Avoid a common mistake when preparing for a company sale
Ask yourself this question – each year when our company does strategic planning, do we build our plan in parallel with building our new budget?
If your answer is yes, please reconsider. The reason is this. Budgeting has natural boundaries built into it and in great strategic thinking and planning, you don’t want to be encumbered by anything that might block the free flow of innovative ideas. Too often, executives go into their strategic planning already having financial boundaries in their heads related to revenue, margin and investment targets. These financial variables then steer the planning and will often squelch any creative thinking and dialog amongst your team. You inhibit members of your team from being confident to raise what if thinking because they already know the constraints that the budget will place on many creative ideas, so why bother bringing the idea up in the first place?
But what if you and your team initially remove the boundaries that a budgeting mindset creates and open up the thinking to include more what ifs? What if you talk with your team about the initial removal of financial boundaries, could this open up healthy new dialog? Could this have you working on new ideas and paths for your business that will provide greater excitement for your future potential acquirer to benefit from and therefore reward you with a premium valuation? Could new thinking help you from getting disrupted by a competitor or even play the role of the disrupter in your market space?
Obviously, the reality of financial constraints (i.e.: how much capital is available for investing in new initiatives) has to ultimately enter the equation. But it shouldn’t impede the initial creative thinking that could generate new ideas that ultimately may not require a lot of capital to execute. Owners that take this approach often find that there are many creative ideas that come forth and ultimately some don’t require the capital investment or risk that they were first concerned about. Wouldn’t you rather discuss the creative ideas and then modify or eliminate the idea if you are financially constrained to deliver on them versus never having discussed the idea in the first place? Don’t forget the adage, one good idea often leads to another.
The business environment continues to change around us. Lead your team to navigate the market opportunities and challenges that your business faces with creative and innovative thinking. This thinking is the first step in doing great strategic planning. Yes, budgeting and financial planning have to enter the discussion, but don’t let it influence the discussion initially. Building this thinking and planning muscle ahead of budgeting will have you on a better path to building the long-term worth of your business.
