What does it take to build a business that thrives and holds its value in a competitive market? In a recent episode of The Edge, Dionne Van Zyl—a seasoned entrepreneur and private equity expert—shared invaluable insights into what makes businesses successful, scalable, and ultimately sellable. With over 30 years of experience leading 27 companies across multiple industries, Van Zyl offers a fresh perspective on business strategy through a kingdom-minded approach.
This episode, an excerpt from The Inner Circle, a high-level CEO mastermind, delves into the core principles of strategic business growth, valuation, and leadership. Whether you’re an entrepreneur, investor, or business leader, the lessons from this conversation could reshape how you view your company’s future.
The Power of Thinking Ahead: How Will Your Business End?
One of the most thought-provoking exercises Dionne suggests is imagining the end of your business. Not in a pessimistic way, but as a strategic exercise in value creation.
“Every business will end—whether you sell it, give it away, or close it. The real question is, if you were to sell your business in five years, what exactly would I be buying?”
This question forces business owners to move beyond the day-to-day operations and consider the bigger picture:
- What are you actually selling? Is it your client base, proprietary technology, regional market access, or something else?
- Who is your potential buyer? Understanding what different buyers value can drastically impact your exit strategy.
- Are you building something valuable or just giving yourself a job? If you are doing all the selling and fulfillment, you don’t own a business—you own a job.
This mindset shift allows entrepreneurs to start building with the end in mind, ensuring they maximize their company’s value over time.
The Three Pillars of Business Valuation
For those looking to understand what truly makes a business valuable, Dionne Van Zyl introduces a simple yet powerful framework—The 50-40-10 Principle—which dictates where investors place their attention when evaluating a business:
- 10% – The Product (6 minutes)
Investors don’t spend much time on your product. Whether you’re selling high-tech solar panels or barbed wire, it’s just a widget. Private equity investors assume your product works and quickly move on to more critical factors. - 40% – The Team (24 minutes)
This is where investors dig in. If they were to remove the founder from the company, could the business still thrive? A strong leadership team, structured roles, and a clear talent strategy determine whether a business can scale sustainably. - 50% – The Financials & Capital Structure (30 minutes)
The last and most crucial segment of an investor’s evaluation is the financial structure. Questions about debt, investor rights, equity dilution, and legal entanglements all come into play. If the capital structure is too messy, investors walk away—no matter how great the product or team may be.
This breakdown is a wake-up call for entrepreneurs to focus on building businesses that can survive without them, rather than creating something entirely dependent on their personal involvement.
The Hidden Dangers of Private Equity and Venture Capital
Dionne shares a cautionary tale from his own journey in private equity. At just 31 years old, he raised $30 million for his technology company, believing he had struck gold. However, over time, he realized that by taking in outside investors, his ownership shrank from 70% to just 6%.
“When they sold it, who made all the money? The investors. The person who did the work didn’t get the money.”
This experience underscores the importance of understanding the terms of capital investment. Many businesses, eager for funding, unknowingly sign deals that heavily favor investors, leading to severe dilution and loss of control.
But there’s good news—private equity firms are currently sitting on $1.3 trillion in capital, desperately looking for strong businesses to invest in. This presents a massive opportunity for business owners who structure their companies correctly and build in a way that maximizes valuation.
How to Build a Business Worth Buying
To increase the value of a business, Dionne suggests thinking of it as a “black box” that produces money. Investors want to know two things:
- How much money does the box generate annually?
- How difficult is it to crank the handle on that box to generate the cash?
If a business requires complex operations, high overhead, and a massive team just to keep running, it’s less valuable. However, if a streamlined team and efficient systems can generate the same revenue, the valuation skyrockets.
This principle explains why tech companies and SaaS businesses often receive high valuations—because they can scale revenue with minimal additional effort.
For business owners looking to increase valuation, the focus should be on:
- Automating processes to reduce dependency on manual effort.
- Simplifying operations to make the business easier to run.
- Building a scalable team so that the business doesn’t rely solely on the founder.
The Kingdom Mindset: Business as a Legacy
Dionne Van Zyl emphasizes that building a business isn’t just about selling it—it’s about creating something that lasts. Even if an entrepreneur chooses not to sell, they should still build in a way that maximizes value.
“If you were building this business to sell in three years, you’d work hard to create as much value as possible. Why wouldn’t you do the same for yourself and your family?”
This approach ties into the concept of legacy. Whether passing a business to the next generation, transitioning to employees, or selling to a strategic buyer, the goal is to leave something worthwhile.
Leading with Purpose and Strategy
Dionne Van Zyl’s insights challenge business owners to think beyond the present and build with long-term value in mind. Whether planning an exit strategy or simply structuring a more efficient company, these principles provide a roadmap for success.
In a world flooded with capital but lacking high-quality businesses, those who master strategic thinking, financial structure, and leadership development hold the ultimate advantage.
So, ask yourself—What are you really building? And more importantly, is it built to last?
Listen to the full podcast episode here: Kingdom Leadership Advantage with Dionne van Zyl
For more insights and leadership strategies from Dionne Van Zyl, visit dionnevanzyl.com.