What’s your Strategy?
by Wayne Vanwyck
Like most entrepreneurs, John is heavily invested in his own business. He also invested, for diversity, in the stock market and, it’s no surprise, he is not too happy with the performance of those stocks. While he doesn’t have any control over the market in general, John can have a significant impact on the value of his business when it is time to retire. Many business owners like John are looking for ways to maximize the value in their business in order to offset some of their losses in other areas.
A business broker recently suggested to me that one of the most important and immediate areas a prospective seller should address, in order to build value in the company, is a formal business plan.
A business without a business plan is like a fisherman without a hook, or a rod, or a tackle box. You can run a business without a plan, and you can certainly go fishing without a hook, but you’ll be much more successful if you have the tools of the trade. A business plan – especially one that you are following, is producing results, and shows positive projections for the future adds significant value to your business – now and when you want to sell it. It demonstrates that you know your business and have predictable patterns of success. It indicates that you have taken time to think about your business, and all the factors that go into making it strong. It is an exercise that should be undertaken on a regular basis; when you are starting your business, growing your business, maintaining your business and preparing your business for sale.
Many business owners have used Dr. Kit Silcox’s Milestones™ program[1] as a guide for working through the process of setting up their company to succeed with a well thought out plan. It’s more than a spread sheet with numbers that you take to the bank for financing. It challenges you to think about where you are, where you are going, and how you set up your business to get there. It’s a meticulous look at the factors that you need to put in place to grow the value of your business. A business is positioned for success when the senior management team makes good decisions, follows through, and acts upon those decisions.
According to Dr. Silcox, a good business plan covers these topics:
- An analysis that identifies where the organization’s greatest strengths meet its most important opportunities, as well as where its weaknesses and threats overlap.
- Values: the underlying principles that direct the organization’s behaviour in its dealings with customers, employees and other stakeholders.
- Mission: A single statement describing what ‘business’ you are in. It acts as an affirmation for the organization.
- Vision: A description of the organization in the future.
- Strategy: A statement of what the organization will become in the future, with an outline of the performance targets necessary to achieve the strategy.
- Market Strategy: A description of the primary client groups of the future organization and the products (goods & services) that will be offered to them.
- Organizational Development Strategy: The processes and systems within the organization that must change in order for the strategy to unfold.
- Priority Goals and Champions: Statements of specific measurable results to be achieved in the next twelve months. An assigned ‘Champion’ provides the leadership and accountability for success.
- Communication Plan: A description of how everyone will be informed about the strategy, how it is expected to unfold and how they will benefit.
- Success Plan: A description of how each major goal will be accomplished. It includes a definitive statement of the goal, the benefits, the milestones (mini-goals) that will occur on the journey and the manner in which results will be measured.
- Strategy Action Plans: Statements of the actions that will be taken, week by week, in order to follow the plan and accomplish the goal.
- Periodic Success Report: A single page in which the champions can report their progress in carrying out their Success Plans.
If one of the most important steps in preparing your business for sale is to prepare or strengthen your business plan, then the earlier you start, the earlier your business will be in shape to sell at the time and price of your choice.
[1] For more information about Milestones 3.0, contact us at 519-654-2368 or go here for details.
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