Business Advisor Series Article 2
Last week we discussed these key points:
The Trusted Advisor discusses, analyzes, and reports on the vital shareholder interest: the link between business process and enterprise value. Ultimately, you’ll be the person who helps the CEO to maximize value. It starts by shining a light on weak processes, and helping to build operational strength. Strong companies are valuable.
Why do clients hire business advisors? Our data shows that clients identify three key goals for business advisory engagements:1
The underlying work for all three is the same: increase the strength of operational processes and procedures. Think about it:
This tells us that a single set of tools and training can serve the majority of client cases. Also, that by creating strong companies we deliver a company that is easier to run, is growing, and that has value and transferability.
This is your “in,” your opportunity to start a conversation with the business owner. Statistically, the data shows that the typical middle market company has mediocre processes. Only 11.7% of companies rate an 8 or better, and only 2.5% are a 9. There are no 10s.2 Odds are therefore over 90% that every business you see has process issues that you can help fix.
A survey of AM&AA members conducted by CoreValue highlighted two issues. 95% of business owners have an unrealistic expectation of value; further 95% of companies present with issues that slow or prevent sale. Yet business owners are unaware, as the issues may not present symptoms that rise to the level of “fires in the lobby” impacting the client’s day-to-day.
When we look at these statistics together, we can see the direct impact weak business process has lowering value and transferability. The solution is to run a health check on the business.3 Like a personal health check, the earlier the business gets a health check the better. Getting the client to understand that their company is sick, and that you can help them cure it, is the key to becoming the CEO’s go-to business advisor.
Just as better processes can improve a client’s operations and unlock growth, there is a proven process for starting the business consulting conversation with business owners and senior execs. Here’s a summary:
Conclusion:
Next time we’ll discuss advisory and consulting roles: architect, general contractor, and the trades.
We’d love to hear your thoughts. Please comment below, or email blog@corevalueforadvisors.com
Save the date: Growth and Exit Planning Conference February 7-9 2019 in Orlando FL. Click here to sign up for updates and for a full calendar of events.
[1] CoreValue ‘Discover’ intake data, © 2018 CoreValue US Patent 9,607,274
[2] It is impossible for a company to have a business rating of 10. Business processes impact each other like gears in an engine. Increasing effectiveness in one area creates stress in others. For example, a company presents with Sales & Marketing score of 3, and Operations score of 9. Improving the Sales & Marketing process score from a 3 to a 7 will help generate additional orders, challenging Operations to keep up, which may lower the Operations process score.
[3] Credit for this positioning goes to Ed Wandtke of Wandtke and Associates, CoreValue “Super User” and fellow NACVA faculty.