Understanding Business Value Drivers


Two obvious and essential drivers of business value are business profits and growth potential, but eliminating risk and increasing the quality of your business can also make a dramatic difference in the value. Owners should review all facets of their businesses for improvement. There are three common and critical areas that deserve scrutiny regardless of industry. Here is a partial list of best practices in each of these areas:

Human Capital:

▪Recruit and hire a talented management team (COO and CFO at minimum)

▪Cross-train to secure backup for key employees and their duties

▪Implement incentive plans so key employees will stay before

▪Benchmark your compensation and benefits to be sure they are competitive

▪Take HR compliance seriously

▪Upgrade your advisors as you grow

Financials:

▪Consider a Quality of Earnings engagement to ensure the quality of financials

▪Limit owner personal expenses and document them

▪Resist the temptation to depress earnings and minimize income taxes

▪Set up proper internal controls

▪Be sure you understand your financials and tax returns

Information Technology:

▪Use state-of-the-art software to handle operations and reporting

▪Set up proper access controls for ALL employees

▪Establish multi-level backup and protection from malware and invaders

▪Ensure compliance with privacy and other regulations/requirements

▪Develop a disaster recovery plan

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