Wednesday 10 April 2019

Successful Leaders Measure Outcomes

Successful Leaders Measure Outcomes 


Many leaders struggle with leading people effectively. While I come across many different issues one which is prominent is that leaders do not set the right environment for people to work within. Too often leader's focus on outputs, not on outcomes. The challenge that leaders struggle with is in creating a results focus cultural attitude that measure outcomes instead of outputs.  

So what is the difference between an outcome and an output? Why does that matter and why is it difficult to differentiate between the two? And finally why is it crucial for leaders to focus on key results measures of outcomes and not just outputs?  

I recently had a client who called me in because his sales team were not following the sales process they needed to undertake. Each one of them has developed their own way of doing through the procedure, reinventing it or tweaking it (their words) to make it work for them. They were all busy doing things and their management and leadership teams could see the stress on the workload, the impact on the processes and on the customers, and on the results. Working with  them I could see that they were focused on being busy creating new steps and explaining why things could not be done when the customer wanted. The team had become busy being busy, but not focused on the customer, and the management response was to look at how busy they were through CRM micromanagement, which demotivate the team and the support functions rather than focus on what they were achieving.    

This is the challenge for leaders. They deploy a plan and step back and mange outputs through CRM KPI's, not on outcomes for the business, the employees or the customer. Here's this issue visualised in a chart by Burns and Bass, outputs v outcomes.  
Leadership Skills Getting Results by Richard Gourlay #Dumfries and #Galloway, #Scotland

Outputs vs Outcomes

An output is something that people do, while an outcome is something that happens as a consequence of that doing activity.  “I have made 50 calls to prospective customers” is an output, “I’ve closed a new customer” is an outcome. Which one is more important? 

Measuring the activity, the output, tells you how busy someone is, while measuring the outcome, the result tells you have effective they have been at the task in hand. Outputs, being busy always start out as the simplest measure to activity, but they are a false measure of success. Outputs are activity measures, while important in their own right, they are not what leaders should be measuring, these are measures which management should measure activity through. 
A strategic thinking leader might ask to their line manager, “Why have you made 50 calls and not generated  new customer from those calls? What are you saying to people?”

Being busy is simple; being effective is what matters for a successful leader. Strategic leaders focus measuring outcomes towards the end goal. Effective leaders start with the end in mind, measure what matters, is what differentiates successful leaders in leading their organisation from others.    

Most people naturally focus on outputs, being busy. It’s relatively easy to come up with a list for what you need to do today, this week and this month. However, as Stephen Covey explains in his book The 7 habits of highly effective people, outputs always come last. In order to be successful, you need to start with the end in mind, by focusing on the outcomes you want, and then work backwards to outputs that lead to the outcome(s) you are focusing on.

For example if you want a new customer, that is a outcome. How you achieve that is to identify what are the steps to getting a new customer. 

1.     Defining a target audience.
2.     Prospecting that audience with a call to identify likely suspects
3.     Gain a meeting with suspects, present a solution / offer.
4.     Close the sale and confirm the customer is on-board.  
5. Pass onto the customer retention team and start again.

The objective, one new customer is a clear outcome. The outputs to get there, steps 1 to 4 above are all activity-based outputs, which the team focuses on delivering towards that outcome. The outputs are measurable activities, which are supported by operational initiatives, such as who is going to do what to deliver them. 

Leadership Strategic Approach

  1. Where do I want to go? Is an OBJECTIVE: the outcome.
  2. What are the results that lead us to achieve in order to get there? KEY RESULTS outputs towards the outcome, steps 1 to 4 above.
  3. What do other people need to do to achieve those results? Theseare the operational INITIATIVES, task activities.

If leaders start with activities (i.e. the Initiatives) they take themselves out of control of where they are going. Leaders must focus on the objective, the outcome to be accomplished. Anyone can be operationally busy, but it leaves the operation unfocused on the end objective. Initiatives such as writing the script, recording the stages in the CRM system and who to call back are all operational activities, which are important to achieving the objective, but are overseen by the management not the leadership.  

Successful leaders define the outcome and resource the outputs to their management team and then focus on leading the team to achieving the outcome.

