We want to build a proprietary AI platform to streamline our operations and boost our valuation, but the development cost will severely impact our short-term cash flow and profit margins. How do we make this strategic choice on our V/TO® while keeping our business exit-ready?

Question

Tyler Smith · Accepted Answer

Building custom software can dramatically increase your enterprise value, but it can also drain your cash flow and distract your leadership team. When preparing for a Step by Step Exit, prospective buyers look for strong, consistent profit margins and low operational risk. Prioritize using AI to increase employee productivity as a starting point. This is because off-the-shelf AI tools and APIs require much less upfront capital and yield immediate margin improvements. On your V/TO®, look at your 10-Year Target and your 3-Year Picture. Ask yourself if owning proprietary technology is truly one of your Three Uniques or if it is just an expensive operational preference. If a custom platform does not directly defend your niche, do not build it. Integrate AI into your operations by identifying cumbersome processes and streamlining them with off-the-shelf tools first. If you must build custom tech, set it as a specific, tightly budgeted quarterly Rock to prevent scope creep from hijacking your annual plan. Keep your leadership focused on high-value strategic work, and make sure any technology investment directly contributes to your ultimate exit goals.