Grow value? Blah blah blah ginger.

Grow Value? High transferable value is the ultimate measure of business success. But that’s tomorrow. Why should you work on it today?

We say value, and you hear “Blah blah blah Ginger.” Here’s a candid conversation guide for business owners like you. (3 minute read).

What your business may be worth doesn’t matter to you today, right? Because if you’re like most CEOs you plan on running your business until you decide to do something else, then you’ll sell it for what you need to take care of your family. 

Do your research: this common assumption smacks right up against a dark reality. 19 of 20 companies can’t sell as they are currently run - this is 95% - and of that little 5% that can, 87% get mauled during due diligence. Mauled means that in due diligence the buyer discounts the price because of the business’ risk profile. Deals fall apart more often than not.

And guess what? You are among the biggest risks - because in many ways, you ARE the company, and it cannot run smoothly without you. This isn’t meant to throw shade… deep down you know this is you. 

Spend 3 minutes thinking about what you want from life. (You have 3 minutes, right?). Please jot down a thought or two re what you want: 

• Professionally
• For your family’s wealth
• As your Legacy in your community

Which brings us to transferable value. Now please ask yourself: what does ‘transferable value’ mean to you? If your answer is something like “transferable value means that selling my business will create a pile of cash one day” you are completely missing the mark.

What is a top complaint of middle market CEOs like you? Time. They don’t control their own time. Feel familiar?

You may be asking yourself: What does ‘time’ has to do with ‘transferable value’? 

Here’s the thing: for a business to have high transferable value it must have a demonstrated capacity to do well without you. Oooookay… it needs to have high growth capacity, without you being a risk to growth. You need to no longer be the head sales dog, the operator, the cheerleader, the glue. No, you need to be obsolete.

And when you’re obsolete, when the business can run smoothly in your absence, what will that do for your control over time? My guess is you’re seeing the light. So sure, when we say ‘high transferable value’ it creates the option to monetize the value of your life’s work one day - but what it really means is creating a business that is easier to run, has stable positive cash flow, and is growing nicely. You can grow it, use it to build savings, whatever. Bottom line, creating high transferable value creates options today.

Your business will need to grow to be bigger and badder after you sell than it is today - PE doesn’t buy a job, they buy an appreciating asset. Focus on this above all else.

This is why we help CEOs like you create an effective senior leadership team that is aligned with and accountable to the shareholder’s goals (shareholder - that’s also you, right?). We help define goals, redesign the business so that it can reach those goals, creating a business that is best-in-class, with high strategic capacity delivering:

1. Predictable Profits & Cash Flow
2. Predictable, Sustainable Growth
3. And if/when the time comes, Predictable Transferable Value

This is a lot to think about - should you talk to someone?

We’re here to help, and the first move is up to you. We’ll chat with you for as long as you need, the meeting is on us. So if any of this resonates, please send us a note. We’re looking forward to helping you sort through your options, thank you. 

This article pulls from Growth-Drive Founder George Sandmann’s upcoming release from Forbes Books: The Growth-Driving Advisor: Proven Strategies for Leading Clients from Stuck to Best-in-Class. Senior pros are using the knowledge, tools and support described in this work to build thriving advisor businesses. You can learn more here. 

We’d love to know what you think: please comment below or email blog@growth-drive.com