Laura Steward, the founder of Guardian Angel Computer Services was told that her business was worth less than 50% of one year’s revenue. Determined to get more for her business, she underwent a makeover focusing on her subscription program.
Intellectually, you know you need recurring revenue, but how do you build an annuity stream in an industry where subscription billing is not the standard?
Take a look at the example of Laura Steward, the founder of Guardian Angel Computer Services. She was in the business of fixing her clients’ computer problems when a valuation specialist told her that Guardian Angel was worth less than 50% of one year’s revenue. Determined to get more for her business, she underwent a makeover focusing on her Angel Watch subscription program.
Steward went on to sell her business two years later for four times what the valuation consultant thought it was worth. In this interview you’ll learn how to:
- Switch customers from hourly to subscription billing.
- Overcome the objections hourly customers have for making the switch.
- Ensure customers stop asking for your personal attention on their job through one simple idea.
- Maximize the value of your contracts in the eyes of an acquirer.
Steward moved her business to a subscription model called Angel Watch and got 90% of her customers to move from hourly to subscription-based billing. Figure out your ideal subscription model by completing The Automatic Customer Builder tool in The Value Builder System™. It starts by getting your Value Builder Score™.
About Laura Steward
Laura Steward is a sought after speaker, business advisor, radio host and author. After building and selling her highly successful technology services company she started Wisdom Learned, LLC, a company dedicated to educating leaders based on experience and wisdom learned in the trenches.
Ms. Steward is the author of the award-winning #1 international bestselling book “What Would a Wise Woman Do? Questions to Ask Along the Way” which was on the Amazon Woman In Business bestseller list for over 90 weeks and continues to hit bestseller lists around the world.
Through her weekly broadcast Radio Show, It’s All About the Questions, keynote speeches, books, seminars, training and one-one sessions, Laura’s mission is clear–help people get off autopilot and create amazing, successful lives.
On BuiltToSell Radio, @thelaurasteward describes her four-step approach for increasing her business valuation.
Some Highlights of the Show
3:35: “Back in 1994 I registered the company and I took my first client in 1995.”
4:10: I sat down with a valuation coach, his suggestions eventually quadrupled my business #valuation.
4:54: “He said, ‘Your company is in good shape now, but if you were to make some simple changes … you would increase the value of the company at a minimum two-fold.’”
6:13: “At the time we were booking about $450,000 a year and he said I could probably get $100,000 to $200,000 for the company.”
8:45: “I had 90% of my clients immediately agree to the switch since it was a better deal for them.”
Learn how to switch your customers from billing hourly to a subscription service.
9:30: What is “The Survivorship Clause” – why you need it in your subscription business.
15:05: “After a couple of months, we started seeing increasing revenue spikes, because we were noticing problems before problems shut them down and they had more faith in us. They started to plan bigger projects.”
16:20: How Laura made the business less dependent on her.
21:45: “I had such a physical feeling of ‘I don’t want to do this anymore,’ and six weeks later I sold the company.”
22:20: The 20% owner and the debate to give them ownership.
25:30: “I touched base with the gentleman who did the valuation.”
26:24: “A friend of mine called up—we had always talked about merging our two companies together; I was just venting and he goes, ‘I’ll buy it.’”
27:25: “I had all of this interest, very quiet interest. Since the first time I tried to sell, my employees told some of my largest clients that the business was for sale and they left.”
27:45: “I signed the contracts and told [my partner] what was going to happen.”
28:25: “The offer I ended up taking was not a cash up-front offer. It was monthly, over two years. But, he offered me a position for a year to transition my clients. I knew he was good for the money because I had him open his books to me and I had him put collateral down.”
30:30: Four to six times EBITA.
33:20: “I don’t do anything without people who are smarter than me [in their area of expertise].”
34:05: “He sold my division that he had bought… He made his money back and more.”
36:15: “Even if the [other founder] had given an equivalent offer I would have gone the other way.”
37:00: “Looking back, I would have checked out a couple of other offers. If I had been willing to [travel] back and forth for four months, I would have gotten even more money for my company.”
39:40: “My advice to other entrepreneurs would be if you are having the thought that it’s time to sell … you really need to sit down with a good business advisor and understand what that means and why you are thinking that.”
40:00: It’s all about the questions | What Would A Wise Woman Do?
Article LINK
For additional information regarding Florida business sales, acquisitions and valuations, please contact Eric J. Gall at Eric@EdisonAvenue.com or 239.738.6227. Also, visit our Edison Avenue website at www.EdisonAvenue.com or my personal website at www.BuySellFLbiz.com.
No comments:
Post a Comment