Activity-based or results-driven?

Leaders must obsessively focus on the objective, from its inception through to its completion. By focusing on the outcome leaders, lead their people relentlessly towards the objective. Define the outcome you want to achieve before you define the outputs that will get you there. 

For many leaders, focusing on outcome achievement instead of outputs requires a significant shift in culture and thinking. Defining outputs is easy, focusing on doing things. Doing something makes people feel good, but doing the wrong thing can still feel good until someone steps back and sees that they have not moved towards the objective, they have just been busy. 

Doing things to achieve a specific outcome is a lot more complicated, and now success is not measured anymore by, being busy or by the percentage completion of your output, but by progress towards the end goal.

This shift can be a challenge for many leaders, but the results demonstrate the consequences of your actions and learn what you can do to achieve certain results. The faster you learn, the better you get, as an individual, a team, and a company.

Leaders must measure performance towards objectives within your business? Are you activity-focused or results-driven? Are you happy when 50 prospects or 100 prospects have been called this week or is what really matters to you how many customers you closed? The latter measure of outcome achievement is more informative to the business KPI than the former. As long as Key Results are on track, leaders should not get involved at the Initiative-level. If the business is off-track, then it is sensible to review the initiatives with the relevant management and operational staff to ensure they have a clear output plan that supports the objective outcome. This is where leaders can help the team to figure out what or why it’s not working, and brainstorming what other initiatives we could try to get things back on track. 

KPI’s: measure outcomes

KPI’s (Key Performance Indicators, just in case you don’t know) are the reporting  indicators which drive decision making. For KPI’s to drive business results then they must indicate outcome performance, not work rate outputs. 
Key Performance Indicators KPI's drive business activity if designed and managed well, by Richard Gourlay leadership consultant, business advisor, NED, in Dumfries and Galloway Scotland


One big advantage for leaders of measuring outcomes rather than outputs is that it enables them to step back and allow management to manage more effectively. Giving space for managers to manage, removes the accidental tendency to micromanage operations. The risk for leaders in any organisation is that they struggle to define where they should get involved and where they should not.  By stepping back leaders can retain their overview rather than being drawn into operational activity.

Summary
To improve your organization, then leaders need to focus the whole team on outcomes instead of outputs. Focusing on outcomes puts the end in mind first, tracks the progress of what really matters, and enables the leadership to learn about company capabilities.


Focusing on outcomes will not only boost performance, but it is also a natural protection against micro-management. Don’t tell sales reps how many outbound calls they need to make today (output), instead make them responsible for closing a certain amount of customers each month (outcome).

Like to learn more about leadership? Then buy the book Strategy: the Leader's Role by Richard Gourlay 
Strategy The Leaders'  Role by Richard Gourlay, book on strategy and business advice, how to develop your business strategy

Tuesday 29 January 2019

Company Culture: the 8c's of Cultural Competitveness in Business

Company Culture: The 8c's in Defining Business Culture 

Company culture has been the key driver of differentiation between companies.  A positive company culture defines the gaps between average performers and high performer companies within any sector of business.  Company culture demonstrates its true personality, is the environment in which employees exist.  Culture is what differentiates brands within every business sector.  

It is culture which employees buy-in, from first engagement through to life-time employment. Culture matters from cradle to grave in loyalty in employing people and in creating loyalty with customers.  Company culture is the only real differentiation between leading brands in maturing market sectors.   Company culture is not a single element but includes the entire working environment, established, maintained and driven by its leadership.

Yet despite the importance of culture within the workplace few leaders focus on identifying, creating, developing and sustaining the right culture within which great teams can succeed.      

Company culture defines an organisation, learn how to develop your culture with this model by Richard Gourlay busienss consultant, NED and business advisor

Business Culture Differentiates You

Culture within the workplace is today the biggest differentiator between organizations. The whole working environment, creating and developing a successful company culture is today at the heart of leadership goals for companies who want to stand out within their sector. Behind the concept of cultural differentiation is the assumption that the culture is inexorably linked to behaviours within a brand that define the results the customer (and employee) will experience.       

