We all tell stories about our lives, professional achievements, and businesses. These stories capture what we’ve done, where we’ve been, and how we got to where we are today.
Often, people use “story” and “narrative” interchangeably. However, I’d like to draw on John Hagel’s distinction because it offers a robust framework for planning your business’s future. A story is about what you have achieved in the past—it ends before today. In contrast, a narrative is a vision of the future, one that invites others to join you, support your mission, or invest in your business (Hagel, 2012).
Your story and narrative are essential for small business owners preparing for a strategic exit. Your story provides credibility, demonstrating the stability and success you’ve achieved so far. On the other hand, your narrative paints a picture of what your business could become, showing its potential and inviting buyers or investors to join you on that journey.
There are three pillars of exit readiness:
- Strategic Clarity: aligning your business goals with your personal ambitions and identifying growth opportunities.
- Growth and Execution: strengthening profitability and operational efficiency while leveraging tools like digital technologies to prepare for the future.
- Leadership: transitioning from an operator to a strategic leader and building a team capable of running the business without you.
This blog introduces a broader framework that ties these pillars together. It helps you see how story, narrative, leadership, and life planning align to create maximum value for your business.
Life Plan Before Business Plan: Your Business as an Extension of Your Life
Your business isn’t just a financial asset—it reflects your aspirations, achievements, and legacy. Therefore, it is critical to start with a clear life plan to create an effective exit strategy. This means asking yourself: What do I want my life to look like after the business, and how can I ensure the business supports that vision?
- If you plan to retire, consider how much money you’ll need to maintain your desired lifestyle.
- If you’re moving on to a new business or venture, ask yourself what resources—financial, time, or knowledge—you’ll need.
- If your family expects to take over, reflect on how to communicate with them and prepare them for leadership.
Your life plan ensures that your exit strategy serves your personal goals. Without this alignment, even the most successful exit could leave you feeling unfulfilled. While this blog introduces the concept, let’s discuss how to make this a reality.
Where Does the Value Come From? Understanding Profit and Multiples
A buyer isn’t just paying for what your business is worth today—they’re investing in what it could be tomorrow. That’s why valuation depends on two drivers:
- Profit: Buyers care about sustainable, scalable profits—not just revenue.
- Multiple: This reflects factors like industry, market conditions, growth potential, and your business’s structure. For small businesses, multiples typically range from 2 to 6 (AccountingWeb UK).
For example:
- With a recurring profit of £500,000 and a multiple of 2, your business is valued at £1 million.
- Improving profit by 10% raises the valuation to £1.1 million.
- But improving the multiple from 2 to 3 boosts the valuation to £1.65 million.
While profit matters, improving the multiple has a far greater impact on your business’s value. How do you achieve that? The key lies in your story and narrative, which I can help you craft.
A Unified Framework for Unlocking Value
In this blog series, we’re building a framework for maximising the value of your business as you prepare for a strategic exit. The framework centres on four key elements:
- The Narrative: your strategic clarity and vision for the future.
- The Story: your operational excellence and proven track record.
- Leadership: the glue that ensures your business runs effectively without you.
- The Life Plan: the personal foundation that aligns your business strategy with your goals.
In Part 2, we’ll explore the narrative, story, and leadership in greater depth, examining how they work together to attract buyers and create a lasting impact.
Let’s chat today if you’d like to discuss how your life plan and valuation goals align. Unlocking value starts with understanding your vision, and I can help you achieve it.
For more information visit:
Growthwithpurpose | Business coaching
https://www.growthwithpurpose.com/
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GrowthwithPurpose: Business coaching – Partnering with ambitious entrepreneurs and business owners to prepare for an eventual exit with maximum valuation
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