As An Entrepreneur,

Do I Have a

20/20 Value Vision?

SIX UNCOMMON COMMON-SENSE TIPS

TO AVOID THE VALUATION TRAP

© 2012- 2013 BUSINESS ANALYTIX, INC.

103 Carnegie Center, Suite 300, Princeton, NJ 08540

Why do I need a 20/20 Value Vision?

Value is the indicator of the future of your business!

An entrepreneur often spends overwhelming amount of time addressing the “tactical level” of business – driving Revenue growth, controlling Costs, growing/preserving Net Assets, and finalizing contractual relationships . But that secures only the present!

It is only when one pays attention to the “strategy level” of the business model, the structure, and the strategic relationships that one creates a “sustainable growing enterprise” that is valuable.

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Value of the Enterprise

Business Model

Revenue Costs

Business Structure

and Control

Tangible, Intangible

and Human Assets

Strategic Relationships

Contractual Commercial Relationships

Value is in the eyes of the beholder … indeed!

2 MOST PREVALENT FLAWS IN

THE VALUE VISION

⧉ Perceptual Fixation creates a

Value bubble

⧉ Perceptual Shortness shrinks

the Value down

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Perceptual Fixation

• Ignoring the hurdles in and the threats

to the growth path

• Overstating the potential

opportunities; assuming the growth as

a constant in the business equation

• Generally, influenced by the

economic climate – but, at times,

result of emotional attachments

related to the pride of ownership or a

few times … due to greed

• Commonly known, yet difficult to

overcome; magnifying the value of

the “potential”; triggers the “Synergy

Dreams” in the case of acquisitions!

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THE ADJECTIVE

“POTENTIAL “ APPLIES TO

OPPORTUNITIES

AND THREATS

ALIKE!!!

Tip #1: How to Fix the Perceptual Fixation?

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Whatever your end-game is:

• Recognize that the nature of the beast is “volatile and dynamic”

• Build an agile organization

• Protect valuable assets – physical, tangible, intangible, virtual, and human – Create Value Anchors and Barriers

THE PERCEPTUAL

WEAKNESS

The bigger trap, however, is in the hazardous “I don’t Know What I Don’t Know” zone …

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Perceptual Weakness

• A failure to identify value drivers within

your enterprise

• Could be consequence of

– Being too close to the business

– Being unaware of the market trends

– Burden of the present day pressures

– Inability to view the business not just as a single

entity but as a Dynamic Bundle of Values

• Results in missed opportunities and lost

Value

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Tip # 2: Overcoming Perceptual Weakness – Stitch together a Value Bundle and create a Value Barrier

There is much more to the

Value of your enterprise than

the assets shown on your balance sheet

Proprietary Systems and

Processes

Unique Service Concepts

Trade Secrets

Exclusive Licenses

Assembled Workforce

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When you stitch together a bundle of value drivers, it creates a value

barrier that makes your business sustainable

Tip #3: Overcoming Perceptual Weakness

Create Value Anchors

Having a value driver that is not

firmly anchored leaves the future of

your enterprise at the mercy of the

vagaries of the high and low tides

of fate!

Ex. Negotiating a contract without

a carefully drafted exclusivity,

termination conditions, and ‘tails’

can mean that today’s boon may

well turn out to be a bane

tomorrow.

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Tip #4: Overcoming Perceptual Weakness

Look for the Right Puzzle!!!

Some elements of your Value Bundle

might be the missing parts of someone else’s jigsaw puzzle.

Helping them complete their puzzle might create more

value than trying to finish your

puzzle!

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Tip #5 : Overcoming Perceptual Weakness

Be Aware of the Impact of the Changing Times

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• Value is never

static

• How will the

Value of your

Value Elements

and Bundle change with time

or the

environment?

• Is this the right

time?

The Control Value

Value also depends on how big is the portion of

pie you control … and sometimes you can control

without owning majority

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Tip #6 : Overcoming Perceptual Weakness

Locate the Control Locus

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Let us talk about it …

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We will be happy

to offer a

preliminary scan

of your Value

Strategy and

offer a Growth

Strategy Outline

Report as a time-

limited

assignment …

… for the cost

that is probably

less than your

one month office

rent!