3 Ways to Improve Your Enterprise Value with Gene Hammett, Founder Coach

How do you increase the value of your company? In this episode, we break down the three critical drivers that determine business value: profitability, risk, and founder independence. We explore how EBITDA serves as a key measure of profitability and financial performance, how the valuation multiple reflects the level of risk and confidence buyers place on a business, and how these two factors combine to determine enterprise value. We also dive into the Founder Freedom Factor: the impact founder dependency has on a company's scalability, growth potential, and overall value. A business that relies heavily on the founder carries more risk, while a business built on strong systems, capable leadership, and operational independence becomes more valuable. In this episode, you'll learn how to: Improve EBITDA and increase profitability Understand how valuation multiples impact company value Reduce business risk and increase enterprise value Identify how founder dependency affects valuation Build greater business independence Create a company designed for long-term growth, freedom, and value creation Whether you're preparing for an exit, scaling your company, or simply looking to build a more valuable business, understanding these value drivers is essential. Key Topics: EBITDA | Profitability | Valuation Multiple | Business Risk | Enterprise Value | Founder Freedom Factor | Founder Dependency | Company Value | Business Independence | Value Creation

• 0:00Speaker 00

  Today we review three ways to improve your enterprise value. That is the value that your company is worth. Those three ways, when you understand them, you're much more likely to be proactive and lead around them. And the third one is one you probably don't think about at all. So stay tuned for that in today's episode of Growth Thinking. Hi, my name is Gene Hammett. I am a founder coach, CEO coach. I've been doing this thing for over 16 years. I love what I'm doing. I love how our team makes an impact for clients. If you are feeling founder dependent, if you are feeling like everything weighs on you, I get it. I've been there and I've been helping my clients figure this out for themselves and how to build a team that's team driven,

• 0:45Speaker 00

  which really means a team that makes decisions that is empowered, that solves problems and can execute on goals without you having to be there. If you want to check out the thing that will really help you do this, get this book. Our latest book is called Get Founder Freedom. If you want to download it for free, all you have to do is go to getfounderfreedom.com and download it now and I'll give it to you, no cost. So I told you three ways to increase the value of your company. So you need to understand the first two. You probably understand them already because you hear them all the time. If you've ever thought about selling your business, then these are the numbers that get tossed around. EBITDA and your multiple. So let's unpack those just a little bit.

• 1:30Speaker 00

  EBITDA is really about your profitability. It is a fancy number that allows you to look at earnings before interest, taxes and depreciation. It's not that important. Look at your profitability of your business for just a quick reference. If you, when you get down to the actually selling, it's very important because it's a very set framework that everyone gets measured by. But you just want to take a quick look at your business, look at the profitability of it. And that is a big number, I hope. I hope it's a million dollars or five million dollars. Whatever, you know, some percentage of your business and hopefully you're doing better than your peers. But if you want to really understand how to increase the value of your company, you've got to go beyond EBITDA. So then we look at multiple.

• 2:16Speaker 00

  Multiple is the, really it's just a measurement of risk. When you think about multiple, it's industry specific. So if you have a manufacturing company, your multiple will be different than a service-based company. Digital agency might be different than a tax CPA firm. And so industry multiples are very much unique and you have to research that. There's lots of sources online. You can find others. You can look at other previous sales to find out what your multiple is. I will also say there's some breakpoints. So let's walk through the numbers here. If you've got an EBITDA of 3 million and you've got a multiple of 3, your value of the company will be 3 times 3 equals 9. And so that's the value of the company in this traditional formula.

• 3:00Speaker 00

  All that being said, it is very important for you to know this formula and know your EBITDA and research within your industry, your multiple. And I said it's a function of risk. Let's take that a little bit deeper. You know, if your company is growing, it's less risky. So your multiple have a little bit more, it's usually given in a range, 3 to 5. So if you have a growing company, you might be on the top side of that. If your company is sort of stagnant, it might be on the lower side of that. If it's, if it's going down, it might be less than 3. And so you have to understand the range of multiples inside of your industry. Again, the breakpoints, it will move up the more multiple you have

• 3:45Speaker 00

  because you will be more attractive to other strategic buyers. If you're listening to this show, chances are you're a founder who's built something significant, but you're still too deep in the day-to-day to see the path forward. That's exactly what the Founder Freedom Strategy Call is for. It's free. Thirty minutes with me personally and we'll pinpoint exactly what's keeping you stuck and what you need to do about it. Book your time with me at my personal URL, schedulewithgene.com. Now back to the podcast. There's one more element of risk that I want to unpack for you here. That's really the important part of this. That's actually the third factor of this, the way to improve and increase your value.

• 4:28Speaker 00

  And that is your founder of freedom factor. Now, I have coined this term. Some other people may have said it before, but I've been working with my team for the last few months to really understand why some companies are sellable and some companies aren't. Well, if your company is dependent on you, your founder freedom factor will be very low. It might be below one. And so that will take away from the value of the company. And then if your company runs really well without you, one way you know, and I've talked to business brokers, I've talked to

• 5:03Speaker 00

  people who, private equity companies and things like that. If you could go on vacation and not check email and no one bothered you by phone for 90 days and your business continued to grow, you have what's called a well-run company. The risk is lower and your founder freedom factor is going to be higher than if your company needs you and you can only take a week vacation and you have to be tied to your phone and check in on, you know, two or three times and you have to check your email daily to make sure there's no fires burning. All that being said, what I wanted to really point out for you today is, is increasing the value of your company comes down to three things. Your EBITDA, which is

• 5:46Speaker 00

  somewhat in your control as you create a profitable business. But sometimes you may not be optimizing for profit because you're not ready to sell yet. You're optimizing for growth. You're optimizing for innovation. And that's okay. But before you go to sell, you want to make sure that you have a history, usually about three years of growth. And that helps you with the EBITDA, but it also helps you with your multiple, having a growth of. And then finally, that third factor, which is the thing I really want to highlight for you, is your founder freedom factor. That's what you have control of the most. That is under your agency, if you will. So what can you do about it? There's lots of things. One thing you can do is download our book. It's Get Founder Freedom.

• 6:30Speaker 00

  You can buy, get that for absolutely free at GetFounderFreedom.com. And it walks you through the eight freedoms. I will tell you, it's not the complete guide. It gives you an overview of the situation. It's very short. It's very easy for you to comprehend, but it shares with you some of the things that you are thinking, some of the things you might, you know, need a distinction for. But it will help you in the journey of creating a business that runs beyond you. That's what we're known for here. And so we wanted to document that for you, give it away to you. And I'm creating content like this all the time. So hopefully this is helpful in increasing the value of your company with those three factors, the EBITDA, the multiple, and your founder freedom factor. All that being said, I'll leave you with this very big idea.

• 7:15Speaker 00

  Your founder freedom factor is the thing that you really want to be able to control. Same profitability, same multiple. And you are in control of the founder freedom factor. If you improve it by a factor of two X from where it is now, you know, your founder dependency, you will increase your multiple. I gave you a kind of a quick numbers before. Three million of EBITDA, three million of multiple. It was a nine million dollar company. If your founder freedom factor is a two, it takes your value to 18 million. So it doubles it. So just think about it from that perspective. If I can help in any way, make sure you reach out. My name is Gene Hemm. I'd love to be a part of your solution and part of your team and give you insight.

• 7:58Speaker 00

  You can download the free book, GetFounderFreedom.com. When you think of growth and you think of leadership, think of growth, think tank. As always, encourage, we'll see you.