Business owners will likely relate more to either being a planner or being open-minded. Planners like to focus on detail and use an organized and structured approach. Open-minded people lean more toward being flexible and creative. The most successful business owners often strike a balance between the two. Adding some open-mindedness on top of your planning can exponentially increase your opportunities in the following ways: 

Mental Preparedness:

• Clear Goals: A well-defined plan with clear goals helps you focus on the areas that are most relevant to your business. This focus makes it easier to spot opportunities that align with your strategic direction. Open-minded individuals are more receptive to diverse perspectives and ideas. This can lead to even more opportunities that can align with your strategic direction.
• Prioritization: Planning allows you to prioritize tasks and allocate resources effectively. This helps you identify and capitalize on the most promising opportunities. Open-minded individuals are more willing to take calculated risks. This can lead to significant rewards and breakthroughs.

Knowledge and Awareness:

• Market Research: Planning involves conducting thorough market research to understand industry trends, customer needs, and competitor activities. This knowledge empowers you to identify emerging opportunities early on. An open mind allows you to perceive situations without preconceived notions or biases. This helps you see opportunities that others might miss.
• Industry Analysis: By analyzing industry trends and developments, you can anticipate potential shifts and disruptions, which can lead to new opportunities. Open-minded people are better equipped to overcome obstacles and find creative solutions to problems.

Resource Allocation:

• Financial Planning: A solid financial plan ensures that you have the necessary resources to seize opportunities when they arise. Open-minded people are not afraid to make mistakes. They learn from their failures and use them to improve future decisions.
• Human Resources: Planning helps you identify the skills and expertise needed to capitalize on opportunities. This allows you to build a strong team and attract the right talent. Open-mindedness helps you build strong relationships with others, which can open doors to new opportunities.

Risk Management:

• Contingency Planning: A well-crafted plan includes contingency plans to address potential challenges and setbacks. Open-mindedness allows you to adapt to changing circumstances and seize unexpected opportunities.
• Risk Assessment: By identifying and assessing potential risks, you can develop strategies to mitigate them. This proactive approach can create new opportunities for innovation and growth. Open-minded people are better equipped to overcome obstacles and find creative solutions to problems

In essence, planning is like having a roadmap that guides you towards your destination. Along the way, you’ll be more likely to spot detours, shortcuts, and hidden treasures that you might otherwise miss.

One of the hardest things for many entrepreneurs to learn as their companies grow is delegation. Yes, you can learn to do it yourself, but doing everything yourself is a huge limitation. To grow a business, you must let go. Reward yourself and start by delegating work you do not enjoy and are not good at.

Letting go does not mean abdication, it means leading. Here are a few tips –

What to delegate

Delegate work that you are not particularly good at.
Why struggle with something that someone else would love to do?

Delegate work that must be done but does not drive the business.
Two areas that often qualify are accounting and routine HR (hiring key people is not routine).

Delegate work that can be done much cheaper elsewhere.
Outsourcing, even international outsourcing, is a fact of life.

How to delegate

• Look for talented people whose strengths match the job that needs to be done.
• Set clear expectations about deliverables, timelines, and quality (milestones). You or someone else may need to train and mentor the person.
• Develop written steps, templates, processes. Videos made on zoom or other services are an alternative that can work quite well also.
• Do not micromanage. Their qualifications and approach will be different than how you would do it. Focus on if clients are happy (internal or external) and if work is getting done. Do take the time for reasonable reviews, particularly while training.
• Monitor that milestones are met. Always have clear conversations about what is working and not working after reviewing milestones.
• Sometimes it will not work out. If this happens, see if you can move the person to another job more aligned with their strengths. Sometimes it is clear the person will never work out. In that case kindly give them the opportunity to find new employment. Delay never makes it easier.

Welcome to leadership.

Without a strategic plan, a company risks:

• Missed Opportunities: Not having a clear direction can lead to missing out on valuable market trends or growth opportunities.
• Inefficient Resource Allocation: Without a defined strategy, resources might be wasted on activities that don’t contribute to the company’s overall goals.
• Reactive Decision Making: Companies without a plan often find themselves reacting to external factors rather than proactively shaping their future.
• Lack of Alignment: Employees may have different or conflicting goals, leading to inefficiencies and decreased productivity.   
• Vulnerability to Disruption: A lack of a strategic plan can make a company more susceptible to market changes or unexpected challenges.
• Loss of Competitive Edge: Without a clear vision and strategy, a company may struggle to differentiate itself from competitors and maintain its market position.

