The Impact of Value Management
When discussing value management, it is crucial to keep in mind that the value of a business is the driving force of business performance as it relates to succession. Exit Planning Institute shows that planning an exit is a meaningful, strategic business tool to drive company behavior and push positive outcome for the future.
Public and privately held businesses can be grouped into two categories: lifestyle or value creator. Both types can generate strong income, but the value creator business will be the one to successfully sell or transition in the future. Lifestyle businesses are usually dependent on their owners’ meaning when the owner goes, the business goes with him/her. On the other hand, value creators can recognize that exiting is part of the business lifecycle and that value should always be top of mind. Transition success rates are shown to be low because most businesses fall under the lifestyle category. Businesses owners should plan to be in the value creator category to one day successfully exit.
Maintaining an attractive business can ensure strong value and overall success. Attractiveness simply means how a business looks from a buyer’s point of view. Factors such as customer loyalty, staff longevity, sales and profit, financial documentation and competitive positioning are some of the most important ways to keep your business attractive. However, many business owners tend to disregard the factors that are a weakness or deal breaker for the company. Lack of strategic planning, low recurring revenue, and low brand awareness can increase a business’s chance of being unattractive to a future business owner.
Every business owner should make value management their number one goal. Many may think exit planning is the endgame, however, exit planning cannot be accomplished without starting early. Just because a company is generating income doesn’t necessarily mean that the business has value. Exit Planning Institute states that focusing on value and strategic planning first will result in an easier and more successful exit. To learn more about Exit Planning Institute, visit: http://www.exit-planning-institute.org/
About our author:
Chris Snider, CEPA, is the award-winning author of Walking to Destiny: 11 Actions an Owner Must Take to Rapidly Grow Value & Unlock Wealth, a business strategy book about the Value Acceleration Methodology(TM) written for business owners and the advisors who serve them. Snider is a professional keynote speaker and content provider to the middle market business community, trade & industry associations, and professional education organizations.
For his written work and his contributions to the industry, Snider has been awarded recent honors that include 2016 NACVA Industry Titan Architect and 2016 AM&AA Thought Leader of the Year.
Walking to Destiny is a five-star rated book that truly empowers owners with the knowledge and path to effectively positioning their business and themselves for exit options down the road, sure, but perhaps more importantly, rapid business growth today.
Snider is the Managing Partner of Snider Premier Growth, the CEO/President of Exit Planning Institute, the Founder of ThinkTank Publishing House, and the contributing author of SniderValueIndex.com. Chris is a family business owner, owning stakes in 8 lower middle market companies with his son, Scott.