Join Rahsaan Freeman and Scott Lundt as they dive into some risky scenarios that seriously affected their clients’ business’s value when it came time to sell. Rahsaan and Scott share real case studies where over-reliance on a single major customer tanked a manufacturer’s revenue when that customer went under and it took them years to recover.
Protecting Your Business Assets: Lessons To Increase Your Business’s Value
They discuss the common temptation of using your business like a personal piggy bank and why that will slash your business’s valuation. Also, failing to protect intellectual property and document key processes – both easily avoidable mistakes that ended up costing business owners 7-figures on their exit! These stories are to help you make proactive decisions now that set you up for maximum value later.
If concentration risk, personal expenses, or lack of IP protection feel familiar, this episode will inspire some valuable changes! Even if you’re not looking to sell in the near future, these case studies demonstrate why having a trusted expert NOW will set you up for success when retirement is on the horizon.
Napkin Numbers Talking Points
[0:37] Importance of Diversifying Client Base
- Scott discusses the importance of not depending on a single customer (or single type of customer) and the negative impact it can have on a business’s value.
- He shares a case study of a company that suffered a huge revenue dip due to customer concentration and the positive outcome after diversifying its client base.
[3:04] Using Business as a Personal Piggy Bank
- Rahsaan highlights the risks of using the business for personal expenses and how it can negatively impact the business’s value.
- He emphasizes the importance of running the business as a business and not using it for personal funding.
[6:31] Impact of Unprotected Intellectual Property
- Scott shares a case study where a company’s unprotected intellectual property led to a significant decrease in their business’s value.
- He emphasizes the importance of protecting the assets of the business to maintain its value during a sale.
[9:09] Importance of Process Documentation
- Scott discusses the risks of neglecting process documentation and improvements in a company.
- He shares a case study in which a buyer acquired a company at a reduced price due to the lack of documented processes, emphasizing the value of having clear onboarding and manufacturing manuals for successful business transfers and future sale preparations.
To prepare to exit your business, consider the missteps others have made and set yourself up for long-term success and a better business valuation by following these tips: diversify your client or customer base, protect your intellectual property, document your processes and run your business like a business – not a personal piggy bank.
If you want to sell a business, please use our complimentary business evaluation calculator to determine its value.
