Improving Company Value

What makes one company more valuable than another? You see it often among large, publicly traded corporations. The common stock of one company often sells at a higher multiple of earnings than another which maybe a direct competitor, think Coke and Pepsi! Even McDonalds and Burger King are examples. It is a complex topic and I have spent years as a stock analyst on matters like this. I have come to see that it can also be true of smaller concerns like the ones that dot the landscape of West Michigan.

It usually comes down to management and its approach to business. There are lots of different strategies to employ, but the highly valuable firm seems to navigate the shoals of change and remain as profitable or more than its competitors, while usually out-performing them. Every company can think of one of its competitors that probably stands out a little more than the rest. There are lots of ways this happens. Business is dynamic and change is constant. Those firms that see this as a process are usually those that create more value for their owners. In spite of multiple outside advisors, it is true that value enhancement efforts often go ignored because the external advisors are absorbed with narrow focus and provide specific advice for current performance like accountants providing excellent tax advice or straight forward accounting information.

One of the primary reasons for enhanced value is the ability of some businesses to be able to have strategic vision and position themselves for the future. It is my experience that most small business managers are so rightly occupied with the daily pressures of their business that forming an effective strategic vision is crowded out by the daily needs of the business. One way a business grows is to have invested in this strategic thinking. This is much more than a business plan. Like most businesses have web sites, many also have business plan with mission statements, etc. Yet, few make much difference and like the web site are usually in need of something more. Done correctly strategic value planning, positions a business for success in adversity, higher profitability and greater growth.

Whether owners are thinking of preparing a company for sale or just prepare for the future, the returns to the owner are increased by placing proper emphasis on and investing in a strategic value enhancement. We can help.

If you are interested in this topic please contact us to receive our white papers entitled:

  • What are the key factors to measure to get the best performance from your business?
  • What is the most important capital in your business?

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