An issue that comes up time and time again is that of knowing your worth, or in the business world the value of a business. When it’s your business the lines can be blurred as the value of your own business may be seen as a measure of your worth.
Valuing a business is an interesting concept and something that is always on your mind when building a company. The business owner has a view of what their business, or the work that they do is worth, but this is not always reflected in the views of other parties. Similarly, you can be doing great work but if it is not recognised on paper as sales revenue then it can be easy for someone else to dismiss its value.
It’s common for a business to be valued by some multiplier of revenue, or gross profit, or EBITDA, but what value do you allocate to opportunity? These valuations are backward-looking and are based on past performance. Opportunity is forward-looking, it’s progressive and its value is associated with what ‘can be achieved’.
I think determination of business value depends a lot on where you are and who you’re talking to. Some people see the value of the opportunity and others do not. Those that don’t will be far more likely to undervalue the opportunity and the reflective worth of the work you’re doing. Where you are is important too. It effects the attitude of people to invest, the appetite for risk and expectation/ acceptance that not everything will fly, and also the real market opportunity.
Australia is in very general terms a small market and more conservative in its approach when considered relative to other parts of the world. There’s less capital to invest, and a lower appetite for risk. America (for example), has long been considered the land of opportunity, and in this example, it has aspects which can influence the value and worth of a business, and the work someone is doing. Comparative to Australia, the American population (domestic market size) is far larger, there’s much more capital and a different attitude to risk. These are some of the cultural aspects of a place which can influence the value and worth of opportunity.
The point of the example is to illustrate the effects the people and the places around you have on the value, and the worth of the work you do. What might be a resounding success in one place, might not be in another, and it’s also important to consider that not all value and worth is, or should be simply a measure of dollars. Too many people relate their own value in dollar-terms to the job they do for someone else. Is a person doing a $40,000/ year job less valuable than someone doing a $90,000/ year job? The COVID pandemic puts into perspective the value of a health care professional; a doctor or nurse whose value when they’re needed is completely irrespective of the dollars they earn.
Interestingly, in building our water business we have experienced many challenges in part because we’re building it in Australia. The need for technologies to be developed for safe water provision in disaster/ emergency events, or simply for places where there is no safe water is not something that many Australian’s think a lot about. We are in an extremely fortunate position that we (in general) don’t need to think about the quality of our water and whether it’s safe to drink. The infrastructure is well established for us in that area. If we were in a place which does not have widely distributed, treated piped water supply, then the value and worth of our pursuits might be considered in a different light.
These business reflections can easily be related to personal ones. When you have a vision for something you want to achieve you will assign a value to making that happen. The key to achieving your vision is to surround yourself with the right people, the ones who support rather than detract, and be in a place of opportunity, where your work is valued and is considered to have the worth is deserves.
Some key points to remember –
- Surround yourself with the people who see your worth
- Be in a place where you can deliver your value
- Know that your worth is not measured in dollars, regardless of your income level
- It’s all about seeing the opportunity