Building Better Assets

The most valuable
organizations on earth…

Every year Fortune magazine publishes a list of the top companies in the world. They rank them by revenue. Most are publicly traded, owned by the public mostly via vehicles like mutual funds. The S&P 500 and Dow Jones indexes are another place to find the largest organizations in the world.

  • Consistent Growth in Sales
  • Consistent Growth in Earnings
  • Consistent Growth in Book Value
  • Low Debt to Income Ratio (> 5)
  • High Return on Equity Average (+12%)
  • Low Operating Costs to Income (> 75%)
  • Low CapEx to Income (> 75%)
  • High Gross Profit Margins (+ 25%)

Consistent Growth

For most people building a business is a complex, burdensome endeavor involving thousands of possible tactics. The truth is that growth comes from acquiring more customers, selling them more of what you offer, and getting them to shop with you more often. That’s it.

Sound Financials

There is a risk of growing yourself right out of business. A home builder called Homex did this after the 2008 housing bubble. As a company builds brand value, it needs to remain financially sound. It won’t be able to operate with negative cash flow forever, despite what might be seen from unicorn startups.

  • Sell a product or a service that is a basic necessity
  • Be the first capture a lot of market share
  • Operate in a large industry with little competition
  • Sell a unique product that doesn’t change much
  • Provide a unique service that’s difficult to replicate
  • Be the low cost producer and/or seller of basic necessities

Methodology

Test.
Adjust.
Optimize.

Sales force website over the years

TL;DR

Building better assets = better business development, which means focusing on quality, value, and impact across the main aspects of your company, which really means mastering the fundamentals, allocating capital at scale, and adjusting to market changes.

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Jonathan Poland

Jonathan Poland

20+ years analyzing and forecasting complex assets at the highest level of the economy. These are notes from my journey. Learn more @ mrplnd.com