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How Does Confidence Translate to an Increased Business Valuation?

We see a lot of surveys in the press about business confidence having increased, and I am sure that for every person who is confident about the future there are 5 others who do not feel the same way.

Which led me to think – how does confidence in business conditions translate into a valuable business?

One of the more recent surveys reported that:

  • Business confidence in Australia had increased 6% over the past twelve months.
  • Was higher than the global average.
  • Small  business confidence levels reported by the Sensis Index had increased from 47% in June 2014 to 53%.

Businesses that have evidence on which to base their confidence will have based this on some key factors that they can influence or control.  This may include:

  • A strong position in the market supported by customer satisfaction.
  • A pipeline of business opportunities that they have assessed as reasonably expected to translate into revenue.
  • A profitable business model that converts revenue into substantial profits.
  • Opportunities to improve the performance of the business through innovation and investment.
  • An understanding of the processes and strategies that will influence people to spend money on their products or services.

Overwhelmingly, the business that I talk to that are confident have already enacted a plan.  They have initiatives underway that will see business improve over the coming months.  And these plans do not rely on the inevitability of Christmas sales – they are new actions they will take to achieve a different outcome.

When it comes to assessing value, we want to see two key aspects:

  • Evidence of growth or improvement, in order to be confident it will continue.
  • Strategies and action plans in place to build on past trends.

Just saying “we expect sales to increase in the lead up to Christmas” is not a plan – it is a hope.  The plan are the things you will do to make the hope a reality.

What are you planning to do before and after Christmas to increase the value of your business?