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How to turn your small business into a wealth-creating asset of value

1 March 2017 11:06 AM
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Is your business a job, or an asset of value? In other words, can it operate without you and can you sell it (should you want to)?

As an entrepreneur there’s only one goal: to turn your business into a wealth-creating asset of value.

Pavlo Phitids, Aurik Business Accelerator

Do you work in your business, or at it?

Does your business merely provide you with a job, or is it an asset of value?

These were the questions posed by Aurik Business Accelerator’s Pavlo Phitidis at the Nedbank Business Accelerator Breakfast.

A business is an asset of value if:

  • It is sellable.

  • It is fundable.

  • It has continuity (i.e. it can keep on going; even after you have left).

The things that drive the value of your business include:

  • Forecast duration (i.e. how long your business can last).

  • Free cash flow.

  • Discount rate (i.e. risk inherent in your business)

There are only two destinations for any business:

  • A sale (5.4% of businesses);

  • Closure (94.6% of businesses).

The only reason for a business to exist is to solve customers’ problems.

Define what your business does in terms of your customers’ problems.

Pavlo Phitids, Aurik Business Accelerator

You need to develop your business into a system of delivery.

You need to employ people, not to do a job, but to operate the system you have built.

The system must enable you to extract yourself completely from the business.

For more detail, listen to entire presentation in the audio below (we will post an edited video within the next 48 hours).


1 March 2017 11:06 AM
Tags:
evergreen

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