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What’s Your End-Game Equation?

What’s Your End-Game Equation?

Have you seriously considered your company’s end-game? No matter what the business, it demands an end-game. More specifically an end-game equation!

If you have no destination in mind and you just float around aimlessly, you could end up anywhere. Hardly a sensible (or fair) strategy when so many others depend on the business for their livelihood and future.

I ask my audience a simple question whenever I present at CEO forums. “Who in the room has a strong end-game?” Few of those present ever put up their hands. So, based on this less-than-exhaustive research, I suspect you too haven’t yet considered your end-game strategy.

Be aware that an end-game is not necessarily an exit. It could be the introduction of equity capital to grow your business and take some money off the table; it could be the succession of your son or daughter to run the company, or it could be a management buyout.

When first engaging with a client I devote a good chunk of time formulating with them their end-game equation. Challenging them to consider a mix of factors, this important process has probably been avoided for two reasons: not knowing where or how to start, or not having a sound, independent opinion on how best to achieve their desired outcome. Many times, with older owners, the end-game might include a slightly diminished – but no less important – role in the running of the business.

I am of the opinion that there are two probable causes for inadequate, or absent, end-game planning: being too tied-up in operational issues, and/or a head-in-the-sand attitude. Too few owners take the time to work on important issues such as business strategy – and even fewer still pay any attention to charting a viable end-game strategy.

Chief among the consequences of this – diminished business value! Less reward for all the hard toil.

 Retirement is very expensive – if your end-game is retirement, it is imperative that you maximise your end-game price.

Here are a few pointers that should help you on the road to having a stronger end-game:

  1. Set a compelling Vision for your company that preserves what’s core and simultaneously aligns everyone with your end-game.
  2. Engage with someone you know, like and trust to discuss your end-game, then formulate your end-game equation as discussed above. (This person should not be involved in the day-to-day matters of your business, and should be counted on as much for their astuteness as their forthrightness).
  3. Take time out (monthly or quarterly) to work on your business to drive up your company’s valuation. deConstantin Business Advisory have a tool to compute and track company health and its valuation, on a monthly basis.
  4. If selling, or seeking investors, build a funnel of prospects as you would a sales funnel.
  5. Make sure you have what we refer to as a “bankable team.” Will an outside investor see your top team as bankable?
  6. Assess whether your company has financial strength: good margins, a healthy balance sheet and a competent financial controller. Have a third party do an external audit if you have any doubts.
  7. Measure your customer loyalty with a metric like the Net Promoter Score – an astute investor, financier or buyer will look for a strong result on customer loyalty.
  8. Ensure you have a good balance of products and customers, with no risky dependencies.
  9. Finally, from a customer perspective, is yours a must-have company in relation to your competitors?

Self-Assessment

Our self-scoring audit will rate the current strength of your end-game, and calculate how long it will take you to get to a strong end position. Drop us an email if you’re interested in finding out more about this Assessment tool.

The scoring matrix is as follows:

Score Result
45 + Excellent score. Your company has an exceptional end-game strategy.
30 – 45 Your company needs approx. 12 months of business value optimization before it’s end-game is strong.
Below 30 2 – 3 years of optimisation and possible management changes are required before the company can reach a strong end-game.

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