Building a 100m valuation company – Starting with the end in mind

Pavlo Phitidis introduces a 5-part series that is going to look at the five layers of valuation that need to be built in to a company for it to grow to be worth R100 million.  

The series will be based on five layers in the business, across four lifecycles of a business, and the five layers need to be reviewed and rebuilt in each stage. The four phases are:

!. A start-up business

2. You’ve found some traction in the market and want to scale up.

3. When you’ve scaled you want to ramp up revenues and deepen

4. The final act – to make sure you lock in your value, and that you, yourself are not the business.

In this podcast of The Money Show, Pavlo Phitidis precedes the five layers of valuation with a discussion of starting with the end in mind

The first thing to do if you want to start or grow your business is to have a clear destination. Consider the reason for what you are doing and why you are doing it. It is often out of necessity, it gives you economy. It hopefully gives you purpose and  meaning. But ultimately, the purpose must be that you are building a saleable asset.

And that means that you need to understand how valuation works in any business.

When you start the business,  it is worth nothing at all. However, you still need to grasp the mechanics of value .

You then must make a commitment to decide what you are doing on a day-to-day basis. Are you  going to build a job for yourself? At a job, you are right in the middle of the business and its survival. Your team cannot function without your everyday guidance and leadership. Your customers draw heavily on you. Your suppliers draw heavily on you, and it can give you tremendous meaning, and a sense of importance and value.

But an Asset needs to have three things:

  1. Income growth
  2. Capital growth
  3. Tradability

And the 3rd point relies on you NOT being central to the business.

Keep an eye on our blog and newsletter where we will share this series to give insights into: Beginning, scaling up, ramping up, and finally valuing up.

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