Saturday, September 21, 2013

Take a Vacation to Increase the Value of Your Business

Building a business can be very demanding and extremely time consuming.  You may be accustomed to working long hours and overseeing all aspects of your company’s operations.  However, if you want to build a business for a successful transition you may have to work smarter and not necessarily harder.
According to the researchers at the "Sellability Score", companies that operate smoothly without their owner for a period of three months are 50 percent more likely to get an offer to be acquired when compared to more owner-dependent businesses. [1]
This was not surprising to me as a business valuator given that a key value driver for most businesses is economic dependence, in particular dependence on the company’s owner.  Owner dependence will be a major area of investigation for potential buyers as they will want assurance that your customers, suppliers and employee/management team will remain with the company after the owner is gone.
There is no better reason for taking an uninterrupted vacation than to see how your company performs without you.  The better your company runs without you, the more valuable it will be when you’re ready to sell.
In order to assess your company’s ability to handle your absence, you should start by taking a short vacation, leaving your computer at home and turning on the out-of-office notification.  Upon your return, you may find that your employees got resourceful and found answers to a lot of the questions they would have asked you if you had been available.  If that happens, that’s a good thing, and a sign you should start planning an even longer vacation.
There is no doubt that you will also come back to an inbox full of issues that need your personal attention.  Instead of busily addressing each problem in a feverish attempt to clean out your inbox, you should slow down and look at each issue through the lens of a possible problem with your: i) people; ii) systems; or iii) authorizations. 
1.  People

Start with your people and answer the following questions:
  • Why did this issue end up on my desk?
  • Who else is qualified to answer this question and why was that person not consulted?
  • If nobody else is qualified, who can be trained to answer this question in the future?

2.  Systems

Take a look at your systems and procedures.  Could the issue have been dealt with if you had a system or a set of rules in place?  The best systems are hardwired and do not require human interpretation.  However, if you are not able to create a technical fix, then at least give employees a set of rules to follow in the future.

3.  Authorizations

You may be a bottleneck in your own company if you alone control the spending.  Employees may know what to do but are simply not authorized to address the issue.  You need to give this more thought. Here are some things to consider:
  • Put a customer service rule in place that gives your front line staff the authority to make a customer happy in any way they see fit provided it could be done for under $100;
  • Authorize certain employees to spend a pre-determined amount with a specific supplier each month without coming to you first; or
  • Give certain employees an annual budget, an amount they can spend without seeking your approval.
Given the fires that may need to be extinguished after the fact, taking a holiday may seem more of a hassle than it’s worth.  But if you transform the aftermath of a vacation into systems and training that allow employees to act on their own, you will find the vacation is worth what you paid for it many times over: your business will increase in value as it becomes less dependent on you personally.
For more information about enhancing the value of your business or to learn more about our VSP Exit Starter Program, contact us at
[1] The Sellability Score is an online questionnaire that allows a business owner to assess the "sellability" of the company. If this is of interest, you can find out your company’s Sellability Score:


No comments:

Post a Comment