A question that many entrepreneurs have a hard time answering is: “What would your business do with a meaningful investment?”. Common responses would include paying off debt, buying more equipment or inventory or taking some money off the table. An uncommon response would be an entrepreneur explaining exactly how the money would be employed and leveraged into a return. The best entrepreneurs understand how money is used in their business and the results it can be expected to generate – specifically. They look at money as a resource that needs to generate a result.
A $1.2 billion dollar decision is a big decision to make. WarnerMedia made an announcement that detailed their plan to forego massive content licensing revenue on their intellectual property library of movies and other video content so they can build their own streaming service – HBO Max. WarnerMedia has foregone the revenue because they believe that over the coming years through HBO Max, they will have hit their revenue targets and established a stable subscriber base that will provide significant returns and meaningful results. As stated by CEO Randall Stephenson, “Our 2020 outlook positions us to deliver meaningful progress on our 3-year financial and capital allocation plans as we continue to invest in growth opportunities and create value for our owners, as we did last year.”
Do you know how your business would use a meaningful investment? If someone invested in your business and wanted a rate of return on those funds, would you know how to do that? Being able to understand where your business is going and what investments need to be made to ensure its success are important answers to have as an entrepreneur. If you don’t have these answers, spend some time working through them. As you do you may uncover new opportunities to increase the value of your business.