By Boruch Akbosh

Other Than Profitability, What Else Can Make My Business Valuable?

Akbosh Investment Group believes that clear understanding of business valuations paves the way for smoother and faster acquisition processes. When valuations are both precise and equitable, it results in a beneficial scenario for all stakeholders.

Apart from the conventional valuation methods, there are certain non-tangible factors that can either enhance or diminish a company’s worth. So, what are these unconventional determinants of valuation?

Owner’s Engagement

Duration Both entrepreneurs and investors prioritize high profitability. Yet, the time commitment from the business owner might often exceed what an investor finds ideal.

How much time do you dedicate weekly to your enterprise?

A reduced time commitment often correlates with a higher valuation.

Owner’s Engagement

It’s not uncommon for entrepreneurs to put in extra hours, but investors find businesses demanding extensive owner involvement less appealing. They are looking for a valuable asset, not an additional job. Minimal owner involvement in daily operations is a plus for investors. A business that demands minimal time from the owner is deemed more valuable, while a high-demand business, despite its other merits, is seen as less attractive.

If you’re concerned about the time you invest in your enterprise, Akbosh Investment Group offers solutions to streamline operations and enhance your business’s appeal to potential investors.

Employee Count

A sustainable and replicable profit-making process is what investors seek. While an excessive workforce is an unwarranted expense, too few employees can also be a drawback.

Employee Count

A larger workforce often means more efficiency and speed. A business with limited staff is heavily reliant on them, which can be a red flag for investors, similar to businesses that demand significant owner involvement.

Consider an investor who acquires a prestigious architectural firm with only three architects. If one architect resigns and another takes extended leave shortly after the acquisition, the remaining architect can’t manage the workload. The investor then faces the challenge of either mastering architecture or investing time and resources in hiring. A larger initial team would have mitigated this issue.

Financial Overview

A proven track record of profitability is crucial for investors. While profit is a key valuation component, it’s just the tip of the iceberg.

Revenue is another vital factor. However, the source of this revenue is equally important. For instance, a software company boasting a revenue of $5 million sounds impressive. But what if $4 million came from a single contract nearing its end? The remaining revenue, scattered among 200 clients, might not be as promising as it initially seemed.

Financial overview

Furthermore, profit can reveal a lot about a company’s expenditure. A company might have an unusually high revenue, but what if it’s due to a special vendor discount that might not be available to a new owner? A thorough financial analysis often uncovers insights beneficial for both the seller and the investor.

Promotion Strategies

Though not a direct component of traditional valuation metrics, effective marketing can significantly boost a company’s value. Continuous customer acquisition is vital for sustained profitability. An established and efficient marketing strategy is a boon for investors.

Promotion Strategies

Does your company employ specific promotional strategies? Are you aware of the most effective marketing channels for your business? Understanding the primary sources of customer acquisition, both online and offline, is invaluable.

Akbosh Investment Group often attributes a higher valuation to businesses with strong email databases, significant social media presence, or valuable online search data. Such intangible assets are invaluable for devising future promotional campaigns that can elevate the business.

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Akbosh Investment Group is an investment management company that acquires, scales, and sells companies that benefit all stakeholders at large.

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