with Buyable author, Steve Preda
Watch the full session here https://www.foundercity.com/bonus1
Founder City is a free, multi-faceted resource created by The Frederick Innovative Technology Center, Inc. (FITCI) and Betamore for business leaders on their own path to growth and discovery. The virtual conference includes a pitch competition worth $25,000 in cash and service prizes, in addition to mentorship opportunities, networking, targeted learning and more.
“Make your business buyable, even if you want to keep It”
Start with the end in mind. That’s the bottom line, according to Steve Preda, an author, speaker, Pinnacle Business Guide and former Certified EOS Implementer® who is dedicated to guiding business leaders as they build self-managing, fast-growing, and high-profit businesses. Also a regular blogger and podcast host, Preda delivers workshops and keynotes to entrepreneurial audiences around the US. His new book, Buyable – Your Guide to Building a Self-Managing, Fast-Growing and High-Profit Business, is available on Amazon. In this Founder City bonus session, he shares top level insights with FITCI CEO Kathie Callahan Brady.
Start wherever you are.
“Some of your companies, clients or members are going to be at the very beginning,” acknowledges Preda, addressing Founder City’s focus on emerging businesses. “They have to figure out what they even want to do and how the business will work. Then there are others who are already running the business for 10 or 15 years. They just have to raise their heads and be a little bit more intentional about the way they move forward.”
Either way, founders have options. Since 2002, Preda has helped more than 250 entrepreneurial organizations become more valuable and sellable, so he understands the difference in each situation, as well as their commonalities.
For early-stage operations Preda advises, “The idea is not to sell your business, but to create an asset.” That generates options in the long-term. “Having a business is a huge opportunity because it’s a vehicle for you to craft any type of life that you want.” Essentially, a business worth buying is the only type of business worth building, because it becomes your legacy, as well as a bridge to whatever you choose to do next.
“Be systematic about it and just do it. Eventually it will be a valuable asset that could make your dreams come true.”
Only 1 in 10 companies sell
That means 90% of businesses, even seemingly “successful” ones, fizzle at the end, leaving founders with nothing to pass on and no padding at the exit for their next endeavor. As a springboard for planning, Preda notes that the average lifetime for a business is 8.5 years. (It’s 18 years for Fortune 500 company.) “That means that most businesses end up not being valuable after the owner is gone. Or they are not even viable. It’s a huge problem.” The answer, he says, “You have to follow the recipe.”
Figure the Future
The recipe, according to his book, outlines seven management concepts. It all starts with formulating an over-arching vision for the company. “The vision is the purpose of the organization. It is the long-term, North star.” It is the great “why” of existence and where the company’s foundation, culture and structure come into focus through intentional creation. Clarity on these three points allows a business leader to share a vision with team members and supporters. Once others understand the vision, they can help manifest it more effectively.
Orchestrate the Business
In the next phase, business leaders should focus on how to launch their journey. Here, Preda leads with questions on strategy. “How are you going to get there? How are you going to differentiate yourself? What are the goals you’re going to set? How will you get resources, whether that’s people or finances or assets? How do you monitor, so that things don’t go off track?”
Instill Value Drivers
He calls the third phase “production.” This covers execution, processes (systemizing the business) and alignment. “Execution is about setting your priorities.” He suggests regular team meetings for peer accountability. “So, you don’t have to do all the heavy lifting yourself.” In this way, business leaders leverage their personal intuition and experience, empowering others to contribute. “When everyone is rowing in the same direction, you have alignment.”
Transparency is important, too, since a business’ “buyability” quotient plummets if it would fall apart without its lynchpin leader at the helm.
Preda calls out the red flags, starting with the truism that most start-ups are led by technicians, not entrepreneurs. “They don’t realize that, in order for the business to be successful, they have to stop being a (tradesperson) and become a manager, then an entrepreneur.” Realistically, no one person is perfect at everything, but identifying a lack unlocks the opportunity to course-correct or engage outside support as necessary.
Common stumbling blocks:
- Wrong/Outmoded Industry
- No Company Vision
- Inconsistency/No Systemized Processes
- Disenfranchised/Stunted Employees
- No Internal Sales Engine
- Incorrect Target Market
- Lack of Differentiation
- Client Concentration
- Shoddy Accounting
- Unsustainable Growth
From Preda’s website, stevepreda.com, there is a link to buyabilityassessment.com. The site walks business leaders through 41 questions to a clear picture of the “Six Factors of Buyability” and offers suggestions on how to improve.
When the time comes to harvest the business, Preda’s advice for the individual at the top is to figure out what is going to be a more compelling future than what you are doing now. And, don’t get distracted by the rosy vision of life after that transition. “Keep running your business. Keep your foot on the gas.” Losing focus will drag out the process and impact value if numbers begin to soften.
Overall, Preda’s message is a positive one as he assures fellow entrepreneurs, “Just follow the process and you’re going to get there. Leave yourself enough time. You can turn your business into whatever exit you want.”