Value is an elusive quality often determined by perceived scarcity – the less there is, the more valuable that which exists. The value of a business to a seller and a potential buyer is significantly more complex because all marketplaces are dynamic and fraught with varying degrees of risk.
Perspective owners and executives look to build enduring value because in doing so they reduce risk and increase the ability of the organization to succeed in good and bad times. Some key ways to build enduring value are:
- Developing and maintaining a skillful, committed management team. Most buyers look for this as a foundation for future growth and profitability. This is often the first place private equity and absentee buyers look.
- Managing resources in a cost-effective manner, with continual attention to cash flow and limiting dependence on lending institutions.
- Paying rigorous attention to customers and referral relationships as though they are part of the company family.
- Nurturing strong, open relationships with employees that are characterized by integrity in communication and giving employees some stake in the success of the company.
- Maintaining reliable internal reporting systems, especially for financial operations, and developing financial literacy competency among employees.
- Diversifying and continually amending business strategies that are consistent with the values and skills of the organization and its employees.
- Performing with consistently positive financial performance and recalibrating, as necessary, to maintain strong market position.
- Continuously refining both marketing and sales strategies to enhance relationships with existing customers, while developing new customers.
- Pursuing ways to further differentiate your company via new products, new services, and methods to enhance what you already deliver to delighted customers.
Companies with enduring value stand out in the crowd because the way they differentiate themselves is clear to everyone, including potential buyers.