By Paul Wonch, MBA, CPA/ABV, CVA, MAFF

The best book I read in 2017 was Principles by Ray Dalio, published by Simon and Schuster in 2017. In it he uses the phrase “evolve or die.” What he is talking about is the idea that everything is evolving over time. For businesses it suggests that successful ones have found a niche where they provide highly valued benefits. It also suggests, however, that as time passes and things change, it’s inevitable that those benefits will decline in value. Just like people, businesses need to adapt and grow to continue to be successful in a constantly changing world.

One solution provided in the book is to regularly challenge your perceptions of reality and be brutally honest about it. This is easier said than done. Many businesses fail to come to grips with changes in their circumstances and adapt accordingly. It seems to be somewhat of a self-fulfilling prophesy. Success leads to hubris, which blinds you to the real conditions around you, ultimately leading to your demise. By questioning your perceptions of reality and being brutally honest, you can avoid the blindness. New light and clarity will clear the road for change and bring new value to your business.

A positive example I see here in Indianapolis is a steakhouse closing down to be converted by its owners to a restaurant inspired by the Paleolithic (health-conscious) diet. What’s changed in downtown Indianapolis is that it has recently become saturated with steak places. The reality may be that what was once a great location for a steak place will now be pretty tough with the increased competition. To my knowledge, the transformed steakhouse will be the only Paleolithic restaurant in downtown Indy. To this valuation professional who loves to eat out, it looks like a great value play. I can’t wait to try it in 2018!

Paul Wonch is the founder of Wonch Valuation Advisors, a leading business valuation and financial forensics firm based in Indianapolis, Indiana.