What makes a company culture a success within a market is easier to see once it is in place, but hard to identify as standalone elements. Cultures within companies such as Facebook, Google and Apple are commonly referred to outstanding examples successful business cultures as popularised by Dan Pink in his outstanding book Drive.


Company Culture

Company culture is at its core a cohesive set of beliefs embodied within a set of living values.  These living values often phrased as the way we do things around here, have to be lived by everyone within the organisation.  That life comes from and is sustained at the top of the organisation, its leadership.   What they do matters, but only if they believe it matters. The leadership team must all do it together and consistently and measure themselves and be measured by others for it to live and thrive.  From remembering first names, to saying good morning, to what you wear and how you behave, culture matters most at the top.  

The key elements of culture are often a challenge for leaders to identify, develop and measure the effectiveness in delivering. I’ve put together a simple set of key elements, 8 in total which I think you can measure a company culture by. So here is how I think leaders can measure their company culture, and how to develop the culture they want to achieve.    


How to assess your Company Culture.


Company Culture Assessment Tool by Richard Gourlay leadership development consultant, Ned and business advisor.

Company Cultural Competitiveness by Richard Gourlay


Looking at each element in turn here is what I think leaders need to think about in developing their company cultural competitiveness.  

Company Cultural Competitiveness  

The overall effect of culture on the performance of an organisation is the end result of measuring the cultural elements which make up a successful organisation. The overall impression of the culture within the organisation, what people see, feel and experience through to being able to measure the impact all the elements of culture, the cultural impact upon the overall competitiveness of the organisation within any market is the net result of a cultural position within a market. 

If you are of a certain age you'll remember the outstanding Seattle Fish company Fish video on what a cultural competitiveness looks like on a teamwork culture within a business. The impact of culture upon an organisation can be both dramatic and highly effective ways to compete within any field of business and that overall measure is made up of the 8 combined elements that make up the cultural competitiveness below.  
  

1. Competitive Position

Companies find and develop their place within a market sector, where they successfully compete. It takes careful strategic positioning of the brand to develop a coherent competitive position within a market. Successful brands make that position identifiable and defendable, and so they can sustain it for the long term.  

That ability to consistently defend a desirable position within a market is core part of a successful company’s culture. A competitive position within a market creates a style in how they own that space within that market is a vital element in making any brand a sustainable success.  How a business competes is a cultural approach from the top of an organisation. 

From product development, marketing and sales through to its relationship structure with its customers the approach it takes is defined and determined by the culture its leadership delivers. As a business matures it can develop a competitive position, through consistency within a market, which company’s can sustain as part of its cultural approach to how they defend their market position. 


Company culture defines how competitive you are as a business by Richard Gourlay busienss consultant

2. Core Competency 

Where and why does your company excel at what it does without having to stretch itself? Businesses like people develop areas of expertise in which become good at through consistency and develop into a cultural competence in undertaking. These core competencies become areas, which organizations culturally outcompete others within the sector. Things that the organisation has learnt to do well.

Like an Olympic athlete, you see them perform at the top level, only because they have worked hard (with real raw talent as a start point) to get themselves there. The basics of what they do, the discipline to get up at 4am every day for years so that they can run heats and make the finals and still be able to excel is all because they have the core competency to get that far. The same is true in companies; great companies have their culture built upon core competencies, which they can rely upon to put them where they need to be to perform when they need to at the highest level. 

Core competencies, areas where organizations operate more efficiency and effectively than their competitors are central to their success. They provide an internal strength, a natural or developed competitive advantage within their market and an ability to excel in certain operations or activities. 


3. Company Capability

What can a company do, what is its capability to do something new, innovative or different? A company’s capability reflects not just how stretched an organization is in delivering its standard operations but more importantly upon its capability to do more than just survive. A company’s cultural capability is the ability for a company to invest in developing itself and its people for long-term success.  

Companies feel their capability in how they look at challenges and opportunities. Companies with a confident cultural approach, a positive attitude to situations, allows employees to take risks and learn form them. Employees feel comfortable suggesting ideas, trying things and in expressing their views in a hierarchy free environment.  Capability is about confidence which is developed through consistently delivering.  The impression that they can deliver, reach and achieve goals sustains that capability culture.

