Knowing How Your Business Compares

We have talked about knowing the value of your company and why it is important to know it in many previous articles. In general, the value of your business can be obtained by many ways, one of which is assessing the following benchmark grid. Moreover, completing the table will help owners get a real idea of how their businesses compare to the ones of their competitors.

Value Driver Low Medium High
Business Growth Low Steady High & Steady
Market Share Small Steady Growth Large & Growing
Profits Unsteady Consistent Good & Steady
Management Under Staffed Okay Above Average
Financials Compiled Reviewed Audited
Customer Base Not Steady Fairly Steady Wide & Growing
Litigation Some Occasionally None in Years
Sales No Growth Some Growth Good Growth
Industry Trend Okay Some Growth Good Growth

Business owners are encouraged to be creative with the value drives and are suggested to compare themselves against specific competing business, not just businesses in general. The above table can also help sellers pinpoint areas that could use further improvement (as part of exit strategy).