What’s Your End-Game Equation?
- November 21, 2015
- Jeremy de Constantin
- No comments
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:
- Set a compelling Vision for your company that preserves what’s core and simultaneously aligns everyone with your end-game.
- 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).
- 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.
- If selling, or seeking investors, build a funnel of prospects as you would a sales funnel.
- Make sure you have what we refer to as a “bankable team.” Will an outside investor see your top team as bankable?
- 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.
- 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.
- Ensure you have a good balance of products and customers, with no risky dependencies.
- Finally, from a customer perspective, is yours a must-have company in relation to your competitors?
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:
|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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