Enhancing Your Business Value
- 2. Enhancing Your Business Value The Climb to the Top – Smart Strategies for A Successful Expedition AUTHOR: Mark Jordan with Randy Watson and Judson Hill PUBLISHER: CSI Publishing DATE OF PUBLICATION: 2002 188 pages
- 3. THE BIG IDEA This book encourages you to take a top-down view in your strategic planning as you strive to gain maximum benefit from the internal factors. There are three primary, internal Value Pillars that affect business growth: Offering Competency Financial
- 4. WHY YOU NEED THIS BOOK This book is designed for the small to medium-sized business owners , to give an overview of many different strategies that one can commit action to and not just to be convinced that it can be implemented.
- 5. PLANNING THE CLIMB Making a Grand Exit There are many different combinations of exit strategies, but typically they fall into one of three broad categories: The Business is Passed to the Heirs During Lifetime or at Death The Business is Sold or Merged During Lifetime The Business is Sold or Merged at Death
- 6. PLANNING THE CLIMB Water or Diamonds Some of the more common methods for determining financial value are: Capitalization of weighted earnings Capitalization of dividend capacity Discounted future earnings Discounted future cash flow Price to adjusted net worth Price to average revenue Liquidation value
- 7. PLANNING THE CLIMB Running the Obstacle Course The best way to identify obstacles is to have an independent review done on your company. Commit to assembling an evaluation and review team. Take the time to find the right professional for the task. Find an advisor who focuses on businesses of a similar size as yours and who has an interest in establishing a long-term relationship.
- 8. MAY THE BEST TEAM WIN Motivated Management Teams: A Cornerstone of Business Value People are motivated by many different factors but generally speaking, they fall into one of three categories: Financial Recognition Potential
- 9. MAY THE BEST TEAM WIN Selling the Vision by Getting SMART While there are multiple versions of SMART criteria, the following is generally accepted: S – Specific M – Measurable A – Achievable R – Realistic T – Time bound
- 10. MAY THE BEST TEAM WIN Keep the Environment Friendly The 5 S’s, first coined by Hiroyuki Hirano in his book 5 Pillars of the Visual Workplace , describes a system for improving quality, minimizing the chance for mistakes, and enhancing the business environment. It can take anywhere from a few months to two years to fully implement. After implementation, it provides a framework for continuous improvement.
- 11. MAY THE BEST TEAM WIN The benefits from enacting the 5 S’s are better efficiency, greater organization, and higher employee morale. While a plan such as this is difficult to implement, your probability for success will increase by adhering to the following three steps: Gain buy-in from top management Promote the new program Train all employees
- 12. MAY THE BEST TEAM WIN The Benefits of Peer Pressure Look for individuals who add value to the company by, among other things: Providing wisdom from years of experience Offering a successful track record leading growing and healthy companies Offer access to new relationships in areas you want exposure Enhancing the credibility to the company Demonstrating strategic, objective thinking, and good communication
- 13. YOUR PATH TO THE TOP In addition to saving yourself from wasting time and resources, there are at least four main purposes in developing a business plan: You need additional funding. You need to make strategic decisions regarding starting, buying, or growing a business. You want to improve the operations and organization of your company. You are considering selling your business.
- 14. GETTING ORGANIZED Standard Operating Procedures The SOP provides documentation enabling someone else with similar training to complete the process or function with minimal supervision. Some of the benefits received from a formal SOP include: Enhanced communications Greater productivity Shortened training time Clear statement of culture
- 15. GETTING ORGANIZED Keeping Your Finances in Check More specifically, you need to ensure: You have a system for uncovering inaccurate information Your financial information is correct and complete Your financial information is secure on the inside and safe from the outside You have a strong system for reporting
- 16. GETTING ORGANIZED Connecting Technology with Value It is vital that your technology initiatives be tied to a goal. For a technology investment to really drive significant value, it must accomplish one or more of the following (in order of priority): Provide a sustainable competitive advantage Enable an increase in measurable functionality, capability, or responsiveness Manage risk (failure risk, employee risk, or success risk) Increase employee satisfaction
- 17. INTANGIBLE ASSETS Intangible assets as a value driver are here to stay. Utilize them and your value will be positively impacted at an ever-increasing rate – neglect them and undoubtedly you will experience a commensurate rate of decline. The path to successfully utilizing intangibles begins by setting progress goals and modeling successful companies.
- 18. PLAY TO YOUR STRENGTHS You must also determine and evaluate the key ingredients of the required contracts. Regardless of the type of contract, ensure the following elements are present: Goals Outline of services provided Type and amount of compensation Length of agreement and termination provisions Confidentiality acknowledgements Minimum acceptable standards Representations and warranties Insurance and other liability requirements Strategy for resolving problems
- 19. PLAY TO YOUR STRENGTHS Create a Diversified Customer Base Evaluate your customer base and commit to diversification. Everyone understands the foolishness of putting all your eggs into one basket. There is another well-known principle we know as the 80-20 rule that says 80% of your revenue is derived from the top 20% of your clients. While we should focus on the key customers who generate the bulk of our revenue, it all too often leads us into greater dependency on a few clients.
- 20. THE VIEW FROM THE MOUNTAINTOP Walk With the Wise These key relationships that need to be managed to sustain business growth have become increasingly complex over the years. As you continue your journey to greater business growth, ask yourself how your organization can enhance the viability of the following four key relationships: Employees Customers Suppliers Community
- 21. THE VIEW FROM THE MOUNTAINTOP Evaluate your personal motives. During your climb toward increased business value, commit to bringing others along. Avoid making the journey by yourself. As you seek to serve the interests of your employees, customers, suppliers, and community, you will undoubtedly experience greater growth in value in your own company.
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