In our Value Builder series we explore the eight key factors potential buyers review when looking to acquire a business – maybe yours!
Why Neutrality Should Be A Core Focus For Your Business
“The longer you’re not taking action the more money you’re losing.” – Carrie Wilkerson, Author
A business’s sale’s value requires that the business not be overly reliant on any one customer, employee or supplier. The Swiss obsession with neutrality inspired one of the core ideas for creating a valuable company. It’s a way of evaluating your business to ensure a neutral perspective that allows you to minimize your dependence on any one company or individual. This method should be implemented in each of the following areas of your business:
Suppliers
If your business is dependent on one or two key suppliers (companies or independent consultants), you are at their mercy. Cultivating a bench of suppliers, on the other hand, means you will never feel beholden to anyone. Spread your business around – even if you lose some special pricing discounts. Neutrality is worth more than a few dollars in savings.
Employees
If you’re too reliant on any one employee, you are at significant risk if that employee chooses to leave and you’re also at a disadvantage when it comes to negotiating his or her salary. To avoid this situation, nurture a pool of people you want to hire. There are several firms that offer bench-building services that can help with this process. Proactively recruiting a short list of candidates who could fill your key roles will allow you to ‘bench’ qualified professionals to hire in the event of an employee defection. Regular interviewing even when you don’t need staff demonstrates to current employees that you are always ready if performance slips.
Customers
If you’re too dependent on any one customer, your business will be highly unstable. Try to work your customer concentration down to a point where your largest customer represents no more than 15 percent of your revenue. You’ll sleep better at night and have a more valuable company when it comes time to sell.
A complimentary Value Builder questionnaire available from The Osborne Group will provide an assessment of the current potential sales value of your company. The questionnaire is part of a system developed by internationally recognized small business expert John Warrillow with results based on findings from over 17,000 companies. Your answers will help determine what drives up, or undermines, your company’s value and steps you could take to increase its value.
The questionnaire takes just 15 minutes to complete online and generates a detailed report that an Osborne Group Certified Value Builder consultant will review with you during a complimentary two-hour meeting.
In future blogs, we’ll examine other Value Builder factors and their impact on your company’s worth. Follow us here for the series:
http://localhost/osborne/category/osborne-insights-blog/
To find out how your company is performing, click here to take the Value Builder questionnaire: http://www.thevaluebuildersystem.com/osborne-group
Geneve, Switzerland – 11 May 2014: bridge with the European flags in the center of Geneva, Switzerland
