Good Business Structure Covers A Multitude Of Sins!

PARTICULARLY IN THIS NEW economy, strong fundamentals play the most critical role in business valuation and likelihood of a successful exit.

It used to be that the ever-growing western economy covered the flaws of a business – and this was superficially true. Most business success in the past 60 years has occurred because of conditions outside the boardroom – like, say, the incredible economic growth consistent since World War 2 – and not because of the talent, products or location. It was osmosis.

Don’t pat yourself on the back. Your business has succeeded in spite of you and your personnel. It is unquestionable. Once you accept this, you can begin to see the road to improvement.

Now consider this:

There is no bad or incorrect way you could tell me that my wife has just given birth to twins. I would want to “buy” your “pitch” no matter how it was packaged.

Likewise, there is effectively no bad way you could sell an iPhone. It is a remarkable, useful and enjoyable piece of technology that has taken off precisely because it is a good, valuable product.

Similarly, there is no way to screw up the transition of a business that is properly prepared, at a fundamental level, for succession and exit of the owner.

If the business is intimately aware of its market, end user, its patrons, products, clientele and its core reason-for-being, then it will stick out from an ocean of other businesses that have succeeded, despite having no real knowledge of any of these, let alone the ability to communicate them and pass them on. I see so many deals that attempt to hide, re-arrange, obstruct and lie about their faults, instead of focusing on effectively and cleanly building a workable, real deal that expresses an understanding of where the substantial value is being transacted. It’s no wonder the global financial crisis impacted so many so negatively!

Structuring your company cleanly is, therefore, the single most important pillar for determining, measuring and organizing the improvement of business valuation.