Business Strategy - 2014 Archive

We have talked about the harsh reality of having a business of value and discussed what markets and buyers look for in a business of value. The next logical step is to discover what needs to be in place so your business, as it continues to mature, achieves steady growth, healthy cash flow, and the systemization that creates a business of real value. You could do an internet search and find any number of websites or individuals that can tell you how to create value in a business. The truth is, there is no one way to get it done but there are certain factors in a business of value that are consistent. This week we focus on three factors: Professional Advisors, Coaching, and Action.

Last week we talked about how many business owners bury their heads in the sand when it comes to placing a value on their business. This week we focus on where the 'sweat equity' can make a positive difference in the valuation of your business.The markets and buyers of the world are as diverse as the businesses. This leaves each market and buyer with its own set of criteria and perspective of what value look like. Taking into account those diverse perspectives, this week we look at three core attributes that nearly all buyers are interested in paying top dollar to obtain: Growth, Cash Flow, and Systemization.

You've built your business with a great deal of hard work, dedication, money, sacrifice, and plain old pig-headed determination. You are really good at what you do, and your business is known for the quality it provides. You have dozens, hundreds, maybe thousands of loyal customers who sing your praises and continue to buy your goods or use your services. You have loyal employees who have been with you for many, many years; and the business has given you and your family a decent living, in spite of some "ups and downs" over the years. You are now getting closer to the "reality of your mortality", the fact that eventually a transition is going to happen, voluntary or involuntary. But as Michael Gerber, best-selling author of the E-Myth books says, "The only sane reason to own a business is to sell it."

After the efforts you have made to define your harvest, plan for the harvest, and then planted the necessary seed to reap your defined harvest, you may think the work is over. No, this is the time to cultivate the growth of your expected harvest by labor and attention. In regards to growing plants, Dictionary.com defines cultivate as: to promote or improve the growth of (a plant, crop, etc.) by labor and attention.

The question then is what are the keys to cultivating? Michael Gerber, in the best-selling book, The E-Myth Revisited, named this idea of cultivating the Business Development Process. Michael wrote that the Business Development Process is based on the foundation of the following “three distinct yet thoroughly integrated activities: Innovation, Quantification, and Orchestration.”

Week one of May you were challenged with the following, “So, decide what it is you want to harvest. It may be as simple as something like this: Over the next (enter time frame here) I expect to harvest (enter your goal here - number of sales, amount of revenue, new position(s) hired, another location opened, etc.).”

Week two the five steps to help you plan your harvest were introduced.  Now, after defining what it is you want to harvest and working the 5 steps to planning your harvest, let’s explore the planting stage.

The planting stage is where the proverbial “rubber meets the road.” This is where the defining and planning of your harvest meet and begin to happen in real time.

Last week you were challenged with the following, “So, decide what it is you want to harvest. It may be as simple as something like this: Over the next (enter time frame here) I expect to harvest (enter your goal here - number of sales, amount of revenue, new position(s) hired, another location opened, etc.).”

We went on to point out that in subsequent weeks, “we would look at the planning, planting, and cultivating needed to bring in the bumper harvest you expect.”
This week we will explore the planning.

It is "that" time of the year here in the Heartland of the United States, that time where tractors are being fired up and planters are being filled as they are readied to enter the fields to plant seeds. This doesn't just "happen," this is a task that is born out of a plan that begins with deciding what harvest the farmers want to have at the end of the season. The same should be true of all business owners; they should begin by asking the question, "What harvest do I expect this season?"

By beginning with the end in mind, it helps the farmer decide what preparations need to be made, what seeds need to be acquired, and what needs to happen throughout the growing season to cultivate the planned harvest. It is not as simple as only choosing what seed to plant, tossing it into the field and waiting - that is a great strategy to feed birds but not to harvest a bumper crop. The same is true for your business - what do you expect your harvest to be at the end of your season? What do you need to do to plan for the expected harvest? What seed needs to be planted? What needs to be done throughout the season to cultivate your crop? These are all questions that need to be addressed to help ensure that you harvest what you expected.