Andy Hurst tells us why it is important to add value to our businesses.
A business owner said to me last week: “Why should I be interested in driving asset value when I have no intention of selling my business?” It’s a reasonable question. And one to which there are lots of answers.
Here are four:
It’s a GREAT discipline to run our business as if we mean to sell it. It forces us to start to design a business independent of ourselves as owners.
It tends to make us focus on the right things; on the fundamental assets that underpin the business model and not just revenue and profit. These assets create long term wealth. And they also drive current revenue and profit – income follows asset.
Keeping the business assets under review on a regular basis acts as a kind of ‘Log Book’ for your business, keeping you honest to your vision and also making a powerful narrative to a buyer if you ever come to sell.
It’s often not about selling wholesale. Many businesses are greatly strengthened by equity-sharing Trade Partnerships. Many management teams are hugely motivated by equity sharing arrangements.
To bring in trade Partners or your own management you need to understand the asset value – and to ensure you get the best deal it’s obviously critical to maximise it.
And that takes time.
It’s energising. Remember how it felt in the property boom knowing what your house was worth? It can be the same with a business. After all for most of us our business is the single greatest asset we have.
Why not be energised by tracking and building its value?