Reflections

When you sell your company one day, an acquirer will want to know what muscle you have

One of the muscles a future acquirer will assess your team for having pertains to building your near and long term operating budget. Is your budget built on a good strategic planning muscle or is your budget really just a math exercise for your finance team. Your budget should be the financial plan for your strategic plan.

Because this time of year many businesses are building their budget for 2026, here are some do’s and don’ts to have in mind:

Don’ts:

• Don’t do your planning and budgeting at the same time. When your team knows you’re trying to build a budget while developing a strategy, they will be constrained in their thinking.
• Don’t build your budget assuming what you spent this year is a good basis for what you will spend next year. A line by line P&L review of costs will be needed to pull out anomalies from this year that shouldn’t be assumed and added on to for the new year.
• Don’t build a budget that isn’t linked to your company strategy for the new year. Your budget should tell a story and that story should be where your team plans to invest in the year ahead and where you will look to improve.
• Don’t build a budget and then put it on the shelf. A budget is a living tool that monthly should facilitate strategic dialog around how the actual results compare – much can be learned strategically and tactically when you have a good monthly cadence.

Do’s:

• Identify what your strategic initiatives will be for the new year and what impact they will have on your budget – where will you invest in your business, where will we look to drive improvements that could be reflected in our financials (i.e.: cost saving or productivity improvement opportunities).
• Identify for yourself and your team what aspects of your business will get investment dollars in the new year and which may not unless actual results exceed budget. Your budget should help you see where every $1 of investment should go going and is that investment going to move your strategic plan forward.
• Identify the base assumptions that will underpin your budget. Base assumptions include; what cost of living changes we are planning for labor, raw materials cost changes, utility expenses for your location(s), vehicle expense (if you have a fleet), insurance expense assumptions, etc, etc.
• A budget should be a financial roadmap for each of your key functional department managers. Make sure they understand their role in supporting and working to the budget specific to their area of responsibility.
• A budget should help you see that you’re protecting and building upon your company core competence. A good strategic plan should identify what your company core competence is.
• Use your budget as a learning tool. The best organizations are learning organizations. A budget is an opportunity to identify each month where your planning was good in what you expected your financial results to be and where your planning was off and how you can learn to avoid the same “off” again in the future.
• Don’t build a culture that has the budget being owned by your finance team. Yes, they are the ones to build the spreadsheets and report the results but the budget is owned by the leadership team.

Budgets are powerful tools to help guide and track your company progress. Building a good budgeting muscle today will reward you in many ways, including checking an important box for a future acquirer that wants to see that your company possesses such a muscle. Budgets aren’t math exercises, they are powerful financial planning tools so use time as a friend in leveraging this enabling tool at your company.

A future acquirer will ask, let's make sure you know the answer

When you go to sell your business one day, there will of course be a litany of questions asked by the potential acquirer(s). One such question could be what is your CAC, or Customer Acquisition Cost.

Let’s start with why they want to know this. It’s simply to help them understand the business today and how it might scale. If your company has built a model of finding and drawing in customers at what is considered a low acquisition cost, this bodes well for the valuation they might place on your business. If they believe the CAC is higher than they’d expect, this will have them probing further during their due diligence to understand more of the why and what steps they believe they could take to improve this if they owned the business.

Your CAC is simply your Total Sales and Marketing Expenses divided by Number of New Customers acquired. Let’s say your sales and marketing expense in the month was $100,000 and you brought in 10 new paying customers, then your CAC is $10,000 each. Whether this number is high or low will depend on several factors including your particular industry.

Sit with your sales and marketing team, include your CFO or controller and discuss this strategic metric for your business. Determining what your CAC is today and how it benchmarks within your industry can help facilitate very healthy strategic thinking and dialog. Don’t wait until you’re asked the question by a future acquirer, help your business today by knowing now.

Whether you’re planning to sell your company one day or not, these questions should be addressed

A common question we get from owners and CEO’s is what questions should their company strategy address? Strategic thinking and planning will conjure up many questions and that’s healthy. But for many this is what can cause strategic planning to become so daunting. And when things become daunting, we tend not to want to address them and allow ourselves to be distracted by more tactical matters.

