It is one of my header phrases, and when it is understood, at least for me it is a wow! Many think that “Exit planning“It is preparing the exit, but it is much more than that (and I would even say that it may not include that part!) One of the keys is to have a valuable, transcendent, transcendent business and that works without depending on its owners.
It is deciding if you stay … It’s because you decide to do it, not because you can’t leave.
In my meetings, works and workshops with business owners, I emphasize a lot and we talk about the importance of having the company “always ready and prepared to sell”, even if we are not thinking of selling it or making a transition or exit of it by some of the alternatives. In short, I call her to create a transcendent company. It is one of the most important events and steps, in my opinion, which we can achieve in our companies.
A guide for business owners. In the competitive current business panorama, many business owners focus tirelessly to achieve economic, financial and sustained growth. Their companies can exhibit solid results and balances, satisfied customers, committed employees and an excellent reputation in the industry. Known brands, clients and diversified products, good business processes, adequate technology for industry, good information systems, perhaps some spot with some “informality”, but in general terms we could say that we have “successful companies.”
However, experience has taught me that, at a certain extent, the concept of “success” evolves. True aspiration becomes a legacy, creating a company that can transcend, and that at any point in its trajectory is a valuable, and transferable company. They have no dependencies of their owners or anyone and works “like a little machine.”
But how is this transition from a successful company to a truly transcendent? The key is to adopt a holistic perspective, and for this, I propose the use of the Value wheel. This integral model allows companies owners to evaluate all the dimensions of their business, not only to maximize their value, but to understand their impact and continuity in the long term. It is a tool designed to go beyond profitability either in the short, as in the medium and long term, and that also helps the owners align their business objectives with the personal and financial.
When the owners of a business create transcendent companies, they achieved their “freedom”, since they own from another place. In my opinion it is a transcendental and the most valuable step to be given by business owners.
Understanding the “value wheel”. A transcendent company is distinguished by its ability to operate and prosper regardless of its founders, being attractive and transferable at any time and allowing their owners to have their personal, financial and business goals aligned with those of the company. The value wheel allows us to examine some of the pillars that support this transcendence:
Results – Ebitda: It is one of the bases. Profitability is indispensable for sustainability, but the objective is that this is predictable, repeatable and, crucially transferable, increasing the value of the company. Not having “contingencies” is very important.
Information systems: Transcendent companies rely on reliable metrics, updated boards, professional management control, systems that can follow technological evolution, which based on systems allow to grow and administer greater complexity, and even go to different countries because they are prepared to do so.
Business processes: Efficiency and quality are built through the standardization, improvement and documentation of the processes. Best practices within the industry, good controls. This allows to climb the operation without sacrificing the quality, making the company more attractive and transferable.
Technology: In the current era, strategic investment in technology is not optional. It allows automating, connecting and generating new sources of value, contributing to the independence of the company. Surely take into account the risks and have worked in cybersecurity.
Intellectual Property: The brand, the know-how, the patents, are key assets that must be protected and valued. These elements can add a significant and distinctive “value”.
Management equipment: Sustained growth requires an evolution of “founders who do everything” to a solid team that manages, innovates and leads, even evolves to being able to formulate the strategy of the company, its consensus and execution, paying accounts before a professional directory. This is vital to ensure that the company no longer depends on its owners. It is a job of many years. In each key position, have the successors, and the entire “motivated” team and sharing the purpose of the company.
Clients and value proposal: A relevant company is based on deeply understanding the client and solving their problems better than anyone. This promotes sustained value and focuses on diversifying both in turnover and profitability, customers and products and services. In general they are companies that are solid because they have no dependencies that threaten them.
Diversification: The resilience of a company is strengthened by diversifying income, avoiding the dependence of a few customers or some product or star service.
Growth model: Climbing requires a clear road map, with defined stages, assigned resources and planned risks. Knowing and having the recipe to continue growing is important. This ensures that the company is always ready to grow and for any opportunity that arises.
Succession and continuity: The owner must be able to choose how and when to make a transition and ultimately if he decides to leave, he must be able to do it. This is only achieved with early planning, appropriate corporate structures and a team capable of giving continuity.
A transcendent company is always prepared and ready for this moment, with an intrinsic and transferable value.
Beyond the owner’s dependence. One of the most distinctive characteristics of transcendent companies is their independence and their constant value: they are valuable companies, always transferable and without depending on a particular person.
This means that it no longer depends exclusively on its owners or a particular person for its functioning and growth. It is designed to be inherently transferable and attractive, with an intrinsic “value” at any time. This state of constant preparation not only mitigates risks, but opens doors to new opportunities and freedom for the owners.
In a transcendent company, the personal, financial and business objectives of its owners are aligned with those of the company. This balance is the one that gives purpose and, ultimately, with freedom to the entrepreneur. Building is not an accidental event; It is the result of a clear intention, an unwavering commitment and a strategic guide. It is the way to transform a successful business into a lasting, transcendent and valuable legacy.
*Gustavo Schutt, consultant specializing in Exit Planning and in increasing the value of companies. Author of “the reinvention of the owner”.
By Gustavo Schutt
