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1 quick tip to step back or step out of your business

1 quick tip to step back or step out of your business

November 16, 2016

What makes your business more valuable to every potential business buyer?

"75% of businesses that go to market, never sell. They either fold or the business continues to putter along." says Harvey Zemmel, author of "The Secret to Exceptional Wealth".

Every year, about 250,000 businesses change hands. That figure is supposed to jump to 500,000 annually for the next 20 years as 7,000,000 baby boomers who own businesses seek to retire, according to the Exit Planning Institute.

If you want to step out or step back from your business, turning your business into a valuable asset is an utmost priority. We call this Assetability.

Assetability means that:

  • You've created a business with a sustainable competitive advantage.
  • Built a business model which is scale-able.
  • Demonstrated predictable cash flow.
  • Developed a recurring revenue model.
  • You're not overly dependent on any key employee, one customer or one supplier.
  • Your customers are satisfied with your product or service and you have proof of it.
  • You've actively researched and developed new business models, including membership, higher internet sales, licensing, and more.

The best part of improving your company's Assetability is that your company will also improve in the short term. The more aligned your team is, the better your systems are, and the less your company is overly dependent on you, the more freedom you'll have right now.

Here's one quick tip to improve your business's Assetability:

Build a Subscription Model.

Subscribers, or business memberships, create ongoing, predictable revenue which makes your company more valuable in the eyes of an acquirer. Subscriptions mean that your customers are "automatic". Customers have to opt-out of receiving your product or service, rather than re-purchase every sale.

 

CLICK HERE 

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TO READ 3 CASE STUDIES OF INCREDIBLE BUSINESS SUBSCRIPTION MODELS


 

A common subscription model company is the security alarm business. Charging a monthly recurring monitoring fee in addition to installing alarms, gives the security companies a higher resale valuation. Alarm companies will discount the price of alarm installation, so they can bank on the recurring revenue of a monitoring contract.

Same goes with cell phone contracts. Get a free cell phone worth hundreds of dollars for the agreement to purchase a cell phone contract for 2 years. Recurring revenue is worth more than the one time phone purchase.

Service contracts work for appliances, HVAC companies, exterminators and car maintenance. Magazines and online newspapers play the game. Heck, even my veterinarian offers a monthly membership fee that covers basic care and vaccinations! Anytime you can ensure an automatic credit card subscription fee, you've ensured ongoing revenue.

By improving your Assetability (especially by incorporating a subscription model), you'll reap short term benefits too. Regardless of future plans, Assetability helps you right now! You don't have to win new customers each month. You can expect a predictable monthly revenue. That's awesome.

WARNING:

When it comes to a subscription model, customer retention is almost as crucial as customer acquisition. Once you have the customer, you've really just begun. Now you have to deliver a WOW experience. If you don't constantly provide your subscribers with real value, AND more, they'll quickly "unsubscribe" once they take a closer look at their credit card bill the next month. Then you're back at square one.

Be sure to frequently nurture your subscription list to build their commitment to you and your company. Getting someone to sign on once is one thing. Turning them into lifelong fans is another. And customer loyalty is where the real money lies.

When a business buyer looks at a healthy subscription based company, he sees ongoing revenue that continues far into the future. Buyers will pay a premium for predictability. Establish a company with predictable revenue, and you'll have more inquiries and fetch a higher sales price.

 

CAN'T FIGURE OUT HOW TO BUILD A SUBSCRIPTION MODEL IN YOUR COMPANY? WE'LL SHOW YOU HOW.


CLICK HERE

TO SCHEDULE YOUR COMPLIMENTARY 15-MINUTE CONSULTATION.


 

Taking you from where you are to where you want to be,

Jon