We share that at the end of the day, here are the most critical questions your company strategy should answer for you:

• What are the worth drivers that a future investor or acquirer will look for if considering investing in or acquiring my company?
• What is my company core competence that I need to protect and invest in?
• What is my company worth today, what do I want it to be at a future date and how big is this gap?
  • If there is a gap that I want to close, what is causing it?
  • What actions would I need to take to address any gap?
• Within the industry landscape that we serve, where is our company optimally positioned to build long term company worth?
• How should we evolve our product/service portfolio to be unique in serving target customers?
• What financial need does my business have and how will I finance my plan?
• What organization do we need to deliver on our plan – what talent, experience and structure is optimal for today but also to help us close any gaps we see?

Your company strategy, either in your head or on paper, will help answer many questions that guide you and your team in evolving your company to an even better place. But it’s easy to get lost in many, many tactical questions that can detract your energy and thinking from the broader level questions that need to be answered first. Answering the more strategic questions first will in fact make many of the tactical questions easier to answer.

Your company worth is driven by your organization culture, focus on it

When selling your business one day, you’ll want to present an organization that excites the acquirer. You’ll want them to see that they can assimilate all or some aspects of your team and culture into theirs and in so doing, it will strengthen their business. Use time as a friend to build such an organization.

Your company today and in the future will be the intersection of two things. First, how good your team is at coming up with ideas and plans for enabling your business growth. Second, how good your team is at implementing those ideas. Where these two intersect says a lot about your culture. What we find most often in working with company owners and CEOs is that their culture is frustrating them.

There are five primary reasons that we find owners and CEOs are frustrated with their organization culture.  Here are the reasons:

• Leadership isn’t articulating the ideas or plans clearly enough. Ideas for growth or improvement are being communicated to some or all team members but not in a way that they truly understand or embrace. This frustrates leadership because ideas don’t get well executed and it frustrates employees because they hear ideas but execution steps are confusing.
  • Improvement step: next time an idea or plan is articulated, ask the employee(s) to play back what they just heard and allow them an opportunity to ask clarifying questions.
• The ideas or plans aren’t being linked to an articulation of a deliverable or what good looks like once the idea or plan is implemented. The idea or plan might be clearly articulated but if it doesn’t include a target or a description of what good looks like when it’s implemented, this will lead to confusion and frustration because how you view a successful outcome and how they do might differ. It can also lead to scope creep which is a great source of frustration for all.
  • Improvement step: With the next idea or plan that is communicated, specifically address how it will be measured for successful completion and allow people to ask clarifying questions.
• There may be a set deliverable for the idea or plan but employees don’t understand how the deliverable will be measured and/or don’t agree with the measurement. Strong leaders ensure that their team understands the deliverable and has a chance to discuss it to uncover if there are issues keeping them from embracing it.
  • Improvement step: consider where you have employees with ownership or involvement in driving to a deliverable or a KPI. Ask them if they understand the calculation and if they believe the calculation is effectively capturing the result.
• Companies allowing there to be inconsistent accountability around the company for people’s performance. This will be a great source of cultural frustration. Some employees will feel they are held to a different performance standard and that under performers are not addressed. This will lead to your star performers max’ing out what they give you because they see you accepting under performers. Address the under performers and you’ll be surprised to see your star performers raising their bar further for you.
  • Improvement step: ask yourself, do me and my key managers define performance and accountability the same? Do we have some managers holding their teams to one standard of performance and other managers adopting a different standard?
• Lastly, leadership is the only one coming up with ideas and plans so this frustrates both leadership and the employees. Leadership wonders why ideas don’t flow upward and employees wonder why ideas only flow downward.
  • Improvement step: ask yourself, do I or do my key leaders encourage all team members to come forth with ideas for improvement and growth so that employees know we want to regularly hear their ideas or do we make this uncomfortable for them? What can we start doing to convey to all employees their ideas do have merit and we will have a process for considering them?

Our job as owners and CEOs is to build and protect our organization culture. Do an honest assessment in considering these causes of frustration. Investing in your culture today will pay you great dividends both in how your team performs today but how it can also enable your future euphoric exit event.

