Over the coming weeks I'll be serving up "bite-sized" posts - four of them - that will cover the four key factors I implement with my clients to build business value.... Strategy, Project Management, Systemization, and Marketing... across the 8 key drivers to business value (I'll blog about those next) as they prepare to exit. But be sure to note that although I focus on "the exit" these same factors apply to any business seeking to build business value. Today we start with STRATEGY.
Regarding strategy.... you must have one. Waiting until the day you want to retire to sell your business will not serve you well. You should begin planning your exit/retirement at least 3-5 years before the time you wish to retire or sell your business (what retirement means to you is up to you, it may mean starting a new business or simply doing what you’ve always dreamed of but never had the time). Any prospective buyer will want to see financial records and tax statements for at least the past 3-5 years so you need to be sure these reflect well on your business value. (Again, building value in your business should not only be considered at the time of exit... focusing on executing these items will just make your business a better run enterprise.)
Your goal is to maximize the value of your business, not simply the revenue. Your strategy should be a thoughtful consideration of how you will achieve that goal. Think about the how easy it will be for a new owner to step into the role. Will the way you do business leave with you and any employees that may potentially decide to depart? What plans do you have to make the transition to a new owner smooth for your staff and the new owner? Think about the projects that would add value to your company. What tools and technology need to be updated; what might make your business more efficient; is your website modern and effective for your business? Think about the customers, partners, and suppliers you have now. What can you do to retain these key people once the new owner is in place? Think about how you grow your revenue and customer base. Are there marketing tactics you can implement to grow your customer base, increase sales to existing customers, or diversify?
In the end, strategy is about thinking and planning before executing. Identify the work that should be done to achieve your goal of building business value and prioritize what is most important. Every business works with limited resources so those need to be leveraged where they add the most value to your business.One word of caution… keep it quiet. When you are considering the sale of your business do it with a small trusted group; your lawyer, a business broker, an outside consultant. Be sure everyone signs nondisclosure/confidentiality agreements. Letting the cat out of the bag too early or accidentally can lead to chaos in your business, can cause staff, customer, and supplier departures, and generally wreck the plans you have outlined. Keep things quiet even at home. Having your kids overhear a conversation with you partner about your business is great gossip to share at school with friends… those friends tell parents and before you know it, the whole community is talking about you selling your business.
Why it’s important: Strategy always comes before tactics. Strategy is the first step and is important because it sets the stage, or the plan, for what tactics you need to implement, to what end, and how. The strategy is important because it makes you think critically and plan before you begin to execute. Your exit strategy also requires you to think about what happens “next.” Life will go on after you sell (or transition out of) your business; what are your plans when your spouse wants you out of the house or you’re done playing golf?
I have been in project management and process improvement for over 15 years working for large and small for-profit companies, associations, and not-for-profit organizations. After working in hospitality management for over 10 years, I underwent a career change moving into technology, working for GE. It was there I began working in project management and process improvement; training with GE's Six Sigma program. Later my career had me working with Constellation Energy in Baltimore, Caesars Entertainment in Las Vegas, and eventual transitioning into consulting working for federal agencies and most recently an industry association in the utility sector. I enjoy working with and helping small and medium-sized organizations build value in their business through strategy, project execution, systemization, and marketing.