Tactical and operational excellence
When you have a business that is tactically excellent, you have often put together a company that provides a nice job that pays a very nice salary. If you were to step away from the business for an extended period of time, your business would probably work less well and may even go out of business. Increasing the value of your business requires tactical excellence first—that is the price to play in the world of business value creation.
Strategic excellence
To create value in your business, you need strategic excellence as well. We call the business that has both tactical and strategic excellence a Stage 2 business. With strategic excellence you will develop the personal capacity to spend time on things that are important, but not urgent. This is the green zone of time management, where you are controlling your business and your business is not controlling you.
Making the owner irrelevant to the business.
You want to create a business that will run well whether you are there or not. Once you have done this you have a business that others would want to own. When business owners make themselves operationally irrelevant, they create personal capacity for changing what they do at work. The owner can now start spending time on strategic activities which can increase the value of the business in two ways. First, the profits and cash flow from the business should improve, and second, a potential buyer will not only pay for the cash flow the business creates, but also the technology for creating the additional cash flow.
Identifying the financial and operating levers that can make your business more profitable
If the owner of the business learns not only what the intellectual capital of the business is but also learns how to charge for that intellectual capital, they can sometimes double or triple the value of the business. If the owner learns how to segment the businesses customer base and only allow its sales department to sell to the most profitable Customers, the business value will increase. If the owner of the business learns to segment the business into very profitable niches and then finds ways of finding new niches, they may increase the value of the business, often by a factor of two or three times.
Selected Tools:
Open Book Management
Total Quality Control
Key Metric Bonus Program
Bonus Compensation Design
Non ESOP/ESOP Plan
Key Metric Measurement Program
Client Profitabiity Measurement
Product Line Profitability Measurement
Client Marketing to AAA Clients
Identifying Intellectual Property
Sales Metrics and Controls
Sales People Compensation
Identifying Niches
Articles
Using Key Metrics to Compensate and Improve Your Business
Hiring for Energy Unit Analysis - A Primer in Hiring Practices
The above tools, techniques and resources are listed as examples. Your Stage2 Advisor will work with you to identify the right strategies for you depending on your specific life goals and financial goals.