February 18, 2014In the last company newsletter, we asked our readers for their input on various questions regarding their thoughts on values now, in the future, and succession planning. Of the respondents, a little over ½ thought they knew what the value of their business was. Interestingly, there was still almost ½ that did not! I find this interesting since the owner and staff in my opinion should have a keen interest on securing the owner's most valuable asset if not growing it. We always suggest that an owner get, at a minimum, a "limited valuation" once every other year so they know what their value is and how they can increase that value. The next question asked was if the business had received a valuation in the last three years. The results showed that less than half had a valuation done on their business. I believe a valuation is critical to make sure you know where you are today with your most valuable asset. Of the respondents, further questioning revealed that 83% felt that their business would be more valuable in the future. This is great news and a strong reason to stay in the business! A few respondents, however, felt that their business would be worth less in the future and I would hope that they are seeking ways to determine their current value so they can measure and create strategic plans to correct that trend. If the outlook is still bad after performing those steps, then obviously it may be time to consider selling in the near future. One of the other questions with a rather interesting level of responses was the question, "Have you started a succession plan?" Of the responses, 66% said no! Interestingly enough, I think a business owner should ALWAYS be working on a succession plan whether that means to begin a plan to transfer ownership, or simply succession of key roles so that the culture and the service standards are never in jeopardy when attrition of key staff occurs. I call this, "Addressing the 'hit by the bus' issue". We always want to create good redundancy in roles and procedures so that our service standards never falter, but rather continue to improve. To conclude, knowing where you've been and where you are through conducting a business valuation will help you know where you want to go and how you want to get there! (strategic plan and succession plan).