Owner Obscurity Increases Business Valuation
In an analysis of more than 14,000 businesses, a new study finds the most valuable companies take a contrarian approach to the boss doing the selling or being the face of the company.
Who does the selling in your business? My guess is that when you’re personally involved in doing the selling and serving, your business is a whole lot more profitable than the months when you leave the selling to others.
That makes sense because you’re likely the most passionate advocate for your business. You have the most industry knowledge and the widest network of industry connections.
If your goal is to maximize your company’s profitability, you may have come to the conclusion that you should spend most of your time servicing customers, and leave the business operations to your employees.
However, if your goal is to build a valuable company—one you can sell down the road—you can’t be your company’s number one salesperson. In fact, the less you know your customers personally, the more valuable your business.
How you answer these 4 questions has an impact on the value of your business
• Most customers demand that I personally get involved when they buy from my company and I know each of them by name.
• Many customers expect to deal with me rather than one of my employees.
• Few customers prefer to deal with me rather than one of my employees.
• My customers rarely deal with me exclusively.
Businesses where the owner rarely gets involved in serving an individual customer, were 150% more valuable.
Companies, where the founder knows each customer by name, get discounted at valuation for funding or at exit sale.
So which one will you choose? Value or Profit? Spend some time training your people to serve and sell to your customers as well as you do. That way current profit is not in opposition to future value.