This Week@Work.
Insights from business owners, for business owners on issues of business growth and value.
Insights from business owners, for business owners on issues of business growth and value.
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For deeper insights into building a business into a wealth-generating asset, read Pavlo’s first book: Sweat Scale $ell, which is packed with stories of business owners who have gotten this right, as well as practical growth insights. To understand how to build a business to thrive in change, read Reset Rebuild Reignite.
Kate has extensive experience in change management for organisations of all sizes and her passion for helping people and organisations to excel has delivered meaningful results for the clients she works with at Aurik.
Aurik co-founder and CEO Pavlo Phitidis unpacks his 30:30 principle – business owners spend 30-plus years building their businesses and only 30-odd hours selling them, when the time comes. And it shows in the value of their businesses when it comes to exit.
Standing out in an increasingly commoditised, competitive environment is critical to finding, winning and holding clients. The key to getting this right is to understand with crystal clarity who you serve, and what problem you solve for them.
In a competitive world, growth is vital for survival. If your company is not growing, it’s dying. You also need to maximize your economic prime’s impact as a business owner and become the best you can be to maximize that return-on-time during your prime.
Successful growth sees revenues and profits increase on a consistent, reliable basis. That would be fine in a less competitive world. To maintain and grow your market share you need to grow well above industry growth rates. To get this done, need to be investing 70% of your time on NLG.
We will work with you
Working with you and your team, we will:
Structure determines behavior, which generates an outcome determined by the design of that structure. Simplifying the design of your business scales it. Successfully done, your path to accelerated growth will deepen value and let you spend your time where it counts most, next-level growth
Succession of a business is fraught with emotional and practical challenges, whether in family businesses or across the professional services sector. Success is rare, with 73% of succession attempts failing at a significant cost to the founders, successors, employees, customers, and suppliers.
For family businesses, failure costs both generations the family’s wealth-generating and emotional wellbeing. In private companies, it erodes or stalls the retirement wellbeing of the exiting generation and robs the next generation of their future wealth creation path. All lose.
If you’re exiting, your successors will pay you out over time, and you need to be confident that they can operate, run and grow the business without your input. Should they raise capital to acquire their shares, they’d need to meet the requirements of a funding source.
We work with you to develop a structured succession plan that is practical and measurable to
Working with you and your leadership team or family members to:
An inclusive, structured, time-based engagement to reliably handover in a risk-managed process, the responsibilities of the business operations and strategy, align the expectations between the exiting and succeeding generation on the company’s future direction plus establishes the framework for the transfer of responsibilities while ensuring facilitated communications, the use of data to moderate and guide decisions and the development of respect between the generations. Allows for the alignment on valuation, terms of payment, conditions of handover to preserve the wealth payout for the exiting and wealth creation path for the succeeding.
Wealth generation for a company owner requires three acts of leadership, each with its focus and direction.
Make money – build a business that generates organic growth to release your time to focus on next-level growth
Grow money – identify and implement next-level growth initiatives that accelerate revenue growth and deepen profitability
Protect money – lock in the 5 levers of value to secure a successful, premium exit that monetizes years of dedication, care, risk, and investment.
While we spend 10-15-20-30-40 years building a business to generate income that we reinvest to win greater returns and a premium sale and exit, 94.6% of companies started fail to sell. They close at a high cost to the business owner, their family, and employees. Of the 5.4% that do sell, 68% make significant concessions on value and the terms of sale, eroding the value of legacy.
Every business develops through stages. In the early days, income generation is vital. It relies on activities that trap you in an income generation mindset and habit, preventing your company from generating income without you. In effect, this makes your company a job, and a job is not salable. To be sold, you must build your company into a tradable asset meeting 3 criteria; income growth, capital growth, and independence of the business owner.
Planning – Businesses are not bought; they need to be built to be sold. There are only 2 destinations for any business: a sale or closure. Not planning your eventual exit prevents you from understanding how an acquirer buys a company and what you need to do to build one that meets those requirements. By not developing the 5 levers of valuation and exit in your business today for that future event reduces your salability and puts you on the back foot of a price taker should a buyer make an offer.
Being caught up in daily, weekly, monthly operational activities traps you in an operator mindset. This prevents your progression to an investor mindset allowing you to build for a sale instead of building for simply income generation.
Time – too much time caught up in your business’s daily, weekly, monthly activities prevents your ability to switch hats from operator to investor. It also impedes your ability to understand the investor/acquirer mindset and then act to build a product they’d want to acquire. Time scarcity often appears in comments like “I will deal with it when I’m ready to sell.”; “I’m too busy to focus on this right now. We’re putting out fires, which takes all my time.”; “I don’t need to plan. I get letters all the time from potential buyers so that selling will be easy.” and”I’m not ready, so planning isn’t necessary.”
Valuation – the circumstances leading up to a sale event are less strategic and more circumstantial, including moribund or low growth, a significant work effort or investment requirement to maintain and sustain the business, burnout, health, boredom, and relationship pressures, amongst others. This motivates a valuation approach driven by a business owners emotion and necessity, not math. And valuation is very much about math. Five levers or variables influence the valuation of a business and the terms of exit. Waiting for the event that drives a poorly planned exit to occur prevents your business from being ever-ready for a premium exit.
By building an Asset of Value today, you can have your cake and eat it tomorrow. An AOV meets the criteria of a tradable asset, locks in the 5 levers of value, and places you in a position to sell in the future
We will work with you
Working with you and your team, we will:
A business built into an asset of value allows you to have your cake and eat it. Should you wish to exit, and opportunity to do so a premium valuation on acceptable terms and conditions. Should you delay your exit, your business will be positioned for growth, enabled by a simple, smart growth system operated by a purposeful team. The results will see organic growth and next-level growth initiatives grow revenue while deepening profits. Ultimately, the years of risk, investment, and sacrifices can now be monetized or sweated further to maximize exit valuations or wait for optimal exit timing.