Asking insightful, strategic questions could help you build company worth

As we are now in Q4, let’s pick our heads up from the tactical side of our businesses and think about our future euphoric company exit event. To get there, good leaders ask good questions – they want to facilitate strategic level dialog with key members of their team because they know that any threat or opportunity their company faces, won’t generally be seen or addressed by only having tactical level dialog.

Here are a few good strategic questions to be thinking about with your leadership team in Q4:

• What’s our forecast for our 2025 revenue and profit and when looked at over our prior 5 year historical performance, are we showing a consistent upward trend of both? If not, why not?
• Are we making progress this year in building company worth?
  • Addressing any customer or vendor concentration challenges?
  • Building our customer stickiness?
  • Enhancing our sales model to build a more predictable future revenue stream?
  • Innovating product, service or capability that makes us unique in the market?
  • Strengthening our team and/or company culture?
  • Driving operational improvements to increase productivity and efficiencies?
  • Building our brand equity with attractive customer segments?
• In preparation for the new year, what logic will underpin our revenue and profit targets?
  • What’s our forecasted backlog that we will begin the new year with?
  • Will we lose any contracts or customers that we need to factor in?
  • Are we targeting specific markets or customers to drive growth?
  • Will we be developing sales plans for our top customers (or top customer segments)?
  • Are we planning our growth from existing customers or new ones?
  • Are we planning our growth from existing products/services or new ones?
  • What is our pricing strategy for the new year and what yield will impact our financials?
• In preparation for the new year, what strategic focus should we have in the year ahead?
  • What operational improvements do we want to make? Can we become more efficient?
  • How might new technologies impact us positively or negatively?
  • What organizational structure and/or culture improvements do we want to make?
  • What improvements do we want to make to systems or processes to support growth?
  • What improvements do we want to make to our sales and marketing model? To our pricing model?
• What dynamics presented themselves in 2025 that could either lead to our company being disrupted by a competitor or that could enable us to be a disrupter of others?

The list could go on here but you get the gist. Strategic leaders constantly are thinking strategically with their team. And yes, then bridging that strategic thinking to action. But for too many, their comfort level is the daily tactical focus and too little on the strategic questions and discussions that will have the most positive impact on building company worth. Use this beginning of Q4 as yet another opportunity for building the strategic thinking muscle at your business and leverage these questions to facilitate a healthy team dialog.

Address this question to better position your company for a euphoric future exit

Steve Jobs was once asked what he was most proud of doing at Apple. His answer was simply, “I’m most proud of what we didn’t do.”

It’s easy to do things simply because they’ve always been done. A company can fall into an operating comfort zone. But in order to have resources directed toward new company worth creating activities, your team might have to stop doing certain things either temporarily or even permanently. Every company has limited resources so it’s a leaders’ job to determine how best to deploy and even redeploy the resources – are your resources being deployed optimally?

Here are some questions to discuss with your leadership team:

• Do we have any processes today that we designed years ago and perhaps are no longer optimally designed or performed? If we redesigned the process today, would we do it the same way?
  • Do we monitor our business costs by major categories to help determine priorities for continuous improvement opportunities?
• Are we investing labor time or investments into an area where we lack key performance metrics to monitor the effective deployment of these resources? In other words, where we spend lots of money, are we effective at monitoring the value what we are deriving from the investments?
• For projects we are currently working on, how are we monitoring whether they are making progress versus letting them linger and draining our resources?
• For development of new products or services, do we have an effective process for putting these projects through stage gates to have Go/No Go decision points along the development process to avoid some products/services from consuming too many resources before determining they don’t further warrant receiving this investment of time, labor and focus?

Don’t assume that your labor, investments and focus are being deployed optimally. Regularly discuss with your leadership team if resources should be redeployed toward activities that will help you grow your company worth. Excite your future acquirer by building a business that is just as good at stopping to do things as it is at doing them.

Identifying your market landscape can grow company worth

When you look to sell your company one day, a potential acquirer will want to know where your company fits within the industry in which you serve.  Knowing where you fit within your industry landscape will help you in knowing where to place your bets, or investments, for the future.