If a company feels capable it reduces and then removes traditional command and control mechanisms, replacing them with a freedom to operate culture. That culture develops its talent faster than its competitors and develops talent identification, acquisition, development and retention as a clear cultural strategy. 


4. Collaboration Culture

A culture of collaboration, working with channel partners, both upstream (supply chain) and downstream (strategic customers) is a cultural approach within a market. How companies collaborate, where, when and with whom, provides a competitive culture. It allows both small and larger companies to leverage their size within a market. Organisations with lower barriers, without the silo mentality approach can do more, quicker and more effectively.  

Using supply chains to develop innovative products, up-streaming product sourcing, or working with specialist outsourced manufacturing; working with people in ‘open collaboration systems’ creates a cultural competitive advantage. 

A competitive culture using collaboration multiplies the competitiveness of a company within its market.  Those companies that collaborate successfully outcompete their market competitors through both upstream early adopter acceleration and down stream channel control. A company which embraces a collaboration culture punches above its weight and allows everyone to contribute to its success. With lower barriers, and lower formality and hierarchy, the collaborative culture enables talent to shine by breaking down self-limiting control mechanisms    


5. Cultural Cohesion

Organizations which operate in silos, have cost effective units but sacrifice cohesion between the departments. The strength of silos is in internal department strength, but that cost effectives creates counteracting two factors.   

Firstly in how silo’s operate, differing departments develop at different paces, stretching organisations between strong and weak departments.  Where those differences are wide then an organisation can progress only as fast as its weakest element. As different departments develop and evolve the cohesion and cooperative way they work alters. If the gap grows between departments in how they operate then this negatively or positively impacts upon the cohesiveness of the whole organisation.  

Secondly interdepartmental work suffers; the ‘them and us’ culture creates poor morale and lower trust between departments. The lack of collaboration between department’s lowers productivity, implementation and innovation, it results in low internal cohesion. Companies where cohesion is high, allow people to move across departments, encourage joint project working and develop people’s talents and encourage synergies that produce a cohesive organisation.  Cohesion is a vital element of a cultural competitiveness. 


6. Corporate Culture

How the leadership pulls together is another important element in competitive culture development. How the leadership pulls together, around the clear strategy for the business in place requires full stakeholder engagement. This creates a coherent culture throughout the corporate body, enabling everyone to pull together around the living culture. 

Ensuring all shareholders and stakeholders are fully onboard, meeting agreed shared precise short and long term objectives, is an important element in competitive companies. When all parties are pulling together organisations can drive forward without having to carry alternative opinions and dissenting voices and activities. The less time the executive team must spend on ‘managing’ or directly fighting with other stakeholders' objectives the more time they can spend their time focusing on delivering their corporate strategy.      


7. Collectiveness 

The second challenge for leaders to assess within the corporate organisation is that of corporate collectiveness.  identifies is that with stakeholder engagement the leadership can leverage from its stakeholders. Stakeholders, rather than just being the shareholders and influencers can also directly contribute to its success. Bringing in new skills, contacts and support. 

The third element of corporate collectiveness is in sharing responsibility for the actions of the company.  Taking collective responsibility for customer satisfaction is the most common experience which leadership teams can measure within the culture of a company, how you can measure your cultural collectiveness.  


8. Communication

Probably the most apparent identificator of culture is how an organization conducts its communication.  Good communication inside, throughout and beyond is a sign of a positive culture within an organization.  The change from ‘knowledge is power’, the closed, controlling top-down, need-to-know to one of open multichannel dialogues is the most significant cultural shift within companies today. 

Poor cultures such these are typified by the as email everything all the time, and the endless meetings to endure, both reflect the ‘tell them what I need them to know’.   Poor communication cultures often include heavy formal reporting of every activity, numerous KPI’s and other activity measurements, creating a police like state within the organization. Companies with this type of culture rely upon formal multiplatform reporting from CRM, weekly reports, pipeline reports, and monthly plan updates.  

