What is the Ideal Business Organization?
From the picture above you could visualize how a business must have an ideal business organization at the time of the sale for maximum value. As you know, you cannot sell a car with the owner driving it. Similar, you cannot sell your business with you in it. You might not be thinking about selling now but every Business Owner either shuts the doors or exits. How close are you to an absentee run business?
The owner of a business usually controls most of what is going on at first to her or his advantage. But as time goes on and sales come in things change. She or he cannot do it alone and the team starts to grow. If she or he is not leaving it for chance, since a business sells, on average, every 3 to 5 years (a good one) then employees are empowered, teams are formed, trade secrets are transparent and the big picture of building business value is on the radar. That is why moving toward the ideal business organization starts now.
As the team grows revenue begins to be dispersed, while roles and responsibilities change. Whether you are in a partnership, family business, or proprietorship, finding the “right” person could be one of the most difficult tasks to encounter as an “Owner”. Especially, if you want an absentee-run business, then moving towards an “ideal business organization” is on the top of the priority list.
When the Owner starts moving towards working on the business and not in it, then the business value goes up. During this culture change reorg, a Business Owner could lose value or make it depending on compensation, roles, and responsibilities. This is one of the most difficult organizational structure changes a Business Owner(s) or HR manager participates in, yet is rarely looked at through the eyes of business value. Read the example in the book “14 Immutable Laws of Business Value” pg. 12., of how the business value was increased by $100,000s with one move. To get more insight into how making the “right” organizational move could bring move business value while preparing for the future exit ask one of our Business Value Experts for an online complimentary review.
CEO Analyzer along with a proprietary change process has been designed to assist a Business Owner or HR Manager get the highest business value while moving towards the ideal business organization. Without the software suite, it would be virtually impossible to fine-tune the culture, employees, roles, responsibilities, and processes for the absentee run business. Let us take a look with you.
When are you exiting? Again the number one rule of a Business Broker is a business sells every 3-5 years, a good one. Sometimes we do not know when we will have to sell our business. Start getting prepared today and set a time for an online complimentary review of your specific situation with an experienced Advisor. Start evolving your company’s culture and organization closer to an “ideal organizational structure” utilizing an Advisor’s guidance. Connect with a Senior Advisor on the contact page for an online complimentary review of your situation.
A company’s value is less with the Owner working inside the business. From, “14 Immutable Laws of Business Value“, Rule 12, Pg. 21.. Read more about how this laws is interdependent with cash flow in the book.