Your business is a living organism – something that has potential to grow and thrive long after you’ve played your role in it. Yet many companies are still healing from a very tough recession, and are stuck in neutral. The “new normal” is being defined by new buyer behaviors, such as greater demands for sustainability, eroding trust in organizations, fee pressures, and tight credit. If you are a seriously growth-oriented business leader, what can you do to ensure that your company recovers swiftly and returns to wealth creation mode?
Most CPAs, attorneys, investment bankers and business brokers will tell you to focus on some fundamental issues to improve your company valuation and viability. They assert that valuation is the key to maximizing your sales price, and they will refer to these as “value drivers.” According to Ned Minor -- a Denver, CO-based attorney and author of Deciding to Sell Your Business, “Value drivers are those characteristics that influence a buyer’s decision about how much to pay for a company. These include:
A stable, motivated management team;
Good and improving cash flow;
Operating systems that improve sustainability of cash flow;
A solid, diversified customer base;
Effective financial controls;
A realistic growth strategy; and
A facility appearance consistent with asking price.”
While these value drivers sound practical on the surface, they only provide a partial definition of wealth.
What Does Wealth Really Mean?
You must develop a fundamental understanding of how wealth is created and defined before you can determine how wealthy your company truly is. Historically, wealth has been defined in myriad ways. It’s up to you to determine which definition best serves your business goals.
The word “wealth” was originally derived from the old British word “weal,” which means “well-being”. It was a term used to describe someone who possessed great qualities. In most business circles, however, this traditional definition has gotten lost.
In my ongoing search for the perfect definition of wealth, I turned to the father of “modern management” and renowned business thinker Peter Drucker. He defined the purpose of a business this way: “Any business enterprise has two - and only two - basic functions: marketing and innovation. These are the entrepreneurial functions. Marketing is… the unique function of business.”
Today, many business leaders are seeking a more meaningful balance between money and happiness. They understand that money and wealth are not the same. If you want to run a business that creates meaning and significance in the world, you have to dig deeper and consider how much has changed since the Drucker days. Today, it’s essential to define wealth in a way that honors your values, your vision, and your core strengths.
Before you begin to
worry that you’re being transported into a spiritual dimension,
recognize that this expanded mindset about wealth can simply lead to
greater self-awareness, a more clearly defined sense of purpose, and