What Is Your Business Worth?
Real Estate Agents and small business owners are notorious for not growing the value of their business. Think about it. You can spend years and years growing a business, make lots of money, be perceived as being very successful, but still have a business that has little or no value. Why? Because if something were to happen to you, or you were to get sick, your income would stop.
There are two reasons to build value in your business:
- You must be prepared for the “what if’s” that can happen. Per the example above, it’s hard to sleep at night knowing your business would fall apart if something were to happen to you. If you anticipate this “what if”, you can prepare for it before anything happens.
- You must have an exit strategy that allows you to exploit your value and generate income when you decide to slow down or retire. For example, if it takes you twenty years to grow a successful business and gain knowledge that took years to develop, why not maximize the return from your years of hard work by having an exit or slow-down strategy?
How do you determine the value of your business? In the service industry, the three most important considerations are:
- The strength of your relationships – or how many clients trust you to best represent their needs.
- The quality of your CRM – this is the amount of information, including notes and contact information that you have inputted in to a customer relationship management program such as ACT, IXACT or Top Producer. The better the information, the easier it is for someone to have a deep understanding of your client base.
- Would the business continue if something were to happen to you? – This especially applies if you want to sell your business to someone else in the future.
How can you create more value in your business? You must embrace the considerations listed above, and develop strategies to make them work for you. Consider the following examples:
- You’ve spent 20 years building relationships with your clients. It’s important to maintain those relationship by staying visible in your local community and by implementing a 24-touch annual campaign. This basically means that you are in contact via face-to-face, phone, direct mail or e-mail at least twice each month.
- Be sure to use a software program that tracks your past clients, advocates and sphere of influence. Most importantly, be sure to input and track each contact you have.
- Build a support team around you. This can be a family member, associate or even a new person to the industry. Keep in mind that it took you 10, 15, or even 20 years to build your book of business. If you want to retire someday, find someone you like working with that is talented, and over many years, turn more of the business over to them. Keep in mind, a talented person can learn from you and be far more successful in far less time if they follow your lead. Best of all, the risk for a new person is minimized because they are far more likely to be successful by learning from you.