Heads up for ECM, BPM & BPO software executives by Mark Edwards, CEO - Document Boss
If you are not going to Invest in your Business, then Invest in Lego
Lego or Your Business?
If you are not going to invest in your business, then your next best investment opportunity is to invest in to Lego sets.
I have a friend, Kirk, who has filled his attic with Lego sets as an investment. He has been talking to me for some time about the money he has made buying Lego sets. I have listened with somewhat surprised interest about the growing popularity in Lego investment. It's not something I would have ever considered. Can you really make money from Lego?!
Lego Increases 12 percent YOY
Then, earlier today, I saw an article online which said analysis by the Telegraph showed, "............investors were able to secure a better return buying Lego sets over the past 15 years than from the stock market, gold or bank accounts...”
The value of the FTSE 100 is no higher than it was in February 2000, meaning the average, annual return to savers over the past decade and half is just 4.1 per cent, once dividend payouts are included.
By contrast, Lego sets kept in pristine condition have increased in value 12 per cent each year since the turn of the Millennium, with second-hand prices rising for specific sets as soon as they go out of production. Modern sets are performing even more strongly, with those released last year already selling on eBay for 36 per cent more than their original price."
The Best Investment You Will Ever Make
I still believe that, handled correctly, the best investment you will ever make will be in your own business. It necessitates starting with the end in mind - much earlier than people typically think - and investing to increase the equity value of your company. Improving the performance of your company in a number of the key areas will improve its attractiveness and performance now but, more importantly, the value of the company for your final exit.
More fundamentally, it is about investing time, effort and yes, money as well, to unlock the true value within the business. Owners work hard to build equity in their business, but they don’t recognise where the REAL equity value lies and how to unlock it - hence, too much of it remains hidden. Equity growth is not the same as revenue growth, yet businesses continue to prioritise the latter while buyers look for evidence of the former.
The challenge for small- to mid-tier software business owners is to ensure they achieve maximum return for their hard work. This means thinking about an exit strategy from the outset and understanding how to maximise the equity value of the business.
Laying the groundwork for adding ROI and value to your Business
Approximately 75 percent of private business owners have no written, strategic exit plan in place. It’s no coincidence that the same percentage of acquisitions is unsuccessful in achieving their stated objectives. The truth is, having failed to consider an exit strategy earlier in their life-cycles, most software businesses are unprepared for the sales process when it arrives. Their owners have failed to invest what is required in their business to create a true exit strategy. They lack experience of successful business sales; they don’t track the market developments that impact their ability to sell; they haven’t considered obstacles posed by other shareholders in their business or the time it takes to exit them. 80 per cent of owners have experienced at least one failed sales process.
A Better Investment than Even Lego
Achieving maximum sales value is not easy. Business owners need external guidance to succeed. Yet, they are often at the mercy of half-truths, myths, an M&A industry that is stuck in the past and consistently fails to deliver the quality of consultancy needed. If you want to invest in your business and create an attractive investment opportunity, then come and speak to us about our new Equity Value Accelerator service.
If this approach is not for you, then I am happy to introduce you to a man with an attic full of Lego.
If you would like to increase the equity value in your business, contact CEO, Mark Edwards for a free 30 minute telephone consultation.