03. The Value Creator Framework

In the previous article, we talked about the two owner mindsets.

The Value Creation Framework is designed to ensure you, your family and your company are ready to reap the value of your business regardless of the timing of a potential ownership transition.

To Income Owners, we wish you – Good Luck. This is said with tongue firmly planted in cheek. There is no wrong strategy. And you can always decide to be a Value Creator in the future.

This strategy doesn’t work for every business owner, but it has worked for many. In fact, my father ran his business this way for 30 years, until he retired at 55 (after making the final payment on my younger sister’s college tuition). Now he’s in his late 80s, still plays softball a couple of times a week, and has enjoyed his retirement from the savings and investments he made.

But, for the Value Creators, we’ll share the Value Creator Framework, a simple planning tool to:

• provide you with the key questions you should ask yourself and your family;
• assess your current business readiness; and
• what you need to do to achieve your goals.

In the illustration below, we introduce the steps you will need to take to consider, articulate, and achieve your goals.

The first step sounds easy… decide to be a business owner who is a Value Creator. However, this is a BIG decision.

To truly commit to becoming a Value Creator, you will first need to create your Personal Plan. We’ll get more of the details in the next article, but for now, begin to consider who else you will want to have participate in this process with you.

You will not be able to go it alone. It is important to have the support of your family and others to work with you on this process.

Next, we assess the current value of your business, and whether it is even saleable. We then, based on your Personal Plan, evaluate your target timeframe and the wealth the business needs to create to set your Target Value.

A key element of setting the Target Value is to determine precisely what changes need to be made to your business that will ensure your business is saleable – and able to create the wealth you need to achieve your goals.

We use our Value Creation framework. This tool identifies the operational elements that need improvement and the strategic capabilities that will demonstrate your business’s ability to operate without you at the helm.

So, think about whether you want to go the route of the Income Owner or if you genuinely want to be a Value Creator. In the next article, we discuss your Personal Plan. This process includes planning for life after sale, maximizing your business value, and ensuring your readiness for your ownership transition.