Value Boosting – Putting the Fun in Funding!

Okay, here’s where we talk about Value Boosting! All too often banks, potential investors, and creditors will determine a company’s value based on financial statements. This is a mistake. Financials don’t come close to telling the true story. Sure, they present the tangible value. But what about the intangible value? Company valuation is emotional – it is FUN! After all, a company is worth what an acquirer will pay, what the market will pay, what the interested parties perceive. We see evidence of this frequently when companies with a trickle of revenue are acquired for gushing millions or even billions of dollars. So you get to be the master of ceremonies here and PRESENT your vision. As you create that vision in a way that you can present it to potential investors, remember the following:

1) Company valuation is emotional.

2) Intangibles often matter more than tangibles.

3) You can’t build value if your business isn’t enticing.

4) You should always be selling: to financiers, customers, strategic partners, staff, and strangers.

Here’s what you’ll need to get started when it comes to value boosting.

1. A killer team and a killer business plan.

2. A hot board of directors and/or advisory board.

3. Specific strategic alliances. An LOI (Letter of Intent) with a partner ain’t gonna cut it. You need a binding contract spelling out exactly what the terms of your deal are. Clarify how many widgets they will buy/distribute/co-market, the time period, as well as what happens if they default on the agreement.

4. New sales channels. Distributors, value-added resellers, outside sales forces, affiliates, joint venture partners, all boost the value of your company. Of course you’ll track the performance of your sales channels. Use the affiliate tools in your online shopping cart to track the performance of your online sale channels, and your accounting system or sales force management software to track all others.

5. Product line extension. Let’s assume you sell a super cool widget. What’s next? Son of Widget? Platinum Widget? Widget Extraordinaire? Map out your future product lines so financiers, partners, and staff can see where you are headed and how you plan to get there.

6. IP portfolio. Protect your corporate jewels! A patent portfolio can be worth gold. A friend of mine sold his company for $425 million (with about $30 million in trailing revenue) because he had locked in so many patents. That’s what the acquirer bought. They didn’t give a hoot about the business.

7. Compelling demo of your product. This is key when you’re in the zero or near zero revenue range, as you’ll see in the second example below. People need to see/touch/feel what the product will be like. Then they can envision your fabulous future.

I’m excited to share these tools with you and hope that you’ll use them to be in the process of being fully funded at ALL times.

Article Source : http://www. christine. com