Building Company Value

what is your business plan Terri Krohn Strategic Business Planning
In a previous post, I wrote about building company value. I can’t over state how important this is particularly for older business owners that are considering selling their businesses in the next 5-10 years.

If you don’t find yourself in the category of older business owner, building value in your business is still important. The sooner you get started, the greater value you will realize when it comes time to sell.

It all starts with a commitment to make planning a priority.

 What do you know about your company?

If you can answer yes to all the questions below then you are in good shape, but if you have no’s amongst the yes’ it is time to think about developing a plan to build value into your business operations.

We have a clear understanding of our business.  Yes  No
We know our primary and supporting customers.  Yes  No
We know what our customers value.  Yes  No
We know the success requirements of our business.  Yes  No
Our management team knows how to manage and drive these success requirements.  Yes  No
We know our strategic dependencies.  Yes  No
We know our customers’ unsatisfied needs/wants.  Yes  No
We know our strategic position in the market.  Yes  No
We know what our strategic position should be to gain lasting uniqueness.  Yes  No
We know what our business should be in the future.  Yes  No
Our management team is on the same page.  Yes  No

Where does your company stand?

If you are ready to start building a plan that guides future growth and worth, we have much to talk about.  As a certified strategic operating plan facilitator, I can help you develop a renewable strategic operating plan that will provide a yes to all the questions listed above while producing results that translate into value and profit.

Please contact me to learn more about how a strategic operating plan can help your company build value.

 9 Strategies to Build Company Value

How to boost company value

Whether you are starting or currently running a business, it is important to take steps to build value into your business operations.  If you want to get top dollar when it comes time to sell, consider every major decision and how it will add value to your company’s exit plan.  Below are nine value-add strategies that any business can implement.

building-company-value

 Build value by. . .

  1. Having a clear mission and vision for your company. If you don’t know why your business exists or where it’s going, it is hard to create value.
  2. Leveraging business strengths to create a unique competitive advantage. Determine what you do best and build upon those strengths to develop your unique selling proposition.
  3. Creating a strong brand identity. Companies with strong brand identities serving niche industries tend to be more valuable than companies serving a broad target market.
  4. Building customer concentration while diversifying your customer base. Build market share within a diversified customer base.  In other words, don’t put all your eggs in one basket.   Don’t allow a single customer to control a significant portion of your sales.
  5. Developing systems and standard operating procedures. By developing operating systems and implementing them through documented procedures you will improve the overall performance of your business.
  6. Building competitive barriers to entry. Obtaining exclusive rights, trademarks and patents to products and services will add a higher price to your business.
  7. Developing a capable management team. Your business should be able to run smoothly without your presence.
  8. Planning for the future. Have a renewable strategic operating plan that addresses your company’s  future growth,  but also manages today, today.
  9. Planning for financial returns
  • Keep detailed books. Bring in the professionals and ensure your business financials are audited.
  • Build a solid performance history over time. Consistently Increasing revenues  year over year make for a great growth story.
  • Develop recurring revenue streams. Products or services that are needed on a regular basis rather than a one-time occurrence have a greater impact on long term revenues.
  • Consistently improve cash flow. Cash flow is the main measurement for company valuation when it comes time to sell your business.
  • Keep debt low – the most effective way to build value is to keep debt low.
  • Focus on the bottom line. Are all products and services profitable.

Contact me today to learn more about strategic operating plans and how one could help your company build value.

 

Do You Know How To Identify The Real Problem?

Charles F. Kettering, an American inventor, engineer, businessman, and the holder of 186 patents, was a founder of Delco and head of research at General Motors from 1920 to 1947.  With a resume like that he no doubt knew a fair amount about problem solving, hence his quote, A problem well stated is a problem half solved”.

It’s Not the Problem, It’s the Symptom

Many times in our businesses we’re not sure what the real problems are.  I’ve seen many a client come up with solutions to what are really symptoms rather than problems.

And when you treat the symptoms, the underlying problem doesn’t go away; it festers.

Do you know how to identify your real problems in business

Focusing on the Symptom

Just the other day, a potential client called asking for financial expertise. He wanted to know if his business was flush enough to afford another employee.  The problem in his mind was financial; he wanted someone to look at the numbers and tell him if he could afford another employee.  If he could add to his staff, then that would take the pressure off of him.  Problem solved, right?

Upon closer examination, the true problem wasn’t that he needed another employee.  Rather, it was that the business was too dependent on him. He felt that the business was consuming his life.  There was no balance between his professional and personal life. That is the problem clearly stated and the identification of it alone can do worlds for him and his business.

State the Problem, the Real Problem

Before a sound decision may be made, the problem itself must first be clearly stated. By understanding the real problem and finding a solution for that problem, the business owner may go down a different path than he expected.  By understanding the true problem, and not just its symptoms, he is setting himself up to find the best solution in half the time and take a vacation to boot!

Are you ready to identify your businesses real problems? Do you have a strategy for doing so?