Where Are You Taking Your Business Value?

Grant Kirby

How to build business value

Adding cash to your business doesn't necessarily add business value. So knowing what builds value is essential to create a business able to prosper in the long run.

All of the biggest businesses in the world started small. BHP, the second biggest mining company in the world by capitalisation, began life in Broken Hill in 1885. They say that the General Manager, William Jamieson, had to borrow a suit so he could take the first prospectus to Adelaide to launch the float process. The drivers that create a behemoth like BHP include the desire to create wealth for shareholders, to maximise the value of the business and to ensure its sustainability. And they are most likely the same drivers that motivate you each day.Every business is influenced by a whole range of external factors and circumstances; for instance your market, its regulation, the competition, suppliers and customers. But how well you and your people navigate these influences determines how fast and how far you grow your business value. Indeed, good businesses create opportunities, even in unfavourable circumstances.

Understanding What Creates Value For You?

What change in circumstances is your business facing RIGHT NOW that can CREATE OPPORTUNITIES if managed well?

Here are a few possibilities that you may experience; How many of those sound familiar?

  • Technology changes and/or disruption
  • Market becoming more price-competitive
  • New market entrants
  • Tighter margins
  • Diminishing product/service differentiation
  • Capital investment requirement
  • Need for improved internal capabilities to support growth or acquisitions
  • Owners approaching retirement age, not wishing to invest more funds in the business
  • Changing health, family priorities
  • Approach by potential acquirer
  • Opportunities for growth best realised by a different owner
  • Shareholders seeking to exit or transfer business at maximum value.

Each of these circumstances, and the many others you may be facing, has an optimum solution which maximises the value of your business. Identifying and pursuing that solution is key to growing the value of your business in the short-term as well as the long-term.Understanding how to create value in your business will greatly help you identify the optimal solution. For instance, a common mistake is to raise more capital when capital efficiency is currently low. In this situation, adding more cash likely means using more cash poorly – which, far from adding value, may actually destroy it. What has been proven to add business value, time and again, is increased capital efficiency. In fact, adding efficiency to any aspect of your business adds value. And this is good news for you! Indeed, improving operational efficiency is a great way to start, even modestly, right away. It brings immediate, measurable and lasting gains, not just to your bottom line but to the value and desirability of your business.

Where Do You Start Building Your Business Value?

Cambian’s ValueBuilder Process is a systematic way of evaluating your current performance and then improving the efficiency of your internal capabilities.

adding business value process

You can start at any of these 8 points, and if you are aware of your key challenge, that’s exactly where you will begin. By systematically and objectively examining every single stage, you can uncover and then deal with underlying risks and opportunities. It may very well be that your biggest opportunities are in areas you haven’t thoroughly reviewed yet.

Analysis & Planning:

This is about producing a detailed plan for “upgrading” each operational area of the business in the most efficient manner possible. It also involves identifying any “low-hanging-fruit” opportunities for improving the performance and value of the business immediately.

Capital:

This step assesses the capital efficiency of the business, and whether surplus capital can be extracted or whether further capital is needed.

Processes & Systems:

The aim is to streamline processes and to upgrade operating systems for the entire business efficiently. This is a pre-requisite for any business to operate competitively into the future.

Products & Services:

The focus is on generating an enduring competitive advantage through the creation of a continuous improvement culture. No two businesses are the same in this regard. So it’s not possible to tell in advance what will make the key difference to your business value.

Marketing:

This is an area of major change for most businesses in the digital age. Hence, we bring in experts with skills in digital and other forms of marketing that enable you to reach your target customers most efficiently and effectively.

People:

Of course, the development and engagement of your people is a focus for every successful business at every stage of this process. However, this is about giving special attention to how best to create engagement and get the best possible outcomes for your business and your staff. from the current performance and future potential of this most critical part of your business: your people.

Risk & Sustainability:

As with people, there is no stage of the process at which risk and sustainability is not front of mind. Here, we give it particular attention to safeguard the future of your business, identify and mitigate the known and possible risk exposures.

Leadership & Innovation:

In most businesses these are the ultimate factors determining success in the long-term. In order to raise the business to the next level, we have to increase the capabilities of its leadership and its capacity to innovate. We achieve this through leadership development at multiple levels within the business and by shifting the focus from operations to strategy.

Know The Potential Value Of Your Business And Act

A systematic, objective good hard look at every aspect of your business will undoubtedly reveal areas of opportunity and challenge. It’s the kind of good hard look that anyone contemplating buying your business will take – and with good reason. They are trying to identify the existing and potential value of your business, as well as identifying risks and threats. The more opportunities you can pursue, and the more of the challenges that you can eliminate, the higher the price you are likely to achieve.Would you like to know how your business is performing in these key areas? Then you'll benefit from spending ten minutes completing the questionnaire for the Cambian Indicative Value Calculation. Contact Grant and START HERE

View more posts
Government Grants You Are Missing Out On
Read now
My Career Path To A New Lease On Life
Read now
Use Social Media for Business Success - Start Now!
Read now
How To Get More Sales More Easily
Read now
View all