By Rich Bond
What Do You – As a Business Owner – Want in the Future?
The answers I hear most often include:
- More sales
- Increased profits
- The ability to sell the business for what I think it is worth.
Unfortunately, most owners of privately held businesses don’t get the input they need to achieve these goals.
Yet, for many companies the easiest way to attain these objectives is to improve the company’s finance function and get a handle on key business indictors.
Here’s an example:
- At a Vistage meeting, I met a business owner who spent almost a year negotiating with various potential buyers, only to realize no one was willing to pay him what he thought his company was worth. The potential buyers said his margins were too low and he had a poor return on investment.
- Once this individual got over his anger and shock about how much time he had wasted, he decided to figure out what he needed to do to “get his number.”
- Over the next two years, this business owner concentrated on two key business indicators – gross margin and inventory turnover.
- With this focus, he increased gross margin by 50% and inventory turnover by 25%.
- In the end, he decided that he was not ready to retire, but he knows when he is ready, he will have the necessary metrics to get “his price.”
My friend is modest, but proud. He said his key report pointed out what needed to be done, and he did it.
Gino Wickman, the founder of the EOS system, said the single most powerful step any private business can take is identifying a limited number of key business metrics to help the owner manage the business. These metrics are usually operational and not found in the P&L, but they can be derived from financial statements.
The most logical person to help you transform your business into what you want it to be is a strong finance person. She or he can keep you up to date by sharing the key business metrics, and acting as your strategic business partner, can help get you where you want to be.
My business is finding finance professionals who enable company owners to achieve their goals. If you’re falling short of where you want to be, shoot me a message. I would love to talk to you.
