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How to Increase the Value of Your Business by 71%

How much did your home increase in value last year?  Depending on where you live, it may have gone up by 5% to 10% or more.

How much did your stock portfolio increase over the last 12 months? By way of a benchmark, according to Market Watch, the Dow Jones Industrial Average has increased by around 16% in the last year. Did your portfolio do as well?

Now consider what portion of your wealth is tied to the stock or housing market, and compare that to the equity you have tied up in your business. If you’re like most owners, the majority of your wealth is tied up in your company. Increasing the value of your largest asset can have a much faster impact on your overall financial picture than a bump in the stock market or the value of your home.

I’m fond of asking my clients, “Where do you want to be in 20 years?” I’m always interested in the answer and I’m always surprised at the questions I get back in response. The point I’m driving at is that no matter where you want to be, the value of your business is the asset that will most likely fund that dream.

Let me introduce you to a statistically proven way to increase the value of your company by as much as 71%.  Through an analysis of 6,955 businesses, we’ve discovered that companies that achieve a Value Builder Score of 80+ out of a possible 100 offers received to buy their business that are 71% higher than what the average company receives.

How long would it take your stock portfolio or home to go up by 71%? Years, maybe even decades. Get your Value Builder Score now and you will be able to track your overall score along with your performance on the eight key drivers of company value. Like a pilot working his instrument panel, you can quickly zero in on which of the eight drivers is dragging down your value the most and then take corrective action.

Your overall Value Builder Score is derived from your performance on the eight attributes that drive the value of your company.

  1. Financial performance: your history of producing revenue and profit combined with the professionalism of your record keeping.
  2. Growth potential: your likelihood to grow your business in the future and at what rate.
  3. The Switzerland Structure: how dependent your business is on any one employee, customer or supplier.
  4. The Valuation Teeter Totter: whether your business is a cash suck or a cash spigot.
  5. The Hierarchy of Recurring Revenue: the proportion and quality of automatic, annuity-based revenue you collect each month.
  6. The monopoly control: how well differentiated your business is from competitors in your industry.
  7. Customer satisfaction: the likelihood that your customers will re-purchase and also refer you.
  8. Hub and spoke: how your business would perform if you were unexpectedly unable to work for a period of three months.

To find out how you’re performing on the eight key drivers of company value and start your journey to increasing the value of your largest asset, get your Value Builder Score now:    SCORE-MY-BUSINESS

I’m always interested in where you’ve been as much as I’m interested in where you’re going. So, contact me and let me hear your story. Let’s see what we can do together.

Blessings,

Dave

Smartest Person in the Room

Back in my design construction career, it was always important that you had a really smart and fully engaged team.

I guess that applies to all careers, doesn’t it?

Well, it’s especially important in technical fields where a lot of times the designed or engineered solution doesn’t quite fit the actual field condition. If you’ve ever been involved in any type of construction or remodel, you know what I’m referring to. The main solution to this is to involve really qualified and experienced professionals. And the key element is “experienced.” The more times they’ve been there, done that, and seen that, the better your project is going to be.

One of the key characteristics of the best experienced people is their ability to say, “I don’t know.” Or “I’ve never seen that before.” Or something along those lines. The worst ones try to wing it and go out of their way to not admit their ignorance or appear to be all knowing when in fact, they are just as ignorant of the situation as everyone else. At this point, I’m trusting that you’re already saying, “Dave, this applies to every field and endeavor.”

You’re right, it does.

I don’t know about you, but I’ve discovered that the person who always wants to be the smartest one in the room, is not always the wisest or the one I want to look to for the final answer. My rule has always been that old axiom, “if you ever find yourself being the smartest person in the room, then you’re in the wrong room.” Applying this to everyone in the room makes me appreciative but wary of the person who always feels and acts as if they have all the answers.

Trusting that you’re not this person, but you have to deal with this person, what do you do when they try and dominate every meeting with their expansive knowledge? It’s a standard problem that every leader has to deal with. The best answer is to always be working toward engaging everyone in a meeting. Even the most introverted or quiet ones. Fact is, many times, they are the ones with the answers – or better still the best questions.  But you’re going to have to draw it out of them with engaging questions of your own.

