In business and investing, strategy is key.  Any action taken in your business and investing must be part of your overall strategy. 

As a business owner and investor, I know first hand the hundreds of distractions that come up daily. This is why it is so important to have a strategy that clearly identifies where your focus should be.

 Let’s say your goal is to sell your business in 10 years for $10 million.  Everything you do between now and then should be tied to achieving that goal.

To reach your goal you must develop a strategy that will get your business or investing to the targeted value.  
Here are the first 2 steps to develop that strategy:

Step 1 – Develop Your Strategy
The first step to developing your strategy is to understand how your business is valued.

I can’t count the number of times I’ve met with business owners who wanted to sell their business but had no idea what the value of their business was – other than a number they had in their head (and the actual value was usually 50% less than that number).

Every industry has its own valuation techniques. Of course, it matters whether you are planning to sell to employees, another business, a public company or whether you plan an IPO (“initial public offering”). But, there are fundamental rules in every industry.

Take the time now to find out what the rules for valuation are in your industry. General rules of thumb can be found through industry associations, business brokers or on the internet. For more precise information, you can hire a qualified business appraiser to do a business valuation of your business.

Once you know how your business is valued, you can focus on the specific factors that positively impact the value of your business. Reporting can help you do this on a regular basis – without having to spend a lot of time on it. Simply design a set of reports that tell you how each factor is progressing and the impact on the value of your business.

Step 2 – Develop Your Business to Run Without You
What you will find out in Step 1 is that the most valuable businesses are those that can run without the owner being there.

If you have to be there every day, how will a new owner take over? Many business owners are their business. They are the face, the name, the production, sales and marketing of their business. Businesses like this struggle to produce much income because there is very little leverage.

Leverage in a business comes from many sources. The most important source is the business systems. When a business has proper systems to run the business, the owner can spend his or her time managing the systems instead of managing the people. Managing systems is not only more efficient then managing people, it also takes less time and effort and produces greater profit.

Are you taking the right action in your business and investing?
Think about the actions you will take in your business and investing today.  Do these actions get you closer to your goal?  Or are they really distractions that are stealing your focus?