Leadership and Management

There are many drivers that go into creating value for your business.  If you are looking to sell your business at some point in time, you need to view the business through the lens that a buyer would see it.  When you do this you look to remove all the risk from the business.  The less risk in the business the higher the multiple used to determine the sale price.

One of these drivers is the leadership and management team in place.  When a buyer looks at your business they will look at it without you at the helm.  So you need to start with a job description for yourself.  Being an owner is not a job description.

Start by detailing out exactly what you do, how much time you spend doing it, then look around you and determine who else in the organization can do what you do.  If there is no one, then consider adding staff.  You need to be able to go away for a couple of months at a time and not have the business skip a beat.  Then it would be ready for a sale.

One of the traits I often see in business owners is the need to control all the decisions.  This occurs even when they try to delegate.  The problem surfaces when you delegate authority to a staff member and then an employee goes around this person and comes directly to you.  What do you do?  If you solve the problem then you have removed the authority from whom you delegated it to.  If you send it back then you go a long way to creating an environment and a culture of delegation and empowerment.

What is the strength of your leadership or management team?  Are their responsibilities clearly laid out?  I like to put a job description into 4 distinct categories; Role; Responsibility; Authority; Accountability.  If you had jobs laid out in this manner it is real clear what needs to be done by everyone.

In a value creation model having a strong culture, clearly defined missions, visions and values, that are enforced, goes a long way to removing risk and increasing the multiple used to value your business.