Company owners and CEO’s in every industry have to place bets. Think about the time when owners had to place bets on the horse and buggy or the automobile. Today, making bets on whether gas, electric, hydrogen or some other fuel will power our cars and planes in the years ahead. Or will the cell phone be the mobile device that consumers will use or will it get replaced over time with AI display glasses that some believe will beat out the cell phone device. So ask yourself, what bets am I already making about my industry and what bets should I start thinking about having to make to not only protect my business but also to enable it versus my competition.

To know where to place your bets, you’ll want to develop a market landscape. In a market landscape, you’ll be identifying things such as;

• Where is my company positioned today versus key competitors? Think about positioning related to price, quality, availability and value.
• In this world of Good, Better and Best offerings, where is my company positioned? Where do we think we should be positioned tomorrow? Serve one of these markets, two or all three?
• Where does my company fit in the value chain that customers derive from working with our product or service? In other words, where does your customer derive value in using your product or service and which parts of the value they derive is your company fair at, good at or great at?
• Where the customer sees value today in the product or service you provide, do you anticipate this might change in the future as their needs or even new technologies become available?
• How do you think your industry market landscape might currently be changing? How might it change in the next decade? How would these potential changes impact your company and what bets do you have to make?

Don’t place the bets on your company blindly. Conduct a market landscape assessment for your company to see where you fit today and to start generating ideas on where you might want to evolve your positioning for the future. Avoid having market forces change your company as this will have you playing defense. Be on the offense so you maintain control of a positive future outcome for your business. Call us (949.874.0787) as we can guide you in how to develop your market landscape and help you accelerate the growth of your company worth.

Auditing prior decisions can create new pathways to company worth

When the day comes you want to sell your company, your goal will be to maximize the value that a third party is willing to pay you. But getting a third party to buy your business and do so at a premium valuation doesn’t happen by chance. Have a plan and as part of that plan, build a learning organization.

A learning organization is one that identifies key decisions that its leadership team makes and periodically selects some of them to audit to identify the learnings. The learnings related to what was done well in making this decision, what was missed and what learnings can be gained to apply to the next time this type of decision arises.

Sit with your leadership team and discuss how to begin building this learning organization. Select a recent decision your team made (a decision to invest in a new system or piece of equipment, to open a new location, to launch a new product/service, to open a new customer, to hire for a key position) and ask these types of questions:

• Was this decision a one off or will we periodically face this again? If we will face it again, did we capture the learnings from this recent decision we made?
• In making the decision, what did we do well and should capture the learnings to apply to the next one?
• Where were we challenged in making this decision and could we minimize or avoid this challenge the next time?
• In retrospect, what did we not do well in making this decision and need to capture the learnings to apply to the next one?
• Did we include the right people in making the decision?
• Did we gather the right data to help us make a fact based decision?
• Did the decision align with our company mission, vision and values?
• Did we make the decision in a timely manner or are there steps we could have taken to be more efficient?

Unless you are periodically stepping back and evaluating key decisions that your company has made, there is a chance you’re missing a great opportunity for strengthening your culture. Learning organizations grow company worth at a faster rate and to higher levels than others. Ensure you’re on track to a future euphoric exit event and building a learning organization is a giant step in that direction.

When selling one day, the difference can put your company worth on steroids

Each company has two options for evolving their product or service offering.  The first is to react to a need that the customer has conveyed they have or that we’ve identified they have. The second is to know your market and customer well enough that you can put yourself in their shoes and anticipate a need or want, one they haven’t even recognized yet.

In going the reactive route, you’re playing the game as your competitors do and you’re working hard at trying to be the best. In going the anticipate route, you are working equally hard but this time you are looking to be the only.

So ask yourself. Is my team focused on delivering only what the customer knows they want or need or do we expend equal calories looking for ways we can anticipate a need? Are we looking for ways to do what our competition does but be better or are we expending equal energy looking to be the only? A business good at reacting to customer needs may command a good exit valuation but one that has a track record of also being able to anticipate customer needs and be the only one meeting them, that company valuation will be put on steroids.

