Let me ask you 3 questions;
- Are you a business owner?
- Aged 45 or over?
- Do you see your business as your major retirement asset?
If you answered “YES” to the above questions, then the next question should also result in a yes!
Do you want to quadruple your business value in the next 5 years?
If you have aggressive goals for increasing your business value, organic growth is part of the solution. Sustainable organic growth of over 10% plus per annum can prove difficult to achieve consistently and still will not enable you to double your business revenue in 5 years.
Assuming you can grow every year for the next 10 years at 8%. That will double your size after 10 years.
If you want to grow fast then a good acquisition is the fastest way to grow.
As an example if you buy a business in year one and add 30% to your revenue by doing this, then in year two consolidate that and grow at 10%.
By the end of that second year, the revenue would surpass 5 years of organic growth.
You would probably be ready to make another acquisition and could be close to doubling your size after 4 years.
However as your business gets bigger it appeals to different buyers who are prepared and capable of paying higher multiples, hence you may move from an EBITDA multiple of 4 to an EBITDA multiple of 7 or 8. So doubling your business revenue may quadruple your value.
See an example below;
Now consider the business you might buy where you know you can do better than the existing owners. How much better? Perhaps 20%? Do you know a business like that?
We all do but often we are scared of stepping outside of our comfort zone to make that move that could help us reach our personal goals!
If you want to learn more about maximising your business value, contact us for your free weekly update and get your free ValueMax Report on your business or contact us directly.