  • Existing bench strength to ensure your company has the right talent to achieve desired results

The list of tips shared in this 3 part series is far from exhaustive, but can serve as a guide for future initiatives.

If you have any questions, feel free to contact Joan Young, President of Sunbelt Business Brokers, Greater Bay Area – [email protected]. Sunbelt also handles Mergers and Acquisitions.