Putting metrics in key areas of your business can enable or disable your company worth

When you look to sell your company one day, the potential acquirer will ask you for what financial and non-financial KPI’s you and your team monitor. In asking this, they are looking for a few things. First is they want to see if you have built the internal discipline to monitor progress versus having a team that just works on motion. Second, they want to see how your company has progressed over time with select KPIs and do they see continuous performance improvements. And third, they want to see how your company compares to like companies in your industry so they will use your KPI’s to compare to industry benchmarks they might have.

We recommend to clients that they have KPIs in place. But, here are the rules of thumb:

• Number of KPIs – avoid having too many. No individual on your team should be monitoring more than 5. Collectively your team might be monitoring 15 KPI’s but one person might champion 4 and another 5, another 3, etc.
• Ownership of KPI’s – who is the champion or person that you deem the owner of monitoring each KPI and do they know they are the owner. If a KPI lacks a champion, it’s questionable whether that KPI is effective.
• Types of KPI’s – put KPI’s in place that help you see whether you’re making progress in your strategic plan. If you’re tracking KPI’s that aren’t linked to your company strategy, you run the risk of monitoring noise versus progress.
• Understanding of KPI’s – don’t commit assumicide in giving a KPI to an individual or a team only to miss that they really don’t understand how the particular KPI is calculated. We see this regularly in working with new clients. An employee, even at a senior level, is given a KPI but when you query whether they truly understand how their daily job and decision making directly influence the KPI, they don’t know. The KPI is given to them from say finance or HR or operations so they have visibility to the KPI but not full understanding of the formula behind how it’s being tracked.
• Embracing KPI’s – another place we see assumicide is when an owner or CEO assumes that an employee who has responsibility for a KPI embraces it. Meaning, they might fully understand how it’s calculated but they don’t agree with how it’s calculated. You might have an employee with a KPI related to order fulfillment or to new customer leads and they understand how the KPI is calculated but when asked whether they agree with the calculation, they don’t. They believe there is flaw in how the calculation is being done and therefore they don’t embrace the accuracy or effectiveness of the KPI.

KPI’s can be a great tool for helping build the long term worth of your company. But they must be well crafted and well managed. If they aren’t, they might be delivering the oppositive effect than what you want and could be damaging company worth. Conduct an audit of the KPI’s in your company to determine if they are enabling or disabling your progress.

Titled Strategic Planning That Grows Company Worth - The Campaign

Looking to strengthen the strategic thinking, planning and execution muscle at your company to build the worth of your company? If yes and if you want to join the elite group of business owners that achieved the pinnalce of success and commanded a euphoric outcome, then this video series is designed for you. To view the second video in this series titled, The Campaign, click here to view video

For those not yet seeing the Introductory video of this series, click here (Introduction Video - Strategic Planning That Grows Company Worth) to begin your new journey of having a more effective plan for your business. This first video in the series provides a fresh way to look at what a strategic plan actually is. Yosemite Associates is working in concert with Synthesia.io (Visit Synthesia) to bring the Yosemite strategic and exit planning tools to life using advanced AI marketing technology.

Focusing on 3 areas could have you on a path to a future euphoric exit

Preparing your business for a future successful exit requires you to get many pieces of the puzzle placed properly. But all the puzzle pieces needed to sell your company aren’t all equally weighted. There are 3 that rise to their own level of worth creation and therefore warrant special attention.

Predictable Revenues – there are generally two types of businesses. Those that are confident that future orders are coming but not sure when. The other is a business that knows clearly when the orders are coming. These businesses have a go to market model that makes it very clear when the orders are coming. The predictable revenue model will command a higher valuation at time of company sale than the transactional revenue one. Here are just a few ways companies build predictable revenue models – establish customer purchasing agreements, receive customer provided forecast, offer a product or service that is subscription, license or recurring revenue model based.

Pricing Strategy – too many businesses are lacking in a well thought through pricing strategy for their portfolio. Some either lack a strategy entirely or their pricing strategy is a one size fits all. An effective pricing strategy is one for each part of their portfolio and for each customer segment. Putting your company worth on steroids occurs when you can show that your business (for some or all your products and services) commands a unique position in the market and customers see a unique value that they are willing to pay you a premium for and even willing to periodically absorb price increases without causing significant attrition.

