Your ability to continue operations when your competitors can’t is seen as a strategic advantage.
And it will ultimately increase the value of your company.
I helped one of my clients develop a succession plan that did just that.
She was hiring for a key position in her company that would allow her to pull back from the day-to-day operations so she could focus on strategy and ultimately exit the company.
Once we created the pieces for that position, it was easy to do the same for the rest of the departments in her company.
I highly recommend you do the same for your company.
Start with the basics, including:
- Writing job descriptions
- Creating and implementing backups
- Identifying cross-training required for employees to prepare them for the position identified in their path. (Or the hiring that may be required, which should be done for every employee.)
Remember from a financial standpoint, it’s critical to include all of these costs in the budget.
After all, if there’s no budget to pay for it, there’s no point in doing all this work.
As you budget and forecast, be sure to include:
- Recruitment & hiring
- Developing talent
While there are costs to doing this work, it’s money well invested in your company and your people that will earn a return over time.
It’s also work that prepares your company for disruptions that may or may not happen. Once you have this plan in place, it will allow you to continue operations in the event that an unfortunate situation occurs.
And a prepared company creates confident, empowered, and efficient employees.
Efficiency drives productivity gains, which in turn drives profitability. Your numbers will tell the real story, and the value of your company will increase.
The ultimate goal of all of this planning is to secure a higher value upon you exiting your business.
Of course, there are also variables to consider.
- EBITDA: Earnings Before Interest Taxes, Depreciation and Amortization, which is otherwise known as Operational Profitability
- Multiple/Multiplier: This is largely determined by capital markets. You have some influence in what that multiple may be, although it’s kind of outside of your control. Multiples are usually a range of numbers and vary by industry, influenced by:
- Economic environment that you’re operating in/industry
- Terms of the deal, whatever they may be
- Cost of capital
- Ownership structure of your business
- Exit preference, if you’re selling inside the company, or outside of the company and whom you choose
- Company’s performance vs. the rest of the industry
If you have a succession plan, a budget, and contingency plans in place, your company will enjoy the gains that your competitors won’t.
Unlock the maximum value from your business now and when you exit by taking the steps outlined above.