Social valuations continue to frustrate

In response to last week’s valuation video, I received a very pertinent comment highlighting the issue of the break even point of sale (BEPOS), and how this important little calculation can affect the value of a business.

So again, in lieu of digging deep to write the necessary, I have waved my hands about a bit, metaphorically, in a video.

This is not brain surgery, you’ll agree. However, the number of business people who rest on their laurels when making a profit, even in the face of a single large customer being their slave driver, is frightening.

We agree that you cannot ditch that large guy. You really shouldn’t, but you do need to get more business out of the smaller guys, and look for others. That will mitigate your risk to a great extent. “Yar, great advice”, I hear you saying. And you’re right; it is very easy to point out the obvious. The frustration at reading the obvious should not be used as an emotional tool for handling any inaction.

  • Sell up and cross sell to your existing smaller customers. Apparently it’s easier to sell to them than to new customers.
  • Find ways of getting new customers, anyway. It’s not easy, but it IS possible. If it were easy, everyone would be doing it. But you’re better than “everyone”, right?
  • Speak to Peter Carruthers about finding new clients. Again, it’s not easy, and it costs some money, but there are easy bailout options from his program if you’re unable to cope for any reason.

Work hard on diversifying that customer base now. Sell the entire business for much more later. You’ll see that I’m right!

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