In creating a value-building plan, we’ve organized our recommendations (or tasks) into categories including:
- Business fundamentals
- Strategic planning
- Internal operations
- Leveraging human resources
- Financial measurement and management
- Benchmarking and measuring success
Today let’s talk about what we mean by business fundamentals and how addressing them can help you build value in your business. We’ll tackle the other five areas in future articles.
Under the heading of “Business Fundamentals,” we put the housekeeping activities that reduce your exposure to risk of loss. We do that first because before we work to increase value, we want to make sure that mechanisms are in place to protect significant business value. We divide business fundamentals into four areas:
- Ownership rights and responsibilities
- Facilities management
- Employee errors
Ownership rights and responsibilities
Are your corporate records in order? Is each share of stock documented? If you are a co-owner, are the rights and responsibilities of each owner clearly documented, understood by all owners and implemented? Do you know what will happen if one owner becomes ill or dies? Has the company paid for any perks for family members?
Minimize risk of loss from facilities management
You need to know where your company is most vulnerable to loss in its activities. Vulnerable areas might be in services, manufacturing, assembly, inventory, publishing/printing/duplication, records management and maintenance, or research and development. You may also need to take a look at your operating space especially if it has grown on an as-needed basis, rather than from a carefully conceived design.
Minimize risk of loss from competitors
Have you taken time lately to identify all of your direct and indirect competitors? Have you evaluated them in terms of their ability to threaten your organization? Can you avoid future threats from competitors?
Minimize risk of loss from employee errors
In the past 12 months, has an employee made an error that cost your company significant money? How did that error occur? What measures can be put in place to prevent similar errors in the future?
By taking time to review these business fundamentals, business owners will get a better sense of their own rights and responsibilities, what is needed in the way of facilities management, how they rank in terms of the competition and, lastly, what their level of exposure to risk is.
To your success,
Joe Maas, CFA, AVA, CFP®, ChFC, CLU®, MSFS, CCIM
President of Synergetic Finance