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5 Ways to Increase Your Impact to Enterprise Value by Getting Out of the Way | Clarus Advisors



5 Ways to Increase Your Impact to Enterprise Value by Getting Out of the Way

One of the most common ways for a business owner to DE-VALUE their business, is to be its key employee.  Think about that for a moment – as the owner, do you want to be an employee too?  It may seem like a odd question.  After all, you own and work in the business doesn’t that make you an employee? But would your rather own a business that is not dependent on you being there, or is owning your job more appealing?  The reality is that if as the business owner you are not spending your time working on your business, developing your employees, creating better operating and sales systems that function without your direct supervision… you are decreasing the enterprise value of your business.

It is de-valued at two levels.  First, if you are integral to the daily operations – you are stuck in the weeds and do not have the time to implement meaningful changes that can drive future revenues.  In short you are a slave to the day-to-day and instead of owning a business.  You really own your job… not an enviable position. Secondly, if you attempt to sell the business to family, employees or an outside investor – the worth of the business is less, because you are key to running the daily operations or you are the primary rainmaker.  Without you to keep things going there will be a decline.

A business that is not dependent on the owner to make everything happen, is a more valuable asset to own.  But how do you get there?  How do you develop a business that will allow you the flexibility and time to focus on things that fundamentally improve the business, rather than fighting fires?

  • Take a skills inventory:

Make a list of all the functions you are performing in the daily operations of the company. Rank them in terms of value to your business and ease of doing them.  Then commit to delegating, starting from the easiest and least valuable functions.  Revise and readdress this list quarterly, continuing to winnow down the day-to-day functions until you left performing a true CEO role.

  • Build procedures and processes:

Create operating procedures and process  for all operating and sales functions.  This serves the purpose of giving everyone an instruction manual.  Standard Operating Procedures provide the rule book for completing the repetitive tasks within the business, reduces errors, and provides a framework to review operations as conditions change. It is also a key requirement that any potential investor would look for as they evaluate your business.

  • Are you the Key Rainmaker:

Do you have a sales team, or do you handle all sales and pricing negotiations? Are there recurring sources of revenue, such as maintenance contracts, or standing order contracts? Develop a sales team with a seasoned sales executive at the helm.  Give them responsibility for growing not just revenue but margin as well… and then hold them accountable for attaining the goals.

  • Create a collaborative planning and execution process:

Create a company culture that encourages dialogue and empower your employees to solve day-to-day issues.  When they come to you… ask, “What would you do?”.  Listen to their answer and either approve, or coach to the “right” answer.  The key is to make your employees part of the solutions to move the business forward.

  • Share the wealth:

Give your employees a stake in the outcomes they create.  Be transparent about the company finances and how they drive results. The more they understand how the business functions the more they will engage to make things better.  Rewards can be in the form of bonuses, revenue sharing, or public recognition of their contributions.  Be creative.

By taking these steps, your employees will be more engaged in finding solutions to issues.  They will give you more time to focus on strategic issues, and this in turn will drive both the short and long term value of your company.

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