Those communication styles create controls and formality, reducing trust and creating distance between leadership and their teams. Micromanagement exists at every level and employees feel like they are in a sausage machine of productivity, often where the reporting takes longer than the activity.  Apart from the obvious demoralization of the workforce, it also reduces creativity and reflects in people’s attitudes at work that they must undertake their role in only one way. 

Today’s positive cultures include multilevel communication, open mentoring, positive feedback loops at all levels resulting in engagement throughout the organization.  Objectives at all levels are understood and discussed.  Emails are there to summaries actions and outcomes. The use of open team software tools allow, real-time monitoring and proactive support with project oversight reporting. Informal meetings and continual mentoring, including Agile working  practices all support improved communication. 

In companies with positive and engaging cultures, people feel empowered within their role and enjoy high-engaged awareness of wider issues within the whole business. Good communication breads holistic communication which encourages and motivates people to opening engage with the their organization rather than try to manage communication. 

Richard Gourlay, company culture #Castle Douglas, #Galloway, #Scotland


Like to talk about how to change culture, then get in touch: contact me here @cowden

#company #culture #organisation #leadership #softskills #emotionalintelligence #strategy, #CSR, #Dumfries and #Galloway, #Scotland 

Sunday 6 January 2019

How to make Change Succeed in the Workplace

How to Create, Drive and Sustain CHANGE in the workplace 

How to make change succeed in business, advice by Richard Gourlay Leadership and business consultant, NED and business advisor

Executive Summary

Change is the only constant in business.The challenge is that success reduces the need for change, until it is too late. Businesses which continually succeed do so because they respond to the changes in their market. Those which can adopt the quickest and proactively succeed in adapting and developing to meet their customers needs, succeed at the expense of those that are unable, unwilling or slowest to adapt.  The drivers of change in business are often driven by a company failing to achieve outcomes in turnover and profit. Change of course is easy to talk about doing, but difficult to achieve.  Changing anything that exists takes more than suggestions, words or even plans. In this article I want to share how I work with high growth organisations to create and sustain change and remove the blocks and active opposition to change within an organisation.

In today's flat rather than traditional hierarchical structures, change is delivered by specialist high impact teams are often using dynamic agile business techniques, rather than traditional command and control annual planning changes. That removal of traditional hierarchy, to create and deliver tailored change plans, provide quicker localised and holistic (mentored) support in creating change. That allows supported change to be sustained by a a specialist team, not necessarily in-house, (or line managed) providing flexible support. While this type of change provides speed it can also generate resistance, although a different type of resistance than the traditional command and control "tell em" approach. 

Director competence assessment tool, article by Richard Gourlay leadership and business consultant..



Resistance to change from either traditional or the more modern will occur if the leadership team do not have a proactive change strategy in place. Key to that strategy is he the ability to focus not on the change itself, but on the outcome of being able to make and sustain change, ensuring that the business unit is fit for purpose after the change step is made.

Here are a few ways which I have used to make change sustainable:-   


Leadership is vital in making change successful. Change in key areas such as culture (and let's face it most change  often about cultural change within a division) must be led by the leadership team. Leaders cannot delegate shifts in culture, either in traditional or modern structured organisations, they must lead it. It is more than just by-in needed by leaders for change to be successful, leaders must lead from the front. Cultures within a company are established, driven and supported by the leadership team, they set the pace, either at the corporate or unit level, so cultural change must led by the leadership.

Leadership often does not see that they set and define the culture, that also means that the leadership does not need to make changes within themselves. Changing the corporate culture from the top is an essential part of making change happen so that it is sustained.  Leaders must inspire, believe in and lead form the front from change to be more than a fashion or fad.      

1. Clear Vision from Change 

Change is ultimately not about the process of change, but the outcome. Successful change focus on the outcome it delivers, even if that change is only a stepping stone phase.  Creating and setting the post change environment, the outcome is a vital first step in making change successful.

Leaders must create and believe in their vision for their business. That belief has to be their focus, passion and end goal. Leadership is about leading, but how, where and why is fundamental for leadership to deliver change successfully.

