By Maurie Cashman
The owner’s first step is building the business value necessary to achieve the post-business ownership transition lifestyle he desires.
That first step is to create a written plan that builds value over time. This business plan should:
- Outline what must be done to reach your goals;
- Make specific recommendations about how to achieve each task;
- Designate the person(s) responsible for accomplishing those tasks; and
- Hold everyone accountable to a timetable for achieving each task.
â€œThe fundamental principle of auto racing is that, to finish first, you must first finish. That dictum is equally applicable to business.” –Warren Buffett, CEO of Berkshire Hathaway
In creating a value-building plan, we’ll organize our recommendations into categories including:
- Business fundamentals
- Strategic planning
- Benchmarking and measuring success
- Financial measurement and management
- Internal operations
- Leveraging human resources
Let’s talk about what we mean by business fundamentals and how addressing them can build value in your business.
Under the heading of “Business Fundamentals” we put the activities that reduce your exposure to risk of loss. We do that first because before we work to increase value, we want to make sure that mechanisms are in place to protect significant business value. We divide business fundamentals into four areas:
- Employee errors
- Facilities management
- Ownership rights and responsibilities
Minimize risk of loss from employee errors
In the past 12 months, has an employee made an error that cost your company significant money? How did that error occur? What measures can be put in place to prevent similar errors in the future?
Minimize risk of loss from facilities management
You need to know where your company is most vulnerable to loss. Vulnerable areas might be in: services, manufacturing, assembly, inventory, publishing, printing, duplication, records management and maintenance or research and development. You may need to take a look at your operating space if it has grown on an as-needed basis, rather than from a carefully conceived design
Minimize risk of loss from competitors
Have you taken time lately to identify all of your direct and indirect competitors? Have you evaluated them in terms of their ability to threaten your organization? Can you avoid future threats from competitors?
Ownership rights and responsibilities
Are your corporate records in order? Is each share of stock documented? If you are a co-owner, are the rights and responsibilities of each owner clearly documented, understood by all owners and implemented? Do you know what will happen if one owner becomes ill or dies? Has the company paid for any perks for family members?