Adding software to a business doesn't automatically make it worth more. Software only increases value when it delivers rapid growth, high margins, low customer-acquisition costs, and strong retention. A software layer alone won't earn you a software company's valuation multiple.
Who here has thought about starting a software for your business to make it more sellable? Get hands raised. Okay, fantastic. Here's why it's a terrible idea. Software does not inherently make a business valuable. There are economics that software often has when done right that can be valuable, which is growth, typically virally, ideally gross margins. So like additional customers cost very little and there's high profit there and revenue retention. Like if people get fully integrated on a CRM, it's very likely that they will stick, stick with it for an extended period of time. Those features are still the things that make the business valuable. If you just add software in, you will not become a software company. You will not get a software multiple. You will not become something that is more sellable. It is only if you accomplish building a software that is exceptional that you will have an exceptional business that becomes sellable.
