It s Time for Your Business Check Up!

Transcription

1 It s Time for Your Business Check Up!

2 Business Check Up Part one Diagnose the current status of the business Is it healthy or in big trouble? What are the trends your business and your industry are experiencing Part two- Forward planning and preparation what can you do to invigorate and breathe life and vitality in your business?

3 Diagnose the Current Health of Your Business 1. Make sure you have current, accurate financial statements 2. Give yourself a thorough financial exam a. Spend some extra time reviewing your financials b. Calculate your key ratios c. Compare yourself to your industry and yourself d. Identify your biggest weaknesses and strengths e. Example

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16 Diagnose the Current Health of Your Business (cont.) 3. Review your own Key Performance Indicators (KPIs) What you can t measure, you can t manage When performance is measured, performance improves. When performance is measured and reported, the rate of improvement accelerates. Financial and non financial indicators that tell you how you are doing Leading Lagging

17 Understanding KPIs Leading indicators activities which will improve future results Innovative and motivated work force Process quality Customer satisfaction Activities leading up to sales Lagging indicators measures of completed transactions Sales Cash flow Example

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19 Diagnose the Current Health of Your Business (cont.) 4. Look for cancer in your own business Unwanted, unhealthy growth Do a customer, product or line of business ranking This a low hanging fruit that many businesses can use to improve their profit Sometimes it is as easy as NOT doing something However, it takes discipline and courage to face cancers and unprofitable customers 5. Review the health of your lending relationship

20 Shift from the basics to a focus on getting healthy 1. Begin with the end in mind what do you need and want from your business? 2. What actions do you need to take to achieve the purposes of your business? 3. The Four Ways to Grow Your Business 4. Looking at the Big Picture a model for the future

21 Think Forward for Growth, Profitability and Success 1. Begin with the End in Mind What do you want your business to do for you? Depends on stage of life and personal goals May depend on the stage of the business One of the primary purposes of a business is to provide not just income, but to increase the net worth of the owner Most business owners ultimate goal is to sell their business and it is the biggest asset they own, by far

22 Begin with Your Own Financial Objectives What does your own personal financial picture look like? How many years do you want to keep your business? What will it take for you to retire the way you want to? Example financial plan

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25 What is your business worth? And what will make it more valuable? The answer.. It depends! What does it depend upon? Your industry Your business Your method of transition Other factors

26 Exit Channels Strategic Buyers Financial Buyers Related Buyers Pure Product / IP Sale Hybrid PEG Add-On PEG Financed MBO Sale / Merger to Strategic JV to Staged Strategic Sale PEG Platform Buy-out PEG Staged Re-Cap Leveraged MBO (ESOP?) Long-Term Staged MBO

27 Begin With the End in Mind Business Value Scorecard How can you prioritize all that needs to be done to improve your business? Have a clear picture of what you want your business to do for you, your employees and customers Get specific about your end objectives Example Business Value Scorecard

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29 2. Strategic Planning Working On Your Business, Not Just In It Answers three important questions: 1. Where is your business now? 2. Where does it need to be to meet your needs and goals? 3. What actions are needed?

30 Vitamin Supplements 3. Profit Improvement Potential There are only 4 ways to grow your business 1. Increase the number of customers 2. Increase the value of each customer transaction 3. Increase the frequency of customer transactions 4. Increase the effectiveness and productivity of the business and its processes That seems pretty basic, but focusing on specifics can make a huge difference in Profit Improvement Potential

31 Profit Improvement Potential

32 4. Look at the Big Picture Financial Modeling and Cash Flow Forecast Thinking Forward is what good business owners need and want A financial model provides a picture of the future that can help clarify what needs to be done, what the critical success factors are and what the results will look like A financial model combines the power of looking at the big picture together with the specificsthus creating a viable action plan Example financial model

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34 Now, it s time for your business check up! 1. Diagnose your current situation 2. Make plans for your business to grow and be healthy

35 Thanks to the Better Business Bureau for hosting this event Questions? Contact Kurt Kofford