You are a business owner and you understand the driving forces behind competition, supply and demand. So when:
- More businesses are for sale – lower prices result.
- With fewer qualified buyers – it becomes a buyer’s market.
- In a buyer’s market – buyers can be selective and value driven.
Thus it is important for you to ensure your business value.
How do I ensure my business value?
You can start by becoming a Best Practice Business. Best Practice Businesses ensure their business value by recognising the operational and strategic drivers of business value and they have systems in place to capitalise on them.
What are the drivers of business value?
1. Good Systems
A business with good systems that is not reliant on its owners. It is important to have procedures and systems in place that allow the business to function seamlessly regardless of the presence of the owners. The business will be more attractive to prospective buyers knowing that they don’t run the risk if the owner exits.
” A Best Practice Business has good documentation and staff awareness of roles and responsibilities.”
2. Loyal Customers
Without repeat business many businesses would not survive with the same level of profitability. Some customer facts include:
- It is 5-10 times more expensive to gain new customers than retain existing customers.
- Repeat customers spend 67% more than new customers.
- Repeat customers refer on average 7 other potential customers.
- 20% of customers account for 80% sales.
“A Best Practice Business understands the demographic of their customer base and delivers what is desired.”
3. Benchmark Performance
Your business value is directly linked to your profitability. Are you maximising your profit by:
- Increasing the number of customer types that you want to attract to your business?
- Increasing the number of times customers return to your business?
- Increasing the average value of each sale?
- Increasing the effectiveness of each process with the business?
“A Best Practice Business continually monitors their key performance indicators against industry benchmarks and produces financial reports on a monthly basis.”
4. Quality Staff
Successful business owners develop an outstanding team of people, all contributing towards the successful operation of the business and the desired rate of capital return.
“Best Practice Businesses have procedures for the appointment of staff, orientation of new team members, employment guidelines, team meetings and good communication with all staff.”
Can I become a Best Practice Business?
Anyone can become a Best Practice Business provided that you have the discipline and desire to endure change. Implementing best practice involves everyone in the business. Depending on your current practices, implementation of best practice may involve a high level of change. Some practices may require only a small change, some may need completely new procedures to be introduced, and some things may not change at all.
Where do I start?
Becoming a Best Practice Business will involve:
- Acknowledging the need and having the desire to become a Best Practice Business.
- Gaining the buy-in of key stakeholders in your business – this could be your staff, your spouse and family, your trusted advisers.
- Implementing the policies, procedures and systems to become a Best Practice Business.