Dreaming about the value of your business? Especially when Instagram sold for $1 Billion in 2012 to Facebook and Tumblr was sold in May 2013 to Yahoo for $1.1 Billion with $13 Million in revenue. These were both still very much start-ups; Instagram with 13 employees and Tumbler with 178 and no clear path to profit. These two businesses have won the business start-up lottery.
Getting a sale price for your business is usually based on the value of your Assets or a multiple of your Profits or a multiple of your Revenue. The luck or skill of Instagram and Tumblr was building a service for people that is useful for other services. Think “Paypal” which started as a service to exchange money on PalmPilots and USERS started using the the web based software for other exchanges of money.
USERS are the key to turning a business from home-based to in-every-home. What Instagram and Tumblr were really selling was the TIME that USERS spent messing around with their software. This is no different than the old days of newsprint when eyeballs were what you buy then and now when USERS or READERS are reading a print page on their desk or on-line.
Building a business as an asset takes getting USERS or Customers to spend time with you and hopefully money. Creating a process that is teachable, repeatable and profitable are the hallmarks of a sellable business.
Sometimes, serendipity will knock at your door as it did with Paypal when the elegant software made for the Palm and being used by 12,000 users was discovered by 1.2 million Palm-Pilot users selling crafts and beanie babies to each other on Ebay. Chip and Dan Heath describe it best in Decisive: How to make Better Choices; “Think how you’d feel: Your company was founded on the strength of some amazing cryptographic acrobatics you’d preformed and yet people seem to naively prefer the crude Web demo. It’s like an accomplished sculptor who finds that all he can sell is $15 pet rocks.“
To get started on creating a business that can be sold, know where you are starting. Get started with the Changing Lanes LLC Sellability Score or www.tinyurl.com/GetMyScore. It is free and takes about 15 minutes – you will get your results via email from Changing Lanes.