As a business owner in Toronto, or anywhere Ontario, it should be your goal to constantly drive your business towards growth, which then increases its value. By increasing the likelihood for growth and the anticipated growth rate, the value of your business increases, and over time, attracts a greater number of potential purchasers, should you decide to put your business on the market.
Starting with an expert and independent business valuation in Ontario, you can have a benchmark of how much your business is worth, and what can be done to continuously drive its growth and in effect, its marketability for future transactions.
Demonstrating Growth Opportunities
It is easy to say that your business has growth opportunities, but completely different to demonstrate that it is scalable. You should have written growth plans for the coming 1-, 3-, and 5-year periods, and to ensure their credibility, the implementation, strategy, and results of your current plan should also be documented. Additionally, an independent business valuation in Ontario can serve as a benchmark for future value enhancement results.
Growth is Equal to Size and Scalability
Larger businesses are commonly perceived to be more substantial and stable than their smaller counterparts, as these businesses have grown beyond the efforts of the owner, and as a result, are less reliant on them. Many investors think of smaller businesses as high-risk, which manifests in a lower business valuation multiple applied to their annual cash flow or earnings. Therefore, companies with a scalable business model have more favorable business valuations, as these point towards their growth potential. When achieved, this allows a business to be more substantial and stable – lower risk, and therefore more valuable.
Growth Strategies for Favorable Business Valuation
Fostering the growth of your business in Ontario is never easy, but with necessary infrastructure and options for scaling operations, you can successfully achieve its growth potential, resulting in a favorable and attractive business valuation. Here are some growth strategies:
- Geographic Scalability: apply your business model in another city
- Cultural Scalability: apply your business concept in another culture
- Horizontal Scalability: market new products or services to existing customers
- Vertical Scalability: market existing products or services to new customers
Alternatively, another way of looking at growth strategies is:
- Market Penetration: sell existing products to existing customers
- Product Development: sell new products to existing customers
- Market Development: sell existing products to new markets
- Diversification: sell new products to new markets
Both horizontal and vertical scalability, as well as market penetration and product development are generally lower risk options for driving your business’ growth, as these deal with existing customers who already know your brand, have had a fair amount of good interactions with your business, and are often pleased to find out that you now offer something else they actually need.
Market Penetration
Selling existing products to your current customers may not sound very special or innovative, but working with an existing customer base is actually one of the easiest ways to foster the growth of your business in Toronto, and in effect, realize an improved business valuation.
Even without introducing new products, or reaching out to an untapped audience, you can grow your business through simple strategies, such as improved product placement and visibility to customers. In this way, people who already know your business will have better interactions with your brand, which would cement their loyalty further – and sales you can count on.
Product Development
On the other hand, there isn’t a better audience to test new products on than your existing customers. Because these people have been following your brand over the years and getting the best use of your existing products, they will be most likely pleased to find out that your business offers something else they need. By identifying and meeting a separate or supplemental need of your current customers, you can drive your business towards growth, and in effect, higher value in the market.