Customer Stickiness – too few leadership teams spend time discussing how to increase their stickiness (or customer loyalty). The expression is don’t look to be the best at something, look to be the only. What services or products does your company provide today that make customers sticky with you and what additional ones could you provide to increase that stickiness? Customer stickiness isn’t a nice to have, it’s a must have for driving up the worth of your company. So don’t leave your stickiness to chance, have a plan for building it.

Ask yourself – is my team working on the right puzzle pieces for building the worth of my company? Spending time on these 3 worth drivers will pay you the greatest current and future dividend. Use time as a friend in preparing your company for a future euphoric exit event – ensure the preparation includes addressing these 3 investments that deliver the best returns.

Knowing the difference can help build your company worth

Ask yourself this question – is my company CFO or controller a coach or a cop when it comes to working with my department managers and supervisors? One helps you build your company worth, the other could be impeding it and you may not realize the difference until you try to sell your company.

Most department managers and supervisors got their jobs because of a technical or department specific expertise that they have. But many lack a true understanding of managing budgets and don’t understand the connection between the decisions they frequently make and the potential impact on your financials. Then arrives your controller or CFO on their door step or in a meeting. Is this ensuing interaction a positive and enabling one or is it a demeaning and frustrating one? The coach can help educate and build someone up, the cop may apply pressure that makes them feel inadequate.

The CFO or controller coach can help build your company worth but a CFO or controller cop can hurt it. The cop hurts it because people are afraid to make decisions knowing the chastising or questions they might receive or managers/supervisors won’t want to proactively come forth with financial questions or looking for advice because the cop will view them as weak in their roles. Now in a turnaround situation, I may want a cop running my financial group for a period of time but in normal growth times for a company, I want a talented and firm handed financial leader on my team but one that helps people understand and respect the financials, not fear them.

As you are thinking about this for your company, you’re also thinking about your culture. Coaches can help build great company cultures, the cops unfortunately can hurt them. We greatly value and respect what law enforcement does for us daily in our lives, but inside your leadership team and company, it can be a different story.

Use time as a friend in ensuring your company is prepared to support 3^rd party due diligence

Too often owners of private companies decide to sell their business only to find out too late that they aren’t ready to support the probe, aka due diligence, that the third party acquirer wants to conduct on their company.  We work with company owners to help them conduct a due diligence dress rehearsal at least one year prior to attempting to exit and preferably two years prior.

There are several areas that the potential acquirer will probe and one of these is the legal documents related to the forming and running of your business. It’s common to have these properly put in place when the business is formed, but years later they are no longer current and before they can be shared, they need updating.

Below is a general (non-exhaustive) list of entity documents that you should gather for entity maintenance purposes and ultimately for sharing with the acquirer:

• Articles of Incorporation (including any amendments)
• Current Statement of Information
• Entity filings in each jurisdiction with the corporation has qualified to do business
• List of fictitious business names (copies of all registrations) or trade names used by the corporation
• Bylaws (including any amendments)
• Shareholder Agreement (or Buy-Sell Agreement)
• Capitalization schedule/table
• Stock ledger
• Founders Agreement (or similar agreements)
• List of all directors and officers (including titles)
• Copies of board of director and shareholders minutes or written consents for the current year and prior three years

You don’t want to try and do a deal with a third party only to find any of these needed legal documents are missing, incomplete, or out of date.  There are several areas of your company that will need a dress rehearsal for due diligence, but if you’re looking for a place to start, start with the legal documents. In other blog posts, we share the lists for other areas of your business to prepare for due diligence.

Not all investments are going to reward you at time of company sale

Ask yourself this question, what is my company’s highest level strategic need that will help me accelerate growing my company worth and how could a technology enable it?  Too many company owners and CEO’s today are more focused on a technology but not first on the strategic business need or opportunity that needs to be addressed.  Only until you know what your strategic need is that will build your company worth, should you then focus investment dollars and your team’s time on embracing a new technology. Technology can be a great tactical solution, but it should be linked to solving a strategic need the business has.