2. Team Structure

Creating the change team, giving people the roles and responsibilities to create and deliver change,  stretching people and developing  the potential for personal and team development.  Developing people is key to retaining talented people and ensuring they fit with the future needs of the organisation. Good teams are diverse in the make-up and challenged to deal not only with today's business challenges but also stretched to be ready for tomorrow's potential challenges.  


3. Set Stretch Goals. 

Whether just benchmarking the competition or creating a completely new model for delivery, change needs to have goals, but don't talk about 5% better, change only happens if you stretch people to double the team's performance. Without the stretch you won't get real change.  

Leaders must set stretch goals to move their people out of comfort zone, by Richard Gourlay leadership and business consultant and NED .




4. Don't Over Plan The Change

Change does not work if you over plan it.  Change succeeds when it is both an evolving process of discovery and of inclusive involvement. If you only provide a total change package there is no buy-in to those on the ground (or the leadership and management team), so change becomes enforced and therefore resisted. The second element of change is that over planning also removes or reduces flexibility in response.  


5. Passionate Leadership 

Leaders must not only be the agents of change but also chief cheerleader, motivating and driving change consistently throughout the whole change process. Active involved leadership (passion) is not only about visibility but also to drive the leading players and pull up the slower, resisting or passive elements in making change.   Emotional leadership is an important part in creating and transferring believe in change.


6. Rationale Argument for Change

While emotions matters, so does rationale in carrying people forward. People buy with their hearts but confirm with their heads. The importance of rationale arguments, supported by either (or both) perception or hard evidence for change is an essential element in carrying the team forward with change.  
One key question any leadership team (or NED) must always ask is the business fit for purpose, today and tomorrow?  Yesterday's success is no guarantee for tomorrow's success. All markets change as customer needs and expectations evolve, as existing competitors and new entrants change or emerge to outcompete existing players. Change is therefore an essential element of business, but too many business leaders become complacent, before seeing that they are loosing profits, customers and market position. 
Change is always occurring, so good and great leaders focus on tomorrow's (note the deliberate plural), typically 3 horizons of tomorrow's business planning skills. A horizon, a future, is static, while tomorrow's retain the rolling nature of change impacting upon a business. Tomorrow's accepts change is inevitable and therefore making change is a logical outcome for leaders to focus on.   


7. Overcome the Depression Point with a Ladder

The pain point or depression point, is the low point in the change curve, the area where the change is under way, initial optimism has evaporated the pain of change is most apparent, because no tangible benefits are yet materialising. It is at this point that the leadership needs to be personally driving change by proving a ladder (simple steps) that deliver tangle progress. 
Making change a step is vital element in carrying people forward. Change takes people from a place of comfort and safety into places of uncertainty, so moving people in steps, where they can see where they have come from, where they are and what the next step(s) are will carry people through the uncertainty.  

8. Empower the Front-line 

For change to happen and to be sustainable the front-line of the change needs to be in charge of delivering change. This is difficult in traditional command and control companies, delegating power and authority to the front end of the operation is a challenge, but one which organisations must embrace if change is to be successful. for change to succeed the front end of any operation must feel its benefits and be empowered to drive it through to completion.

9. Allow A Culture of Trial and Error 

In both traditional and modern organisational cultures the most successful change happens when people can try new things, without fear of failure. That ability to have space in which to try changes, safe failure, allows people to try new ideas (within safe limits) without being judged. One successful measure of change cultures is to measure how many new ideas are generated, tried and tested.


10. Positive Solution Provision. 

Leading change is more than just saying well one and get on with it. Leaders must be a source of ideas, not necessarily answers but sources of inspiration, or of resources which can support change. Providing suggestions and fresh support, internally and externally to enable and support change throughout the whole process including post change to re-enforce and sustain change.  

Like to learn more then read further blogs, subscribe or  get in touch to to discuss your needs enquires@cowdenconsulting.com
Strategy The LEader's Role by Richard Gourlay leadership consultant and business advisor, NED and author

Richard Gourlay supports leaders develop their skills in creating and delivering strategic change.

Friday 4 January 2019

What to focus on when looking to sell your business.

