What is the Ideal Business Organization?
A business owner (s) cannot sell their business while in it-right? Like the selling of a car or home. The owner does not go with it. Wait!!! Did you know the more the buyer perceives the seller to be free from the business the higher it could be priced. Most times, if the buyer cannot foresee the business without reliance on the owner, the deal is broken. How does the business rely on the owner?
So, it really does not matter what the valuation comes to, unless the ideal business model is being considered for an accurate business value. How much does it cost to get the owner out of the business?
So, what does it take to bring a business to the ideal business organization? It is more than organizational structure (org chart). The concept is carefully unfolded in the book, “14 Immutable Laws of Business Value” for more in depth understanding. For the purpose of this page we want to introduce to the reader the importance of this concept to the selling price of a business. And the necessity of considering when maximizing the value of a concern.
Growth Concepts starts with business culture development from the beginning using Analyzer I and proprietary processes to evolve the business to the “ideal business organization”. So the owner has “true” value at the time with their business.
See the picture below for a typical business organization moving to an ideal business organization:
From the picture above you could visualize a typical business organization on the left moving to an “ideal business organization” on the right. The owner must be free from decisions in the business while having sustainable cash flow offering more time. Read more about the “ideal business organization” in the book, “14 Immutable Laws of Business Value“. How close is your business to an ideal business organization run?
Typical appraisals do not consider this crucial organizational structure where the owner is not working in the business or the “ideal business organization“. Sure, it is talked about by the buyer and seller with the broker or lawyer in any transaction. Obviously an owner cannot sell her or his business while in it so, it gets to the heart of any transaction.
However, if business reliance is diminished before the sale, so, the bottom line increases and the organization moves closer to the ideal business organization. On pages, 7-12 in the book, “14 Immutable Laws of Business Value” you could read an example of how an organizational structure change increased the value of the business over $200,000. What would it take to get your company aligned with the “ideal business organization”?
These value initiatives do not require expensive equipment. Yet, if known, how much business value would it add to your concern?
While maximizing a business value for more equity to leverage the owner of a business usually controls most of what is going on at first to her or his advantage. It is not on autopilot yet. But, as time goes on and sales come in things change more and more. She or he cannot do it alone and the team starts to grow. Then employees are empowered, teams are formed, processes emerge and an unseen event happens to force the sale. What would you do? That is why moving toward the ideal business organization starts now. Read more about the “ideal business organization” in the book, “14 Immutable Laws of Business Value.”
As the team grows revenue begins to be dispersed, while roles and responsibilities change and the number of systems and processes increase. Whether you are in a partnership, family business, or proprietorship, finding the “right” successor person and personnel could be one of the most difficult tasks to encounter as an “Owner”. Especially, if you want maximum dollars from your business, with an “ideal business organization”.
To get more insight into how making the “right” organizational move could bring more business value ask one of our Business Value Experts for an online complimentary review.