What Are Unit Economics and Why Are They Important?
TERMS YOU’VE ALWAYS WANTED TO KNOW ABOUT BUT NEVER HAD THE TIME TO LEARN ABOUT - UNTIL NOW by Prasad Nilantha
Why are unit economics important?
TERMS YOU’VE ALWAYS WANTED TO KNOW ABOUT BUT NEVER HAD THE TIME TO LEARN ABOUT - UNTIL NOW by Prasad Nilantha
Why are unit economics important?
“Valuations are up.”
“Multiples are very attractive now.”
These are comments that get business owners and shareholders excited, but what does it really mean for you?
Unless you do what I do for a living, “valuation” probably isn’t a word you hear every day… but it is a word you hear a lot on the TV show Shark Tank.
And it’s usually a point of controversy.
But why do the entrepreneurs and the Sharks differ on valuation?
“I’m thinking about selling my company - I need a valuation.”
That’s how many conversations begin.
It was in a conference room with the President of a privately held company. The business was growing quickly and was very profitable. They had been approached by competitors in the past, but the timing wasn’t right.
Until now.
It’s a question I get a lot… “What is the business worth?”
“Give me a rough idea - back of the envelope.”
And as an old mentor of mine known as ‘Dr. Value’ would say: “It Depends.”