This "soft skill" could double your business value
Oct 16, 2024It's The Real Jason Duncan here, let's talk about something that could literally double the value of your business overnight.
Sounds too good to be true? Well, stick with me, because I'm about to show you how your company culture could be worth millions.
A Tale of Two Exits
Meet Sarah and Tom. Both owned successful marketing agencies with similar financials – $5 million in annual revenue, 20% profit margins, and steady 10% year-over-year growth.
Sarah had always prioritized building a strong, positive culture. Her team was engaged, turnover was low, and clients raved about their experiences. Tom, on the other hand, focused solely on the numbers, often at the expense of his team's well-being.
When it came time to sell, Sarah received multiple offers and ultimately sold her agency for $10 million – a 2x revenue multiple. Tom struggled to find a buyer and eventually sold for $3.5 million – just 0.7x revenue.
Same industry. Similar financials. Dramatically different outcomes.
The difference? Culture.
Why Culture Matters for Your Exit Plan (By the Numbers)
- Higher Valuation: Companies with strong cultures saw 4x higher revenue growth. (Source: Forbes)
- Smoother Transition: Organizations with engaged employees outperform those without by 202%. (Source: Gallup)
- Attractiveness to Buyers: 94% of executives believe a strong culture is key to business success. (Source: Deloitte)
- Operational Efficiency: Companies with strong cultures saw a 756% increase in net income over 11 years. (Source: Harvard Business Review)
- Customer Loyalty: Highly engaged teams achieve a 10% increase in customer ratings. (Source: Gallup)
Building a Culture That Adds Value
So, how do you build a culture that not only makes your business a great place to work but also increases its value? Here are some key steps:
- Define Your Core Values: What principles guide your business decisions? Make these explicit and ensure they align with your long-term goals.
- Lead by Example: As the owner, you set the tone. Embody the values and behaviors you want to see in your team.
- Hire for Cultural Fit: Skills can be taught, but values alignment is crucial. Make culture a key factor in your hiring decisions.
- Recognize and Reward: Regularly acknowledge and reward behaviors that exemplify your core values.
- Communicate Openly: Foster transparency and open communication at all levels of the organization.
- Invest in Development: Show your commitment to your team by investing in their growth and development.
- Measure and Iterate: Regularly assess your culture through surveys and feedback. Be willing to make changes based on what you learn.
The Exiter Club: Culture at Our Core
In The Exiter Club, we don't just talk about culture – we live it. Our mastermind program is designed to reinforce the importance of strong company culture in everything we do. Here's how:
- Peer Learning: Members share their culture-building experiences, both successes and challenges.
- Expert Guidance: We bring in culture and leadership experts to provide actionable insights.
- Accountability: Regular check-ins ensure members are actively working on their company culture.
- Resources: We provide tools and frameworks for assessing and improving culture.
- Community: The Exiter Club itself models the kind of positive, supportive culture we advocate for.
Your Next Steps
- Assess Your Current Culture: Take an honest look at your company's culture. Are your values clear? Do your employees feel engaged and valued?
- Identify Gaps: Where does your current culture fall short of where you want it to be?
- Create an Action Plan: Develop specific steps to address these gaps and strengthen your culture.
- Communicate the Importance: Help your team understand why culture matters, both for their day-to-day work and for the company's long-term success.