Driving Value

By: John Hotson,
Business Transition Alliance Co-Founder

As business owners begin the inevitable process of transitioning their business…. whether that means selling the business outright, handing it off to family members or perhaps just stepping back and providing a guiding hand….they ultimately have to come to terms with what truly drives the value of their business.

Identifying the things that build value, and making that transferable to the next generation of owners can be a challenging undertaking.

A lot has been written about the importance of metrics, performance ratios, balanced scorecards….and what is a KPI anyway? While all of these are useful measurement tools that can track progress and improvement, they themselves are not the things that drive the value of the business, from a prospective buyers point of view.

Value drivers are rooted in organizational routines.

Routines such as the management and maintenance of key assets; routines that cause activity patterns that focus on building recurring revenue streams; routines that are based on how effectively organizations deploy their resources to maximize cash flow.

Knowing what drives value helps a company align its behaviours and activities inside the company with the expectations and value perceptions outside the company.

It sounds simple, and it is. But simple does not always equal easy.

reference: Value Maps by Warren D. Miller

About John Hotson:

John is a seasoned marketing and communications professional and running addict. He has worked as both a business owner and advisor to owners who are committed to improving the value of their business. John is a principal of Clearwater Corporate Communications and a co-founder of The Business Transition Alliance.

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