By Harold Floyd
The book Finish Big contains some of the best advice for business owners that I have ever seen. The author Bo Burlingham says, “If you have not already begun thinking about your eventual exit, now is the time to start. You should do so even if you currently believe that you’ll never want to sell the business, that you’ll just keep it forever, or leave it to your employees, or close it down.”
Why is this such great advice?
Because if owners take the approach that their exit is in the foreseeable future they will be much more likely to take the steps necessary to build business value, resulting in a stronger, more valuable, and sustainable company that the owner can enjoy today. As Mr. Burlingham says, the owner needs to view his company “as a product itself, not just as a deliverer of products or services, and then build into it the qualities and characteristic that will maximize its value…”
How does one one do that? DVIRC has several excellent tools to evaluate your current status. One is called the Value Components Assessment. This tool scores a company on 27 drivers of business value. It covers the obvious factors in financial performance and growth potential. It also covers less obvious – but still extremely critical- factors such as customer concentration and overdependence on employees (especially the owner!) and suppliers. It gives an overall score compared to about 50 other manufacturers so that the owner gets a view of how the business compares to others. The owner also gets one or two major recommendations on next steps.
If you are going to have high business value you will need to form a strong management team, and foster a high-performance culture that enhances the productivity of employees. DVIRC can assist you in this by evaluating both your management team and your major business processes to develop an action plan to dramatically increase the value of your business.
Improving the business takes time. It only makes sense to take that time. After all, studies show that the business accounts for the great majority of the wealth of the business owner. Why not make your business more valuable now, rather than later.
Contact DVIRC for help with your exit strategy or succession plan.