What is the Ideal Business Organization?
A business owner (s) cannot sell her or his business in it. Like the sell of a car or home. Wait!!! Did you know the buyer has to perceive the seller free from the business or in an “ideal business organization” state for the seller to get maximum dollar for the business (Sometimes if the buyer cannot foresee this happening it breaks the deal)? 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 how a business owner must be totally free free from her or his business, on the right, to an “ideal business organization” at the time of the sale for maximum 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. Obviously an owner cannot sell her or his business while in it so, it impacts the transaction. However, if known there are ways to create value with the organization structure before the sale, so, the bottom line increases and the organization structure 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 initiative do not require expensive equipment. 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”. Why this ideal model is not in a typical appraisal it surly rests on value at the time of the sale and could be quantified. Read the example on pages, 7-12 in the book, 14 Immutable Laws of Business Value.”
When the Owner starts moving towards working on the business and not in it, then business value goes up. How much, how long and for what purpose? This is one of the most difficult 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 business value was increased by over $200,000 with one organizational move closer to 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.