Do you need an advisory board?
It doesn’t matter whether you are an emerging tech start-up or a multi-generational family business, growing a company is challenging.
As a business owner you probably feel that regardless of the number of employees, customers, or complexity of the business, the accountability for the company’s success rests on your shoulders.
That’s why many business owners are turning to an advisory board to create an inner circle of trusted experts who will support them on their journey.
BHAG, Pronounced bee hag, is one of the most important and revolutionary business concepts from the late 20th century, inspiring thousands of companies to push themselves outside of their comfort zones in order to achieve greatness.
First coined by Jim Collins and Jerry Porras in their 1994 book, Built to Last: Successful Habits of Visionary Companies, a BHAG, or Big, Hairy Audacious Goal, is a long term goal which challenges your company to carry out the unattainable. It is the Everest of business.
But it is more than just about achieving a goal.
The subscription economy is booming.
Companies from florists, to furniture stores and even car manufacturers are adopting the subscription model and seeing tremendous growth.
Perhaps its success can be attributed to the optimal outcomes for both the business and the customer.
For customers, the greatest value is convenience. Subscription services take the thinking out of a repetitive buying decision, allowing people to shop on 'autopilot'. No more dreaded last minute trips to the store to pick up dog food or grab a pack of shavers. Buying on subscription gives you peace of mind that whatever you need will be there, hassle free and delivered to your door (or device).
For businesses, the overarching benefit of a subscription business model is the reliability and predictability of revenue and increased efficiencies. These factors are ideal when running business, and also one of the most compelling factors in boosting the value of your company.
Let's take a closer look at the advantages of a subscription-model...
You’ve most likely worked with one, perhaps you’ve hired one, but undoubtedly at some point in time, you have come across a ‘bad apple’ in business.
It may be due to an inability to communicate with customers, poor performance standards or a character trait which is corrosive to the team’s dynamic, but every manager or business owner will inadvertently come across a toxic worker during their career.
At some point every business owner will need to exit. Some wish to spend more time with loved ones, focus on a new venture, or just take their foot off the peddle. Other times, people may have health issues, need more capital or believe a strategic partner could take the business to the next level.
The problem is, when it comes time to transition, many business owners lack a clear process to understand their options and achieve the outcome they deserve.
A crucial first step is to understand your motivations for selling your business, along with the preferred outcomes after the transaction is complete. While this step is often overlooked, it plays a vital role in the sales process. Like any strategic business move, the outcome is always shaped by your motivations.
This article is the first in a series of 3 articles on preparing to sell your business and achieving the best outcome.
Receiving an acquisition offer is exciting. You’ve presented your business (and your professional reputation) on the table and someone has come by and found it appealing.
But before you start planning your retirement, just remember that almost half of all acquisition offers don’t make it to the final stages. In fact, receiving the offer is the easy part. For most business owners, it’s closing the deal that’s difficult.
After piquing a potential buyer’s interest, there are a lot of factors which come into play during the business sale process that could make or break the success of the transaction.
Selling your business is a deeply conflicting and personal decision, and the ramifications affect not only yourself, but your staff as well.
Whether you have 3 or 300 staff working for your business, the decision to tell them you’re planning to sell is something many business owners will struggle with.
It begs the question: Should you tell your staff you are thinking of selling your business? If so, when?
Trying to find the words to tell your employees you are selling, and knowing the best time to do so is a challenge. One that there is no perfect answer to. It is a deeply personal decision for each business owner and only you can decide on how and when you will break the news.
Being honest and transparent about decisions which will affect your team may seem like the ethical thing to do. Especially if you have developed close working relationships.
But doing so also presents a large number of risks:
- Employees no longer feel like they have job security. They immediately start looking for another job.
- Competitors may find out, and try to use this information against you.
- Loyal customers may end up leaving you for competitors
If any of these outcomes were to occur, your potential buyer could use this information to their advantage in the transaction process. Depending on the severity of the loss, a worst-case scenario may result in an offer being withdrawn and the deal falling through altogether.
Another morning. Another coffee.
The phone rings, only this time it’s not any enquiry.
Someone wants to buy a business… your business!
After the initial shock has worn off, reality sinks in. It’s only natural to get excited about the situation!
Next comes thoughts of living it up on a tropical island and making plans for the future.
Being financially secure with your retirement nest egg already in place is the dream. But it’s also a trap to get too far ahead of yourself before finalising an acquisition.
The ultimate dream for many business owners is to have a business that's not reliant on them to show up everyday.
Not only does this create more personal freedom, it also impacts the value of a company.
A company which runs on autopilot is highly sought after by buyers, and they are willing to pay a premium to find one. But, a company that requires hands-on involvement from its owner is likely to result in a heavily discounted offer.
Why? Because an acquirer wants to know that when they take the reins, the business will keep generating a steady stream of income, and it won't all fall apart because you've left!
This upcoming summer, consider the possibility of giving yourself a lengthy break. See how your business runs while you’re not around.
It’s highly likely some things will go wrong. But by identifying areas that need improvement, you can put steps in place to take your business one step closer to operating independently - while making it more valuable.
Here is an Eight Step plan towards Owner Independence for your business
You know it’s important to have systems and processes in your business.
After all you won’t be able to scale without them.
Right now, the business is still heavily reliant on you. This is making it harder to keep on top of things and allocate time to focus on growth.
That’s why you’ve started taking time to write out procedures.
You’ve documented them in a manual and explained them to the staff. You’ve even placed them in a central location so everyone can have access to them.
The problem is, the staff seem to just ignore them and choose to do it their own way!
Often the issue is not the actual processes themselves, nor the staff.
It’s the way the information is presented.