When weighing the importance of value and income, I would argue that focusing on value drives all other positive outcomes.
When evaluating whether or not you your company has value, I like to measure “Attractiveness” and “Readiness.” I do this with a Common Sense Scoring methodology to develop a metric and score for each.
This score is developed during what I have termed The Triggering Event.
The Triggering Event is a personal, financial and business assessment correlated to your business’ range of value (ROV).
Every business owner should complete a Triggering Event to establish a baseline value and the value factors that, if improved, will raise the score and thus raise business value and improve your life. The Triggering Event is the first step to begin your journey on your path to destiny. It is always first and should never be skipped.
In my experience, I’ve discovered that although a business may look reasonably attractive and may generate decent income, the business still may not be ready to transition nor scale. I am asserting that being “ready” to transition also means you are ready to grow. So even if you are not ready to transition, you should still do the scoring to determine if you are ready to grow. Growth and transferability are built on the same principles.
If you accept this, you might be asking, “what is the next step I should take to improve my readiness and my business’ readiness and attractiveness?” Here’s what you do:
The key to successfully using Value Acceleration is to remember that it is a process or system which is “grounded in action.”
One of the problems I saw in the exit planning industry when I first got into it was that it was all focused on developing “plans” which focused on the end game. Initially, with little success, I began trying to sell owners exit “plans.”
I soon realized that owners didn’t want “plans.” They wanted ACTION. They wanted results. And they wanted them now. They didn’t want to wait until “someday in the future” they would exit their business. Many of them were not even thinking of exiting their businesses when I first met them; they were thinking growth!
To be impactful and therefore successful, my firm needed to help them produce results now AND in the future. For me it was like a lightbulb went on. By integrating exit planning (value creation) tactics into the way we run our businesses today we could produce results now AND position the business and owner for a successful exit in the future and a happy, productive Best Act after they exited.
Be prepared so that you don’t let a good buyer pass you by.
If you are not ready when the call comes in, there is very good chance the buyer will pass you by. I’ve done a fair amount of buy-side work in my day, including buying my own businesses. I might call 40 owners in a search and move forward with only two or three. The other 37 or 38 I would simply say “not interested” because I could tell from an initial phone call they were not ready. I often would wonder what would happen to those 37 or 38 owners that I passed by. Would they ever be approached again? And if so, would they be “ready” to sell to the next buyer that might call? Would they ever be able to sell their business to anyone? Or transition it and unlock the wealth trapped in it?
As I previously said, Value Acceleration is grounded in action. But that doesn’t mean you don’t need a plan. Good planning makes execution needs clear.
Put together an Action Plan and establish Relentless Execution.
This action plan is going to be built on the concept of 90-Day Sprints, meaning you will take a long-term view but you will scope the effort and act/implement in short 90-day spurts. A good way to think about it is through the concept of interval training. Interval training includes completing several short bursts of exercise to get your heart rate up and then periods of rest in between. This raises and lowers your heart rate. Doing this over and over again over time builds strength and endurance.
The first thing you want to do is to take your list of weaknesses identified in The Triggering Event (both personal and business) and sort them into strategic vs. non-strategic actions and estimate the time, effort, and cost of implementing them.
Then, work on simply implementing de-risking actions within the business and for yourself personally to add value. De-risking actions are usually easy to implement and don’t cost a lot to implement. Getting a few actions completed quickly will also help you begin to build momentum, which is so important to execution success.
Next, you want to group your actions into themes. For example, marketing actions, customer actions, operational actions, personnel actions. This will allow you to see where your biggest group of weaknesses reside.
Lastly, it’s important to not only build a strong integrated strategy, but more so, one that can be implemented. You want to build strategies that can be executed, relentlessly executed in fact and in practice.
Realize culture along the way.
Now you might be asking, “shouldn’t I be working on developing culture first?” In my experience, although we are usually aware of building culture, culture is often discovered or perhaps a better word might be realized. Often the culture of relentless execution is developed as you move through your 90-day sprints and up the ladder of priorities. Remember that we are talking about a multi-year process to move through priorities. Three years into this, as you have de-risked, defined and started implementing an integrated business strategy, building a scalable business model focused on efficiency and growth, you will be building a culture of relentless execution – no doubt.