Checking in on your company

Checking in on your company

Departments - Cream of the Crop

2019 is still young, so use this time to make sure your company is running smoothly.

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January 31, 2019

Cream of the Crop features a rotating panel from the Harvest Group, a landscape business consulting company.

Whether you plan to harvest the fruits of your hard-earned labor in 2019 or in another five years, use your New Year’s energy to start working on your plan for best results. Start with a reference point for your company’s value today, identify actions to add value to your company going forward and explore your options for transitioning the business. This time next year, you will be glad you did.

First, get a market valuation for your company as it stands today. You will gain a “ballpark” number for the company’s value if sold in today’s market. (Not to be confused with a business appraisal, which can be used for legal reasons). The report includes assumptions used to make the valuation and will indicate areas to focus on to increase the company’s value.

Second, how healthy is your company? Are you optimizing your company’s potential? Growing too fast or too slowly? Potential buyers for your company will use the same factors as you do to evaluate the company. These can include:

  • positive trends in sales, net income and margins over a period of years
  • quality of clients and long-term retention
  • leadership bench-strength
  • quality of employees, culture and training
  • business location, fleet and equipment
  • market size and potential

What’s your “grade” on these? Which ones should be improved? Ideally, have a third party give you some honest feedback. In my experience, most owners think their companies are stronger than they really are. Independent surveys and/or a trusted adviser can give you an assessment of your strengths and weaknesses with an eye to improvement. It’s better to know now so you can get to work on key issues.

Measure your performance on an ongoing basis. Smart companies create a dashboard to measure key performance indicators (KPIs) and make necessary adjustments. KPIs will include financial measures as well as input from HR, client satisfaction surveys and operations.

 

Third, determine what your options are for transition. Do you want to transition to a family member or insider, or sell to a third party? Have you planned for after the sale? How much money will you actually receive from the sale? Pre- or post-tax? Or do you plan to strip out as much cash as possible and liquidate at the end of some time period?

All of these are valid options and will have aspects that can be managed for best results. Each will require some exploration with your adviser.

Having a plan will give you peace of mind as you move ahead.

The best time to plan for the transition of your business is well before you want to take action.

Make a plan in 2019 for stronger, healthier business results toward your “harvest” of maximum value for your hard work.

Alison Hoffman leads acquisitions for the Harvest Group. She is a former senior vice president of operations at a NYSE company.