The real end-game of a business is to maximize the value of the enterprise.
Yes, Peter Drucker said the “the purpose of business is to create and keep a customer”, but the entrepreneurial journey, from Start-Up to high performing Stage 7 type business, is all about developing a growing customer base, showing good margins and EBITDA, having the right people in the right roles, and having all of the expected operating systems in place to create enterprise Value.
The reason why its important to keep an eye on the creation of increasing business value is that at some point the owner(s) may feel that its time to exit. This may be the transition of the business from one generation to another or selling the enterprise. But what is often the case is that the Exit is not a planned event. The preparation and due diligence required for selling a business is more difficult than staging a home for sale. It takes at least 6 months, but ideally 12-18 months to get the business to a position where it presents itself at optimum value.
What is interesting is that, according to recent research, most SME’s are not contemplating selling at any time soon, and that regardless of the demographics of the owners (especially those approaching retirement age), there is no thought given to a succession or exit strategy.
A lot of businesses will not be worth what the owners think the value is.
It’s always time to get ready
Here’s a thought… shouldn’t every business be on a perpetual mission to increase its value? The financial returns of managing a business well are immediate, and a long tern track record of growth and profitability can only make that business highly attractive. This is even more important when the business owner sees the enterprise as his eventual pension plan.
At Plutus Consulting we have been helping business owners for almost 12 years to overcome obstacles that are holding them back, and to become more profitable. Sometimes businesses grow beyond the owners’ “comfort zone” to manage, and they need practical management advice and solutions on how to become confident again and have a clear roadmap for the business.
The end game is always to increase the value of the business.
What to do when you are thinking of selling
Plutus and Robbinex have entered into a strategic alliance to provide certain Robbinex and Plutus clients with coaching and consulting support, in order to create that increased business value. This provides added value to business owners, providing the necessary insights on how to streamline and enhance operations of that business and effectively “stage” it.
Since 1974, Robbinex Inc. has specialized in the sale or transition of mid-sized privately held companies. (To learn more about Robbinex services visit www.robbinex.com.)
Doug Robbins, the President, says “Exit might mean selling your business, but often there is another option that is more appropriate. In fact, there are at least fourteen alternatives a business owner might consider, ranging from management buyout (MBO) to passing the business to the next generation.”
Robbinex is an exclusive member of M&A Worldwide, one of the world’s leading mid-market M&A networks which provides their clients with unique and unparalleled access to a global audience of international buyers who are interested in acquiring and investing in Canadian based businesses.
Robbinex is also the only M&A firm in the world to obtain an ISO certificate on our processes (ISO 9001-2015). This provides assurance to clients that there is an an enormous amount of thought put into the processes by which we conduct our business. Robbinext does a professional and thorough job.