We also see owners/CEO’s investing in a technology only to find later that there were less expensive and less complex solutions. But because they didn’t frame the company opportunity or challenge properly on the front end, they too quickly went down the rabbit hole with a technology. The risk then becomes that the technology takes money and time but doesn’t enable the business at a strategic level so it doesn’t build company worth in the eyes of a future acquirer. Acquirer’s look closely at capital expenditure investments made when doing their due diligence and it will negatively impact their purchase price if they see your company making technology related investments that don’t truly enable the business in their eyes.

There has been no better time in the history of doing business than now for leveraging what technology can do to enable your company. But the technology isn’t your starting point, strategic thinking and planning to identify the strategic opportunity or challenge is the place to start.

Reward your future self at time of company sale by ensuring alignment today

Ask yourself this question – if I ask each member of my senior leadership team to write down what they believe are our current top 5 priorities to grow and improve our business, will they each write down the same answer?

Too often the answer heard from company owners and CEOs is no. Missed opportunity for creating company worth.

What is team alignment? It’s you and your key managers being on the same page regarding where team energy and focus should be and you’re discussing regularly the underlying actions to address them. If the team is not aligned, then you need to wonder what each person is making their priority. And as well, you need to wonder about the employees within each of their departments because they won’t be aligned with their peers either.

If your team is lacking this strategic priority alignment, here are the most common reasons we see causing it:

• Lack a strategic plan – the leadership team is tactical and working on tactical matters but there is uncertain connection to the strategic value for the organization. The dialogs frequently but the dialog is often tactical versus strategy.
• Chase squirrels/shiny objects – the members and team often get distracted by the shiny object syndrome so priorities are always changing.
• Incentive plan alignment – the key members of your team have incentive plans that reward them for working on different priorities versus sharing incentives to help align them.
• Lack of peer respect – senior team members that don’t respect each other will look to avoid interaction, not encourage it. If they want to limit their interactions, then it’s highly unlikely they are strategically aligned on priorities and have set their own.
• Owner/CEO not giving importance to alignment – at the end of the day, it’s the role of the owner/CEO to ensure there is team alignment. If they don’t give this priority, generally neither will the team and functional heads will work in silos.

At your next leadership meeting, do the simple exercise of asking each person to write down on a post-it note what they view as the company’s current top 3 to 5 highest level priorities and then have them hand those notes to you. If there is misalignment, then this is your starting point for discussing how to address this. Give a gift to your future self, build and maintain team alignment as it’s your fastest path to building company worth. Give us a call and we can provide you some strategic templates to help evaluate the alignment of your team.

Strong awareness will facilitate operational effectiveness and reward you one day when you sell your company

Ask yourself this question – how good is my team’s situational awareness of what is going on outside our four walls as it relates to what could be threat or opportunity for us?

Having solid external situational awareness is a key element to any strategic plan. Unless me and my team have solid situational awareness, I truly won’t know what brewing threats we may need to navigate and we may be missing opportunities that the market is presenting to us. Said another way, ask yourself could my business be disrupted and could my business play the role of a disrupter? If your answer is I’m not sure, then the root issue might be your external situational awareness has become stale.

Ask yourself these questions to get an idea of how good your situational awareness is with your business:

• Is investment capital flowing into your industry/market or is it outflowing? Investment arms such as venture capital and private equity flow into dynamic and compelling market opportunities and leave those where they believe there isn’t much upside.
• If money is flowing into your industry, do you know where it’s going and how it’s being applied that could indicate threat or opportunity for you?
• How is your competitive landscape changing – new players entering? Existing players expanding or changing their offering?
• If a new competitor emerged, what could they do that would make them a threat to your business? If there is something they could do, could you do it first?
• How are advancing technologies being applied in your industry? New technologies such as augmented and virtual reality, 3D/Additive Manufacturing, 5G (soon to move to 6G), Internet of Things, etc – will any of these change your customer requirements or change how your competitors support your customers?
• Have your customer needs or decision making criteria changed? What they needed from you just a year ago maybe evolving in some way, are you monitoring any changes?
• How is the labor market in your industry changing and how might these changes impact your access to the quantity and quality of labor you’ll need to scale your business? What are your competitors doing to attract and retain labor that you’re both fighting for?
• Your company most likely serves various market sectors/customer types, do you have good awareness on how each specifically is growing/shrinking and what these dynamics are projected to be in the years ahead so you position yourself optimally?