In essence, strategic planning provides a roadmap for a company’s future. Neglecting it can significantly hinder its growth, profitability, and long-term sustainability.   

Here is a good resource on how to create a strategic plan: What Is Strategic Planning? | Strategic Planning Process & Steps (thehartford.com)

Four years after the worst of the COVID shutdowns and COVID benefits, the labor market appears to be calming down. COVID demonstrated the importance and business value of having a skilled, loyal workforce.

“A great system is when average people get outstanding results every time.”
– R.V. Caruso

However, the most important part of any system is skilled people running it. That does not happen overnight.

What is intangible value?

First, let’s start with the basics. Intangible value is all the value of your business that is not identifiable tangible assets. A tangible asset is a chair or a building. It can be touched. Intangible assets are things such as software programs, procedures that are in place, and goodwill because people know and call you—namely, anything we cannot see or touch.

What really creates intangible value?

When we talk about business value or investment value (tangible or intangible), we are talking about the likely future cash flow from an asset. This asset could be rent from office space or profits from a company providing services. For operating service businesses, this future profitability is usually about the people or employees who maintain and grow the company.

Companies need people to keep updating and improving what they offer. Then, they need more people to sell, manage, and lead the product lines or offerings. Otherwise, the overall company and its value would quickly fall as customers move to newer or easier-to-use products and services. (Remember the decline of the Blackberry for the iPhone?)  All companies need “forever and continuous improvement,” or they will get left behind—sometimes very quickly.

Your employee’s improvements to products and systems create your intangible value over time.

How can you increase your intangible business value through your employees?

Good employees are always important to business operations, profits, and value. There are simple (but not easy or fast) ways to increase your business’s intangible value through your employees.

1. Hire the best. Train people, grow them, and keep them. This is hard work, and if you are successful, you will lose the occasional well-trained person, but really, what is the alternative? Many successful companies have programs to develop growth plans for every employee. These are not just plans but roadmaps for frequent training, reviews, and skill development to carry the employee and company forward.
   
2. Compensate them well. I say compensate rather than pay because benefits like flexibility, titles, and non-monetary compensation (e.g., retirement plans or health insurance) are often just as important as salary. Remember, your competitors are lurking for your stars, and they will pay more—at least on the hire date.
3. Create benefits that lock employees in. For instance, if your company gives large bonuses, pay the bonus over three years in thirds. If an employee chooses to leave, they are also leaving a big bonus behind. However, remember that you must pay them the full bonus if you need to lay them off. Another option is to create a stay agreement, where the employee receives a bonus if they stay for two years under new ownership. After all, ownership can change for voluntary or involuntary reasons.
4. Remember the huge cost of new hires. Although you are hiring the best, they will still need time to adjust to your company. They are even more valuable when they are found, trained, and up to speed. Don’t be chintzy with your best people.
5. Hire slow and fire fast. This might be the most important advice for any business owner. Back to point one–hire the best, even if it takes time. Then, don’t be afraid to let people go. How often has a hire who did not feel like a fit at the end of the first week made it on the team? Yet I bet you put tons of time “trying” to get it to work. Let those people go after two weeks, maybe even with two weeks’ pay (it’s still cheaper), not six months later.
6. Contractually protect yourself. Note that this has become more contentious. Seek legal advice on all legal matters, particularly non-competes. In most jurisdictions, properly prepared non-competes or non-solicits can give some degree of protection to your firm from the loss of clients that might leave with a key employee. We believe these employees should be able to work in the field but not take your clients and software. The specifics of these provisions vary by state, so ask your lawyer.

Creating business value for your company through employees means using the carrot and the stick. Take your time to hire great employees. Then, provide training, compensation, benefits, and contracts that keep them around and grow them and your business. Finally, don’t be afraid of letting employees go if they don’t fit, no matter how hard it is.

Employees are the most important part of a service business’s intangible value. Protect that value.

Contact me to learn more about ESOP, Estate and Gift, SBA, and exit planning business valuations.