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Adding Value to your Business

Tuesday, November 07, 2006
Typically I believe most new entrepreneurs are more concerned with growing income and profits than they are with adding value to the company. It is very important to focus on or at least consider what the long term impact of events is on your business. I am going to focus on the web publishing business for most of my example here because that is what I am most familiar with.

When I talk about “value” I am really referring to two things. First off, there is the quantification of the net present value of a project. For instance, hiring writers to post articles would probably not yield returns within the current month, or maybe even the current year. If you consider the long term benefit of the job, you will get different results. Let’s say that you predict that over the 12 month period a short blurb would generate .8 a month, and then the second 12 months would be .6 a month, then it would yield .4 indefinitely beyond that. The value is that even after you are don paying for the article, it is still returning results. The same idea can be applied to hiring programmers to write custom software, etc.

The second way you can add value, which is probably more often looked over, or undervalued is by creating something that will aid in management. This could be creating systems and protocols to deal with certain events, or tools to help you perform your work better. Consider the long term benefits of hiring a programmer (or using some of your own time) to create an application that pulls from various sources and builds a list of keywords for ppc. Let’s further imagine that it gives you more of an edge than most people in the ppc arena currently have. The cost of this application might have been in the hundreds or possibly thousands, but the benefits it derives to the business could be huge.

The idea of this post is to get you to think about how you can invest money in your business to get great results in the future, and not just constantly focusing on the short term benefits from actions. Obviously long term growth that may be smaller than other short term gains has more value over time. Of course that is not telling you to ignore short term opportunities because they can fuel your long term investments if used correctly.

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