Examining the Business Model: Value Creation Strategies for Improving Financial Viability before Selling
Journal Name: Value Examiner
Issue: September/October 2024
Publish Date: October 22, 2024
Authors: Kipp A. Krukowski, Colorado State University (http://orcid.org/0000-0002-0993-3566)
Abstract: The Value Examiner (September/October 2024): Reliable industry sources report that only 10 percent of businesses listed for sale eventually sell. Of the companies that do sell, business owners may not be maximizing the proceeds they receive. Often, the root cause of these fumbles is a lack of advance planning and preparation. However, a common question that arises is, “Where should I begin?” To answer this question, this article provides a roadmap to uncovering opportunities for value creation in advance of selling a business. To identify these opportunities, a study was conducted of business advisors and dealmakers who work with small business owners. For business owners and advisors, a good starting point for rewriting this narrative is to examine a company’s business model and identify value creation opportunities. All companies have a business model that explains how they create, capture, and deliver value. The four main parts consist of the offering, customers, infrastructure, and financial viability. This article focuses on uncovering value creation opportunities related to financial viability, specifically in the areas of cost structure and revenue streams. Designed as a qualitative study, business advisors and dealmakers who work with small business owners were asked open-ended questions to capture their unique value creation suggestions extended to small business owners. The summarized responses of this article serve as a resource and idea starter as business owners and advisors work to build value and ultimately best position a company for sale. Similar to staging a house for sale, the more presentable the business when it hits the market, the better chance of receiving interest and obtaining maximum value.
Keywords: selling a business, M&A, exit planning, business consulting, business for sale, entrepreneurial exit, business model
References:
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Rodriguez, Arnez, “Business Brokers, IBISWorld Industry Report OD4796,” Retrieved from IBISWorld database, 2021.
This article (or a version of it) originally appeared in The Value Examiner, 2024 September/October issue, published by the National Association of Certified Valuators and Analysts® (NACVA®). All Rights Reserved. To learn more, please visit www.NACVA.com/ValueExaminer.
This article is being made available for educational purposes.