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Will Abbott has been a partner at Randall & Payne LLP since 2001. An Accredited Mindshop Facilitator (AMSF) he delivers a process to drive growth and profits, tailored to your goals.
In 2011 Will received the Mindshop High Achiever Award from his peers for his work with ambitious business leaders. |
The value of the average business has been limited for a few key reasons:
| • Most businesses have been structured and operated with the tax legislation in mind; profit has been kept low to minimize tax. |
| • Little effort has been invested in removing waste from the business. Owners generally have wanted to fund their life-style, and even their children’s life-styles, rather that invest in growth. |
| • The ability of some owners to manage a growing business has been limited and there has been a reluctance to learn about leadership or invest in consulting services to develop growth capacity. |
There are ten steps that can be used to maximize the value of a business and these are outlined below. These steps can be grouped into three distinct phases;
Phase 1 – Optimise Performance
Step 1 in this process is to improve the profitability of the business by removing waste. There is no point to putting more business through an incapable business and a key measure of how efficiently a business converts its sales is the profit of the business. One of the most efficient industries globally is the automotive component manufacturing industry and the lessons on how they remove waste can be applied to any other industry. The seven wastes program is used as a framework for a series of 8-week team cycles to enable employees to identify and remove waste from the organization’s processes.
Step 2 is to grow the business, as a positive trend line of sales growth can provide confidence that the sales process in the business is working well.
The sales improvement process involves:
• Reviewing the product and market segments,
• Reviewing the price points,
• Training in sales,
• Developing a contact program, and
• Conducting a detailed competitor analysis.
At the end of this first phase the business performance is optimised, cash is created to fund the next phase of the process, and the sales and profit trend lines show a continuous and predictable improvement. It is at this point that phase 2 can be commenced.
Phase 2 – Polish the Business
In this phase we make sure that all the elements of a great business are in place. There are four distinct steps in this phase.
Step 3 is making sure that, wherever possible, the future revenue of the business is locked in, preferably with long-term contracts. A buyer of the business needs a degree of certainty of the five year revenue outlook so contracts with customers need to be robust.
Step 4 is to establish a management infrastructure that removes reliance on the owner. The management skills and experience (and processes) to lead the business in the absence of the owner need to be in place.
Step 5 is to protect the brand of the business. Mechanisms for this include the web-presence, social media, patents, and other intellectual property protection.
Step 6, is to reduce the debt levels of the business in order to clean up the balance sheet. The cash created in step 1 can be used to retire debt and remove loan accounts.
At the end of phase 2 the business looks as good as it can and it is now that the sales process can formally begin.
Phase 3 – Creation of the Sale
Step 7 in the 10 step process is to find a buyer who “needs” to buy the business. This is the key success factor in maximizing the sales price. Ideally several potential buyers have been identified at this point and an analysis of why the business is essential for each potential buyer is carried out. This analysis often requires changes to the look and feel of the business. The information gained from the analysis enables a specific sale process for each potential buyer to be developed and implemented.
Step 8 in the process is to make sure that the negotiation process goes well. Often the business owner needs to be coached on their role in the sale. The psychology of the sale process must be clearly defined and followed. There is no point in having built a valuable business and then handling the negotiation of the sale badly.
Step 9 is part of planning the sales process and involves anticipating all the likely objections raised by the buyer and their value-reducing tactics in the sales process.
Step 10, the final step, is to manage the risk in the sales process. We use a Failure Mode and Effect Analysis (FMEA) tool to control all identified risks.
Form more help email wja@randall-payne.co.uk or if you just want to have a chat about what we can offer,
call me on 01452 723377.
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Randall & Payne is a brand name of Randall & Payne LLP. Registered in England & Wales number: OC345710.Rodborough Court, Stroud, Gloucestershire GL5 3LR.
Unless otherwise indicated we use the word partner to refer to a member of the LLP. Registered to carry on audit work and regulated for a range of investment business activities by the Institute of Chartered Accountants in England and Wales. A member of the ICAEW Practice Assurance Scheme. Google: Tax, VAT, Corporate Finance, Management consultancy, business advisers, accounting, business planning, business advice, accountants, accountant, adviser, Gloucestershire. Site by IsaacPartnership |
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