The cost of borrowing capital is much more expensive than it was a year ago. That makes it riskier to fund growth. Whether or not your business is borrowing money to grow, that higher cost of capital makes your company less valuable. Potential acquirers must carry a higher debt burden to buy your business.

One way to determine your business’ value is to use a simple formula: Value = earnings x market multiple (the number of years of earnings an acquirer will pay). Understanding this formula is essential to devising a strategy that allows you to protect value today so it can grow tomorrow.

Higher costs of growing your company push down the earnings growth rate. That automatically devalues your company. And when it’s more expensive for the buyer to gain access to capital, they drop the market multiple. But there are ways for owners to influence the market multiple their company deserves. For example, the company can develop its culture or “social capital.”

Social capital is how you move information within your company, the attitudes of your management team and employees, and company morale. It is the rhythm and culture of the company. Social capital also shows how your company contributes to its community. All other things equal, improving your company’s culture improves your market multiple. However, when you improve your culture, all other things do not remain equal — it drives sales and earnings upward.

To get your company to flourish, you need an owner-like effort from your team. Inspiring owner-like action comes from cultivating a vibrant culture inside your business. Here are four ways to get your employees to care as much as you do:

1. Cast your employees as stars in a ‘David vs. Goliath’ movie.

In 2008, Gavin created a portal that allows companies to manage their social media accounts from one place. For eight years, Gavin’s Sudbury-based company grew steadily in its geographic region. They even made substantial inroads into the Boston market.

In 2016, a national competitor entered the space, causing Gavin’s company to hit a sales plateau. Gavin gathered his employees and explained the challenge they were facing. Rather than sugarcoat the problem, Gavin encouraged his team to think of themselves as underdogs in an us-against-the-world battle.

Gavin set out to position his company as smaller but scrappier. To get the word out and get buy-in from employees on the cultural shift, Gavin started a podcast. He also shared photos of his employees online, answered customer questions via asynchronous video, and sent personalized LinkedIn messages to every new customer.

With a rival to face, Gavin’s employees followed his lead and gave extra effort to humanize themselves and the company. Gavin’s company started to grow again. By 2021, the company was thriving and was acquired by a competitor.

2. Provide perks others cannot.

Another way to create a thriving culture is to offer perks your competitors can’t.

Natalie and Chris are from Litchfield, Conn. They are the life and business partners behind a software-as-a-service company that automates marketing emails. Unlike most hard-driving software executives, Natalie and Chris were committed to creating a great workplace. Rather than take on outside investment and the corresponding pressures of demanding investors, they decided to self-fund their business.

Obsessed with helping their employees do more meaningful work, Natalie began researching ways to inspire her staff. She came across data suggesting implementing a four-day workweek created a healthier workplace culture. Because the couple owned the company outright, they didn’t need the permission of their board or outside investors. They decided to try it.

Transitioning to a three-day weekend created a culture in which their employees enjoyed working, resulting in consistent growth into 2022, when Natalie and Chris sold the company in a life-changing exit.

3. Gamify your business.

Another way to inspire your employees to give owner-like effort is to gamify (turn a task into a game or something resembling a game) your business.

Josh started a freight brokering company in West Springfield. Brokering freight is all about gross margin — the difference between what you charge the customer and how much it costs to hire a driver to move the stuff.

Rather than simply telling his employees to focus on gross margin, John made a game of it. He created quoting software with a virtual gross margin scoreboard for his employees to see. (You could do the same with an Excel spreadsheet or a shared Google Doc.) The software gave each employee an objective and transparent scoreboard they could follow daily to know whether they were winning or losing that day.

John then tied his employees’ compensation to gross margin, which created a healthy competitive culture within the company.

After gamifying his business, the company saw tremendous growth. Within two years, the company grew from two to 45 employees, which caught the attention of an acquirer, who offered to buy John’s company for a truckload of cash in 2019.

4. Be like Berkshire Money Management

People want to work where they can have fun with their friends. The team at my company, Berkshire Money Management, likes to have fun. Once a month, we close the office early on a Friday for what we call “BMM Fun Days.”

In our office kitchen, we have a whiteboard where we write quirky motivational quotes and ask not-so-profound questions for the gang to share their answers. (We need to start posting pictures of them on social media; they’re gold!)

Coincidentally, the “Throwback Thursday” question this week was, “What did you enjoy about our BMM Fun Days?” Some responses were “whacking piñatas,” “egg hunt death race,” “music bingo,” “becoming the bocce champ,” “The Ocho-Level corn hole competition,” and “risking my life on some nasty jelly beans!”

Work hard. Play harder.

Work hard enough so that we’re confident that we’re on the right path to be the best in our space. Play harder so that you want to come back tomorrow and do it all again with your friends. Having fun starts at the top — it’s easy when the boss isn’t afraid to embrace and exhibit their inner (dorky) child.

One of the secrets to building a valuable company is to get your employees to work as hard as you do. To do that, they must love where they work and feel like they are part of a shared mission.

This article first appeared in the Berkshire Eagle on December 31, 2022.