These are just a few questions that leadership teams should discuss on a frequent basis to maintain good external situational awareness. Any changes in these areas could be reason for disruption to your business or opportunities for you to make operational changes that could disrupt competitors. Being a disrupter in your industry could significantly raise your company worth when the day comes you want to exit.

The degree of visibility will greatly impact your future company valuation

When the day comes you want to sell your business, one of the very first things a potential acquirer will look to understand is what is your team’s visibility is to future revenues? When you build a business model that enables you to have very good visibility to the timing and volume of your future revenues, the exit multiple they will pay will be generally higher.  If on the other hand, you are confident in future revenues but not clear on the timing or volume of them, then your exit multiple may be lower.

Companies that build a model where they have very strong future revenue visibility are those that have put customer purchasing agreements in place, support customer programs/platforms where there is known volume needs going forward, or an application that you sell or even a SaaS or DaaS model. These types of business models for some or even just a part of your business can greatly enhance the value of your business in an acquirer’s eyes. If however, your business model is more like a grocery or furniture store or a service business, where you certainly have confidence that customers will purchase but you’re never sure when or how much, then many times the exit multiple will reflect this lower visibility.

Think about your current business model and what visibility it gives you to future revenues. Identify where you might even just have a single product or service that you could move to something more recurring with your customer. Any step you can take to increase the revenue visibility will reward you at time of exit.

Well in advance of selling your company, you should know what your exit narrative will be

Too often company owners decide it’s time to sell and then they engage professionals that identify what the exit narrative will be to convey to potential acquirers. But this shouldn’t be how it’s done. You should first decide years earlier what exciting and compelling exit narrative you want to one day deliver to potential suitors and then build the company and performance to underpin it. This is how you command a premium valuation for your company, this is how you achieve a euphoric exit event.

What is your exit narrative? It’s your story or your message for future potential suitors to hear about what you’ve built, why it’s special and how its future is bright for them to benefit from. And there are multiple narratives you will one day develop as you will have a narrative for fellow shareholders, your employees but ultimately the one for your acquirer.

You work hard, you invest a lot of time, energy and money into your business. The last thing you want is for years to go by and then decide to sell and then hope you’ve built something you can build an attractive exit narrative around. Going this route, you have to hope you built an asset that others will want. But hope isn’t a plan, it’s not a strategy.

An effective exit preparation is to know your industry well enough to know what will attract suitors one day to pay you premium and build your narrative and then build the business to support it.

Don’t bet your future exit event on hoping you’ve built something you can then create a compelling exit narrative around. Build and bet on a plan that allows you to use time as a friend in creating the narrative and the business performance behind it. Going this route will have you well on your way to a much greater likelihood of one day getting the premium valuation that you’ve always dreamed of earning.

There are many emotions when selling your company and selling to a competitor may be one of them

You’ve competed against them for years and you dislike them, even despise them. And it’s common to hear from owners that when the day comes that they look to sell, the last people on the planet they will consider selling to is the competitor.

At an emotional level this makes sense. Competition can be fierce and it can get personal. But what you also have to consider is rising above the emotional aspects and asking yourself….but might that competitor give me the best valuation and might it be the right place for my employees to continue flourishing? Direct competitors are often able to make the strongest offers because they know your company, respect it (even though they might hate it), and there is benefit to them in consolidating competition and there could be the greatest number of synergies that help A+B be a very compelling C.

It’s ok to hate the competition. It’s ok to not consider them as a future potential suitor. But for a moment, remove the emotions and rationally think about where you can get optimal value from selling your company?  If you can get that optimal value from others besides a despised competitor, great. But if you believe that could bring you the highest overall value, then rise above the emotions and do what’s best for you, your shareholders and employees.