What to focus on in selling your business. 


The time to sell your business is when you want out. The best time is when you have a new exciting project that you want to commit to. The optimum time to sell is when investors are excited by your sector and your business is in tip-top fighting condition within a dynamic market. 
This simple checklist should be at the heart of all business owners when looking to define their exit strategy timetable.  Buyers buy because of the potential they can see in making money from the business they are buying. They will pay a premium for a well-run company, with a motivated and dedicated management team, delivering efficient processes to loyal customers.     
What to focus on when looking to sell your business advice and tips by Richard Gourlay business consultant, Dumfries and Galloway Scotland


Buyers Expectations

Buyers look at potential business acquisitions through the lens of perceived financial risks and rewards. Buyers weigh up the potential rewards over 3 to 5 years both in terms of profits coupled with its potential asset value (share value) as their return on their exit plan. The stronger your key business drivers, from the market you operate within through to how well you deliver your products and services define the start-point of the business value. In essence how you manage the risks around and within your business combined with how well you maximise your opportunities is what buyers are prepare to pay 
The strength and quality of your key business drivers is critical to receiving the highest possible price. In every business there are a whole host of significant business factors, depending upon industry, but the key common ones are consistently recurring income streams from diverse sources, strong strategic business plans delivering sustainable growth, strong future profitable cashflow all being delivered by a strong management team with appropriate operating systems.   
Business owners today looking to sell need to build each of these drivers to maximize your company’s purchase price.

1. Business History

The first driver buyers look at is a history of increasing revenues and profits year over year for the past three to five years. Remember, buyers buy businesses to make money. They want to see the track record, based upon the old adage that the past is the key to the future. Your history reduces risk to buyers as it shows your position with your market, and explains your product / services in terms of income and returns and it shows consistency of you operations.   

2. Strategic Business Plan

The second driver, the strategic direction (business plan) demonstrates the businesses strong organic growth, what happens if the new buyers do nothing once they have bought it. This provides buyers with a base case or buying the business.  Is it sustainable without the purchase, or is the purchase propping it up, if so the investment is being salted away on running the business not in creating value for the investors. 

The second fundamental element of this driver is the buyers investment plans, or often called their the inorganic growth plan.  Their plan must create a compelling competitive advantage within the target market for scalable growth.  High-growth markets are key target for investors particularly where that can be coupled with multiple market development to accelerate that growth. So if your business operates across multiple sectors, or can be able to then it is more appealing to investors than one which operates within a single or limited market.   

3. Future Cashflow 

Expected future cashflow is the third major business driver of business value. Cashflow in all its elements, from profit generation to working capital and investment capital requirements (including any future CapEx) all fit into the mix which financial assessment will include. 
The future EBITDA, as this is assessment is expressed are all-dependent upon the business owners strategic business planning. Understanding your market from the macro factors through to the micro drivers all combine into a well throughout plan which demonstrates sustained profitable sales and market growth. The strategic business plan needs to thoroughly explain how your business is both organically able to grow but also how the buyer will be able to leverage enhanced growth through its investment.  

4. Operational Risk

The fourth major business driver is in operational excellence through a strong management team in place supported by effective operating systems. The more your business revolves around only you or another “key people,” the greater the perceived risk among buyers. If that person is the owner, then any sale will buy them in, so owners need to make themselves redundant within the business. 
A strong management team, from leadership through to operational delivery people, is an ideal buyer purchase scenario. So metrics such as a high quality recruitment strategy and low staff turnover are highly desirable. What buyers are looking for is a strong culture and a stable labour force for future growth.

Next Steps

If you are looking to sell your business then the first steps are to get some professional advice to see where they are compared to where they need to be. Owners need to understand the key business drivers, which they can influence and take steps early towards developing these to improve your business drivers. That will drive your business value upwards and begin the process of polishing your business, making it more attractive to potential buyers.  
Strategic planning is one of the most effective things that business owners can do to add value to their business. Like to learn more then contact us to learn about our strategic planning services enquiries@cowdenconsulting.com or learn more at www.cowdenconsulting.com/strategy

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