Book Summary Preview : Enhancing Your Business Value

The Big Idea

Growth is an ongoing process that occurs in many facets of our lives. There are so many individual factors that go into creating, increasing, and sustaining business value it is virtually impossible to list them all. Determining how to prioritize your business efforts is an even greater challenge.

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 – what product or service does your organization provide?
Competency – who are the people involved? What infrastructure and information systems are needed for management to make productive decisions?
Financial – what is the revenue and profit potential? Can shareholder value goals be met?

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.

PLANNING THE CLIMB

Making a Grand Exit

Envisioning your exit plan requires a long-term focus. You may be successful generating profits year by year, but if your company is not positioned to accomplish your long-term objective, will it really be a success? 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

Make a decision today to begin your exit planning. Since none of us are capable of predicting the future, tomorrow may be too late. As you begin the process of introspection and planning for your future exit from the business, make decisions based on current facts and the most probable scenarios. Let’s take a brief look at exit planning for the owner who wants to pass his business to the next generation. Some of the key questions that need to be processed are as follows:

• Are there children currently active in the business?
• If so, do they show signs of effectiveness?
• If they are not in the business, have they expressed an interest but are too young?
• Do you have a strong desire to see your children carry on your business legacy?

If the answer to any of these questions is yes, perhaps you should give considerable thought to implementing a plan creating the option for them to enter the business or continue in the business by establishing a business succession plan.

Water or Diamonds

Determine a range of values your company is worth. Utilize different assumptions and evaluation methods.

Strategic value is certainly the goal, but when determining the range of values your company is worth today, focus on the financial value of your company, not the strategic value. This will enable you to plan, based on a realistic approach rather than the top end value. 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

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. You do not need to expend the costs for a Fortune 100 advisor. Find an advisor who focuses on businesses of a similar size as yours and who has an interest in establishing a long-term relationship. a

 

Want to read the rest of this summary? click here >>