In our last blog, we talked about a recent survey by The Sellability Score found companies that would perform well without their owner for a period of three months are 50 percent more valuable and more likely to get an offer to be acquired when compared to more owner-dependent businesses. So why is this the case? Let's look at a couple components of your company. People
Start with your key leaders and answer the following questions:
- Why did this problem 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?
Is your leadership team capable of handling not just the routine, but the hair raising customer or supplier phone call that can ruin your day? Systems
Next, 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; but if you’re not able to lock down a technical fix, then at least give employees a set of rules to follow in the future. Authorizations
You may be a bottleneck in your own company if you’re trying to control spending too much. Employees may know what to do but do not have any means of paying for the fix they know you would want.
For example, you could 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.
You might allow an employee to spend a specific amount with a specific supplier each month without coming to you first. Or you might give an employee 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’ll find the vacation is worth what you paid for it many times over: your company will increase in value as it becomes less dependent on you personally.
How does sharing information empower employees?
Think about trying to fix a stalled car without the basic knowledge of auto mechanics. Sharing information and teaching your employees how the enterprise works allows them to make solid business decisions while they are in the heat of the moment. Equipped with the right information, they’ll know not to discount a deal or to push hard for an end of month sale because they’ll understand what it means to the company and what it can also mean for them.
“A recent report by the Sage Policy Group and the Nearing Group affirms the positive economic impact of UMBC’s ACTiVATE®
program. The report concludes that ACTiVATE® creates jobs at a "remarkably low cost" when compared to benchmarks for entrepreneurial job creation and generates substantial income for local governments and the State of Maryland.”
This was the opening line of a recent press release from the University of Maryland Baltimore County (UMBC) touting the successes of their ACTiVATE® program. ACTiVATE®
is an incredible innovative, yet simple program that works because of its pragmatism and because of the people involved. Over 100 women with business and technical backgrounds have gone through the program and have started 30 companies as a result. The Sage Policy Group study estimates that these 30 companies will create 234 direct and spin-off jobs by the end of 2011.
Ellen Hemmerly, Walt Shultz, David Fink, Steven Auvil and the leadership team of UMBC’s Incubator and Accelerator (branded as bwtech@UMBC) have done a great job in finding passionate business people and encouraging their entrepreneurial spirit, locating technologies that were able to be polished and taken to market and then offering the right mix of support to make ACTiVATE® such a smash success.
Let's see - passion, entrepreneurship, sound technology, a market awareness and support when needed. Sounds like a formula for success any business would be smart to employ! Full study available here:http://www.umbc.edu/activate/SageACTiVATE_UMBCImpactStudy2010.pdf Press Release:http://www.umbc.edu/blogs/umbcnews/2010/09/report_affirms_success_of_umbc.html Leadership team of UMBC:http://www.bwtechumbc.com//about/management.html
I had lunch with an old colleague a while ago and he reintroduced me to the concept of the Triple Bottom Line. Alan Randolph
is the Professor of Management and Global Business in the business school at the University of Baltimore and the author of "Three Keys to Empowerment
". As our conversation drifted around concepts of empowerment and value drivers, Alan reminded me of the concept developed by Ken Blanchard, Alan and others at The Ken Blanchard Companies
It goes something like this. Companies should certainly strive to achieve results in EBITDA or the traditional bottom line. That almost goes without saying. But they should also expand their concept of a bottom line to include being considered the employer of choice and the investment of choice. So if it all comes together, you'll strive for the best profits, the best place to work and the best place to invest.
Privately held midmarket companies can easily measure EBITDA, but may struggle with measuring their progress on whether they are the best place to work or the best investment.
Consider turning behavioral goals like "best place to work" with metrics like retention rate and number of applicants per staff opening. Whether you are a good investment can be viewed as a return on investment on the ownership of your stock, but also by how partner firms working with you view their relationship. Is it a profitable venture for stakeholders such as your bank, suppliers, vendors and distributors to continue doing business with you?
So the next time you address your leadership team or staff and broche the topic of meeting bottom line objectives, remember the triple bottom line. You'll satisfy your shareholders by building long-term value and meeting the objectives of your stakeholders by building a great company.