3 Game-Changing Lessons For Growing And Building The Value of Your Business

Are You Building Maximum Value in Your Business? Why do some companies sell for a premium price while others don't? And if you are a business owner of a small to midsized company, what do you need to be doing right now to build business value and command the highest possible price for your company?

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They say that your reputation is determined by the company you keep. But your?wealth is determined by the company you sell

?David was the owner of a small manufacturing business in a northern town. The company was stuck, struggling with cash flow and unable to generate sustained growth. David was on the verge of burning out and was ready to throw in the towel. The management team was frustrated and considering a move to greener pastures. Some of the better-performing employees had begun to feel insecure about their place in the company.

?David didn't give up.

?To solve his growth problem, he found the right help and learned three critical lessons that freed his business to grow and ultimately increased the value of his business.

?Lesson 1: "Success should be measured in value, not profit."

?Thinking it was time to sell his business, David met with a business broker. He left the meeting in shock: because his business was profitable, he thought it would be an attractive and valuable business that he could easily sell and then retire. The shock? His company had little value and his vision of retirement and taking it easy had just vanished before his eyes.

?David's broker explained that although David had a history of profits, he couldn't show that the company could repeat this performance in the future. "You have focused on profits, but profits are yesterday's news. You can't show a systematic method to generate profits, the business seems to be very reliant on you to generate sales, which makes your company tough to sell."

?Lesson 2: "Your business is an engine - not a financial statement."

?The broker went on to suggest that David get a good business advisor and "Start thinking about your business as an engine. The gears inside the engine drive growth and value - you should be able to list the gears, and measure how strong they are. Weak gears (growth and value drivers) are bottlenecks to growth. Once all gears are strong the engine spits out profit, but the value of that engine is in its processes because these processes will generate future profits."

?Armed with his new understanding that operations and building business value are the critical drivers of success, David gathered his team and explained that he was looking for outside help, and with this help, they were going to tune the business engine. They all agreed that they needed to know where they were weak to focus their time, money, and energy.

?Davids’ search for help led him to a consulting company that was different. He liked the company because they measured a business in a standardized way. They were helping companies to grow and build value when competitors were not. As they discussed the engagement, they explained that they only work with companies where they believe the CEO will get a 10X or higher ROI from their services. They then took some time to get a snapshot of David's company, delivering a clear report that also showed the 10X ROI David would get from hiring the company. They made it look easy, with a reasonably short timeline of 3-6 months to start seeing results. He listened and learned the next critical lesson.

?Lesson 3: "Focus on the bottlenecks - the weak gears in your engine."

?The company shared a key lesson with him: at any one time, only a couple of operating issues are holding your company back. As soon as these bottlenecks are identified and fixed, the company moves forward - almost by magic. But better than that, the company and their advisors have control and a roadmap to move forward.

?David saw his truths in the report. He hired the company, and they immediately analyzed the business in depth. Their system tied operational performance directly to value. Better yet, the system measured each area in monetary terms and prioritized projects based on value. The firm was able to show David that by working together, they could fix most of his challenges at the promised 10X ROI.

?Within a month, David was on the path to building the growth and value of his business and was having fun for the first time in many years.

?So how did David do?

?In his words, "It was like falling off a log to get rolling. Operations are in our DNA. We had great help and ran the business using the growth and value plan every day, with KPIs comparing our performance to the competition. We had a destination and a map to get there."

?David's advisors had connected their services to David's needs, and together they engineered success.

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