I wish I could tell you the perfect answer to dealing with the smartest person but I still haven’t found the perfect answer (to anything for that matter.) I can tell you what I have used that has at least relieved the situation to a degree:

  1. Always allow the person his or her opportunity to contribute (You’ll not be able to avoid this so dive in and accept the fact.).
  2. Once it appears that they are going to attempt to answer every question or make the first response, say something like, “Thanks for your input, let’s hear from someone else” (And here you might request input from someone specific – maybe even that quiet person that seems to never say anything.).
  3. Continue following this process throughout the meeting. You may never fully quiet the smartest person, but you can sure indicate to the rest of the participants that you are determined to get and value their input.
  4. Finally, if necessary, have a private discussion with the individual and ask them to help you draw out input from everyone else by not being so quick with their responses.

If you’ve discovered another process, I’d like to hear from you. For sure, I’m not the smartest person on this subject.

Blessings!

Dave

I or We?

Do You Say “I” or “We”?

According to a study led by Dr. Matthias Mehl, an Associate Professor in the Department of Psychology at University of Arizona, on average we speak about 16,000 words per day.  Words are important.

As a leader, what are you saying to your team, to your employees, to your company?

How are you saying it?

When you talk to your team, do you say “I” or do you say “we”?  Think about that for a minute.  What we say reflects how we act and what we do.

“I” leaders put themselves first and, as a result:

  • Put the team second
  • Decrease morale
  • Promote selfishness

“We” leaders put the team first:

  • Put themselves second
  • Inspire and uplift
  • Promote servant leadership

With a shift from “I” to “we” requires leaders to put the interest of their organization ahead of their own self interest.  When this occurs, the company has a greater chance to succeed as leaders empower and engage their employees to be their best.

In the book “Good to Great,” author Jim Collins calls these people Level 5 leaders.

What distinguishes Level 5 leaders from other leaders is that they channel their ego needs away from themselves and into the larger goal of building a great company. It is not that Level 5 leaders have a lack of ego or aren’t interested in themselves. Indeed, they are incredibly ambitious.  Yet their ambition is first and foremost for the institution, not themselves.

The failure of business leaders to make this first shift from “I” to “We” is the single most inhibitor of a company’s long-term, sustainable performance.

Michael

Finding and Using a Guide

“Have you been to Europe?”

“Where did you go?”

“How did you go?”

A friend of mine was recently asking several of us these and many other questions about his family’s upcoming vacation to Europe. I was doing the same thing about a trip to Denver recently.

In every case the exact answer to each question and much more can be obtained through a simple Google search. Yet, that’s not what was being asked. Specific facts weren’t being searched. Advice and confidence were. Do you see it? It’s surely not that all of us don’t know how to look things up on the internet. It’s that we are looking for someone that we know and trust who has gone there before. We’re looking for wisdom, knowledge and confirmation in our decision. We’re looking for a guide. Someone who’ll lead or point the way, so we can maximize our enjoyment and avoid unnecessary mistakes.

Here’s a question for you. When we’re so open and willing to seek the advice of our friends in order to guide us through important personal decisions, why don’t we do the same thing for important business and career decisions? When we’re entering into unknown territory in business like a new market, a new process, or even a new type of customer, why aren’t we taking the same approach? It’s true that in the business decision we’re looking for specific answers, but the real truth is we’re doing the same thing as in the personal example. We’re looking for wisdom, and knowledge from someone who will guide us through the process and help us maximize our efforts and avoid unnecessary mistakes.  Sometimes you can get that guide from a business friend or acquaintance like your accountant, banker or attorney. But in all cases, you’re looking for someone who’s been there before.

When I first entered into the consulting world, I had an associate that cautioned over and over again about giving our services away for free over a casual conversation. I was never comfortable with that advice and have come to realize just the opposite.  These conversations can sometimes quickly help someone who is just simply looking for that word of encouragement and get them back on track. (Like my friend who just wants to be confident in his decisions booking his trip to Europe). At other times, they can also reveal a much more serious need that our team can help with. Whatever the situation, I’ve discovered that I’m the one blessed with every opportunity to help.

