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Where business value and reality meet

Do you know the worth your business?  Is it your guestimate of value or have you had to full valuation done within the past two years?  Do you understand what you will need to get out of the business when you “retire”? Have you identified ways to resolve any potential shortfalls or protect your gains.  You’ve worked successfully over the years to build cash flows, market share, and profit margins. But the reality is often that your drivers of value are not consistent with the way an outside investor would value your business.

The fact is that if you do not have a strong and independent management team.  If you do not have effective, adaptable, and documented operating procedures.  If you do not have open and auditable accounting and financial systems. You will not only take a significant discount in value of your business from an outsiders perspective, but you put your heirs and/or employees and yourself at significant risk if you are transitioning the business to them.

Sustainable value in a business, value that transcends any individual comes from several key factors… these are the intangibles that go beyond revenue growth, service quality, and market share.  They are the foundation that will allow anyone to run your company successfully.  They are:

  1. Having simple and repeatable systems that allows your organization and all its employees to function seamlessly when serving customers, vendors, or dealing with obstacles as they arise.
  2. Having a “Thinking Platform” that enables you and your team to anticipate issues before and as they arise… including a firm evaluation process that critically and continually seeks improvement and risk mitigation within the company.  Keeping your team focused on the ever-shifting business environment.
  3. Finally staying out of the way… Leading is different than managing or running your business.  Empower your team to run the day-to-day operations, and seek their input in developing the direction of company.  Hold them accountable – but be more involved in the long-term strategy of the company.

Putting your business house in order is challenging.  It requires foresight and trusting your team to do the right thing. But doing just that builds a business that is transparent and can function without you, adding value for all stakeholders and ultimately a higher return to you.

 

 

 

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"This quick, thorough read is designed to help any sized owner or entrepreneur improve their business and its chances for survival in today’s tough economy." – Dr. Benjamin Ola Akande, Dean of George Herbert Walker School of Business and Technology at Webster University"