Getting Started with Business Self Assessment
Uncover Opportunities by Assessing Your Business
Join Dan Smits as he guides you through the essential process of business self-assessment. Dive deep into the strategies that empower you to navigate the road to growth effectively. Discover how to unleash your business’s potential by assessing where you stand in comparison to industry benchmarks. From optimizing EBITDA to streamlining operations, Dan shares actionable insights that set the stage for success. Tune into this episode to learn how to maximum growth and create lasting profitability for your business.
What You’ll Learn
- How to measure your business’s standing against industry norms
- What practical strategies to implement to optimize EBITDA, streamline operations, and amplify efficiency
- Why self-assessment can help you foster growth, prepare for exit, and ensure your business’ success
Ready to unlock your business’s true potential? Dive into the world of growth strategies and self-assessment with us. Subscribe now and embark on a journey towards lasting success!
Hello, this is Dan Smits with GrowthPoint Partnership. I am hosting Partners in Growth Podcast. where we dive deep into running your business, growing your business, and making sure that you’re able to exit your business in the future with the maximum results.
Partners In Growth podcast presented by GrowthPoint Partnership. We are fractional COOs for hire to help you to grow your business. Today we’re going to be talking about the business self-assessment that helps you to be able to reflect on your business where you’re at right now to be able to say how is this compared to other businesses out there in my industry. So there’s tons of information out there that supports where you should be from a margin standpoint, or I will refer to it as EBITDA today, that is the factor that people are using when it comes to multiplying a factor times your EBITDA to determine your current value of your company. And of course there’s a lot of things that go into creating a gross strategy that helps you in the long run to be able to sell your business for a maximum amount through a business broker, through consultants that know how to help you navigate through that process. But today we’re going to reflect on where are you at today and what are the things that you need to be conscious of in running your business so you can in the long run exit for the maximum amount. And it might be years before you exit, but everyone is saying in the industry, especially business brokers, three to five years you should be thinking about exiting your business. So let’s start by comparing your numbers and statistics in the industry to best practices. So I will use the comparison. of business to business professional services industry, which I’m in, and let’s compare that to the other organizations that are out there. When you do research, worst case scenario a professional services company should be at least at 22% EBITDA to be able to determine the healthy part of your business. So 22%, so if it’s higher, that’s great. If it’s lower, there’s a lot of room for improvement to be able to continue to increase that EBITDA number. And how do we do that? We do that by having a strong strategy, is number one, of really having a point that you’re working on your business, you’re not just stuck in your business, and it might take a consultant to help you to move towards doing that. You’re also really Understanding your financials, you know what your financials are telling you. You are able to answer a question if someone like myself asks you where you’re at from an EBITDA standpoint, where are you at from overall ratios of different parts of your business and how much are you spending. You should be able to answer those things. You also have your operations, which is the third point that you really need to work on your business. really having solid operating procedures for your team, having metrics, dashboards, those different things that really reflect on your overall productivity model because ultimately you’re trying to become production oriented, a productivity driven model. No matter what you’re doing, that’s the ultimate goal. Then sales and marketing, of really focusing on What are you providing to these organizations from overall marketing and delivering that from sales and accounts management standpoint? And then lastly, number five is technology. Leveraging the technology to ensure that you become productivity driven, and that’s by leveraging different tools within your organization that you have an administrator of. You have great QuickBooks, you have great CRM system, enterprise system, other types of software that helps you to be able to track all these things that are happening within your business. So now we’re gonna dive into EBITDA, of what is EBITDA? It’s earnings before interest, taxes, depreciation and amortization. So really it’s what would you be transferring to the next business owner that they would be able to operate from? That is the amount. There are also add backs that potentially your compensation as the owner is more than it needs to be in your financials that maybe some of that can move to EBITDA.
It all comes down to does someone need to replace you when someone’s purchasing the business? And even if you’re not purchasing the business now, you need to prepare yourself so when you do decide to exit your business or if some unfortunate things like health come up, then it ends up being that you already have a good start towards selling your business from a profitable standpoint. So in general terms, most leaders are wanting to grow their business value and considering the impact of what it is that you need to do. So we know that we need to grow sales. Right. We need to reduce cost. We need to add capacity, which is simply efficiencies. Right. Capacity doesn’t mean necessarily more people. Right. Usually the biggest issue that a business owner has is that they are over staffed, right? So that’s number one thing that we have to define is adding more capacity. How do we do that? And then accelerating the overall culture into that productivity driven model that not only internally is seen, but externally it’s seen by the customers. And then reducing risk. And this doesn’t necessarily mean insurance, right? Yes, there could be insurances that help to reduce risk. But the main thing here is how are you communicating within your organization? Is that producing the right type of value system for your employees? Is the communication at an all time high? So you are insured that you’re reducing the fact that people will turn over within your organization. And when you come on or bring people on board them, is there a process to ensure that your company is moving forward in the right fashion to reduce risks and problems? Because it’s hard enough doing it the right way in business. So why not do it that everyone’s on the same page and that overall you know that the risk is less by having a plan, having strategies, and these different components that we talked about of self-assessing your business. When it comes to working with a consulting group or an internal mini board or with your business partner of having a predetermined process of how you’re gonna evaluate these different things. So we would be happy at GrowthPoint Partnership to walk you through a free assessment that helps you to be able to determine where you’re at and potentially where you’re going and with those different components of fixing things of how much it will add to your bottom line of your organization. This is Dan Smiths and my email is [email protected]. Our website is GrowthPointPartnership.com. My telephone number is 612-718-0698. Thanks a lot, have a good day.