If you have found yourself in a business situation where just talking it out with someone who’s been there and done that, I’d be pleased to listen. Who knows? You might just find yourself freed up to go to Europe.

Dave

They didn’t tell me anything new, but…

Sometimes the answer is right in front of us we just need to talk it through or have it told us in language we understand—and may have heard before.

Sound familiar?

So it was with Michael Smith at MD Engineering.  He had a successful, growing company, but something was missing.  And it was really in front of him all along.

“The New Paradigm Advisors (NPA) team came in and really spent time with us,” Michael recounted. “The things they told us we had heard before just not in that order or with the emphasis they gave it.”

New Paradigm Advisors is a business consulting firm that helps determine a company’s value by helping shape it.  NPA came in to help Michael shape his company at a time when it needed shaping.

“One thing I was missing was an advisory team,” he continued. “As a privately held single partnership, I didn’t necessarily have any collaborators.  The New Paradigm team helped me select and shape an executive team.”

Subsequently, Michael put together a team that help guide decisions important to the company’s present and future.  This team includes:

  • Michael, the CEO
  • The company controller
  • An industry visionary from within the company
  • A next-generation employee

This team is anything but a collection of “yes” people. Quite the contrary, Michael says.

“Anything is open for discussion to allow the smartest and most clear decision to be made. They all are allowed to push back.”

This one innovation has gotten the company excited again.

New Paradigm Advisors is a value-assessment and consulting firm based in Dallas, Texas.

Just What Do I Want?

Many of us in business are working hard to shape and grow our business.  We’ve built up this thing we call a company and hope to see it through to…to what?

Just what do you want?  Is it “how much?” Or is it a legacy?

These are the questions Bruce Bernbaum asked himself not long ago.  Bruce is a co-founder and partner in Bernbaum-Magadini Architects in Dallas.  At his age and where he is in his career, Bruce has some decisions to make.  But where to start?

“The New Paradigm Advisors team gave me this Value Builder’s ‘quiz’ that allowed me to assess my business,” Bruce recounted. “And it caused me to stop and think long and hard about the value of our company.”

New Paradigm Advisors (NPA) is a business consulting firm that helps determine a company’s value.  Dave Sykes of NPA met with Bruce informally to ask some critical questions.  It was the Value Builder’s Assessment that really got Bruce’s attention, particularly with one question.

“When I got the score back I had a zero on one point,” Bruce recounted. “’That can’t be,’ I thought.  But it was enough to stimulate a discussion with Dave to help me set some goals.

Between the assessment and the ongoing discussion, Bruce has used his time with the New Paradigm team to be better at planning and forecasting.

“The team got me working on my business rather than in it.”

New Paradigm Advisors is a value-assessment and consulting firm based in Dallas, Texas.

Part of the Company

If you had been part of large companies all of your professional life and then struck out on your own, what would do to start your company?

That’s what Roger Pavlovich asked himself when he started his own construction services company.  Roger had been an officer or project manager at several large construction firms. He had all of the experience and energy to start his own concern.  But something was missing.

“I needed an outsider on the inside,” Roger said. “Actually, the NPA team is my security blanket and the guys I go to when I need to bounce something off a collaborator.”

NPA is New Paradigm Advisors, a business consulting firm that helps determine a company’s value by helping shape it.  New Paradigm Advisors came in to help Roger shape his company from its beginnings.

“We got the NPA team involved on a weekly basis, though I do talk with several of them almost daily,” Roger continued.  “The team sits down with us at least once a week.”

Some of the things New Paradigm has done for Pavlovich:

  • Helped produce a 3-year look-ahead plan and an associated monthly review process.
  • Offered daily collaboration.
  • Defined processes and systems for the young company.

Pavlovich Construction is a design-build construction consulting firm specializing in light industrial projects in the food processing and distribution segments.

“Because Roger and I knew each other from more than business, we had a mutual trust,” Dave Sykes of New Paradigm added.  “That gives us a bond that really ensures success for both of us.”

New Paradigm Advisors is a value-assessment and consulting firm based in Dallas, Texas.

Why is the monkey on your back?

Recently we were in a client’s executive meeting where everything was going smoothly. People were engaged and contributing. After a while it was time to assign tasks and responsibilities for the various issues identified. That went pretty well, too, until one particularly challenging item was on the table. Rather than assign this, the leader volunteered to take the responsibility for it himself. You could feel the sense of relief everyone else in the room felt. They were off the hook on that one.

We call this taking the monkey. You’re familiar with the concept of having a monkey on your back? Well, this is the same thing.

Continue reading “Why is the monkey on your back?”

Sellability: Is this a goal for your company?

Imagine that your first-born graduates from college and as a gift you give him your prized 1967 Shelby Ford Mustang. Your heavily indebted child takes it on the road, but after a few miles, the engine starts smoking. The mechanic takes one look under the hood and declares that the engine needs a rebuild.

You thought you were giving your child an incredible asset, but instead it’s an expensive liability he can’t afford to keep, and nor can he sell it without feeling guilty.

You may be planning to pass your business on to your kids or let your young managers buy into your company over time. These are both admirable exit options, but if your business is too dependent on you, and it hasn’t been tuned up to run without you, you may be passing along a jalopy.

The sellability of your company is a gift and is just one of the four reasons why building a sellable business should be your most important goal, regardless of when you plan to push the eject button.  It should also be a hidden goal.

If you’re like most owners, you have a profit goal you want to hit. You may also have a top-line revenue number that’s important to you. While those goals are important, there is another objective that may have an even bigger payoff: building a sellable business.

But what if you don’t want to sell? That’s irrelevant. Here are the other three reasons why building a sellable business should be your most important goal, regardless of when you plan to push the eject button:

  1. Freedom.
  2. Fun.
  3. Financial freedom.

Freedom goes back to the “you-proofing” concept.  Making your company less dependent on you means that you actually have an enterprise that stands alone and gives you the freedom to step away or look at it differently.

Running a business should be fun–thinking and acting strategically, solving problems for your clients and customers and working on your business rather than in your business.  Passing on the drudgery of your business to someone else in your organization is part of making your company sellable.

By creating a sellable business, you shape and mold your enterprise into something that is not unlike a financial portfolio.  It is an asset working  for you rather than you working for it.

Keep in mind these things take time.  but patience and persistence and doing the work are all a part of successful business. Remember, it is a goal.

Blessings.

Dave

Is Your Company “You Proof?”

We’ve all had a client or prospect “disappear”on us on occasion. Happens all the time and it sends us into all kinds of internal scenarios trying to figure out what happened.

I couldn’t reach a new contact recently and began to wonder what happened to him. Maybe he was no longer interested in what we had been discussing. Maybe something was going on in his business that had changed his priorities.

Well, you get the point. When a client or prospect drops off the world, you begin to wonder what happened and what you can do to pick things back up.

Then, after two weeks, I get a call from him apologizing for being out of communication since he had been on a two-week fishing excursion with his buddies. He quickly moved from a worry to being a hero.

Question: “Can you go fishing for two weeks? Maybe take your family on a two week vacation?” If not, why not?

“You-proofing” your business has enormous benefits. It will allow you to create a company and have a life. Your business will be free to scale up because it is no longer dependent on you, its bottleneck. Best of all, it will be worth a lot more to a buyer whenever you are ready to sell. With that thought in mind, here are a five ways to get your business to run without you:

  1. Give your employees a stake in the outcome by creating an ownership culture inside your company.
  2. Create an environment of inclusion.  Ask your employees often, “what would you do if you ran the company?”
  3. Prioritize your company’s offerings by which ones require the least of your attention.  That is, revise your selling priorities towards things that sell best without you.
  4. Fire yourself as the company’s chief rainmaker by creating automated customers.
  5. Write an instruction manual on how to run your company.

Some owners focus on growing their profits, while others are obsessed with sales goals. By  making it your primary goal to set up your business so that it can thrive and grow without you, you ultimately will increase the value of your company and make life more enjoyable.

A business not dependent on its owner is the ultimate asset to own. It allows you complete control over your time so that you can choose the projects you get involved in and the vacations you take. When it comes to getting out, a business independent of its owner is worth a lot more than an owner-dependent company.

Blessings,

Dave