Tuesday, July 8, 2014

Take a Vacation, Make Your Business More Valuable

Summer is here. For many people, that means it's time for a vacation. While it might seem strange, this can be the perfect time to increase the value of your company.

The most valuable businesses are the ones that can survive without their owner. Buyers will pay premiums for a company that runs on "autopilot" and apply a steep discount for a business that is dependent on its owner.


An extended break from your business enables you to see how things run when you’re not in the building. If you weren't planning a vacation at all, you should consider taking one.

It’s likely that some things will go wrong, but understanding these errors creates opportunities for making your business operate more independently of you – and therefore more valuable. 

Here is a six-step plan for profiting from your vacation time this summer:

Step 1: Schedule your vacation plus one extra day

Whatever day you plan to start working again after your holiday, tell your staff you’ll be back one day later. That way, you’ll have a full day of uninterrupted time to dedicate to understanding what went wrong in your absence.

Step 2: Categorize the issues

When you return, make a summary of the things that went wrong and categorize them into one of three categories:

  • Mistakes: errors where there is a right and wrong answer.
  • Bottlenecks: projects that had difficulties because you weren’t there to provide your feedback;
  • Stalled projects: initiatives that went nowhere while you were gone because you’re the person leading them.

Step 3: Correct the mistakes

The first and easiest place to start is to simply correct the mistakes that were made. 

Most mistakes are due to a lack of training rather than outright negligence. The right answer may be crystal clear in your head but not immediately obvious to your staff. 

Write up some instructions for next time the employees face the same situation. Make sure your instructions are clear, and share them with your team so everyone has them. A company intranet or a file-sharing service like Google Drive or DropBox can be a helpful repository for your instructions and training documents.

Step 4: Unblock your bottlenecks

If you’re being asked for your personal input on projects, there’s probably going to be a bottleneck if you’re not around.

Make sure your staff is clear on the projects where you need to have a say and the projects where you don’t. Some employees may wrongly think that you need to approve all decisions. Make it clear when you want them to act alone and when you still need to have a say.

Step 5:  Re-assign stalled projects

The hardest part of making your business less dependent on you is dealing with projects that get stalled when you’re away.

Start by asking yourself if you’re the right person to lead the project in the first place. As the owner of your business, projects often fall in your lap by default, rather than because you’re the best person to lead them.

Categorize your stalled projects into two groups: a) strategic projects you need to lead; and b) non-strategic projects you are leading by default. Hang on to the strategic projects, but delegate the non-strategic projects to someone on your team who is better suited to drive them forward.

Step 6: Empower your employees

At Ritz Carlton Hotels, every employee has the discretion to spend – without approval from their general manager – up to $2,000 on a guest. The $2,000 figure is a large enough number to make the message clear: front line employees should act first, make the customer happy, and ask questions later.

Employers want their staff to deliver the best customer service, but sometimes it's not exactly clear what that really means in a specific situation. Many employees know how to make a customer happy but lack the confidence to act. They uncertain about what they are authorized to do. 

Giving employees some spending authority will speed up the resolution of customer issues and empower your team to do the right thing when you’re not there.


Summer is beckoning. Go ahead and take a vacation – if you follow the six steps here, you may get a more valuable company to go along with your tan.  


Wondering if you have a sellable business? Contact the MAXIMA Group for a consultation. We focus on privately held companies with annual revenues of $3 million to $60 million. We also advise larger public and private companies on buy-side engagements. 

Wednesday, July 2, 2014

One Important Reason to Sell Your Business Now

The goal of any investor is: Buy low, sell high. This is a complicated issue when buying and selling stocks in public markets. It is more complicated when buying and selling entire businesses.  

Investors frequently miss a good chance to sell while waiting for a better opportunity – ones that may not materialize at all. Worse yet, sometimes disaster strikes while awaiting that “better opportunity,” and the whole economy goes into the gutter. Big potential profits are turned into huge actual losses.

This highlights a critical issue: if you are offering something for sale, you need a buyer who will bid a price you are happy to accept, rather than one you accept out of desperation. In a bad economy, asset prices fall because investors are less eager to pay for them.

So what about selling the ultimate investment: your business?

You want to sell your business when it is a good business to sell. Buyers want reliable cash flow, a sustainable business model, reasonable growth levels, and contracts in place for future work. 


What happens in a recession? Your clients’ projects are put on hold, or cancelled entirely. Future endeavors are moved farther away on the planning horizon. Liquidity becomes strained, spending contracts, and profits fall. This kind of situation puts downward pressure on the market price for your business. Even if your business has many fundamental strengths, the overall economic environment is a major factor in its value.

When you think about the “boom-and-bust” phases of the business cycle, it’s obviously not ideal to sell a business in a recession. 

When will the next recession occur? Canadian economic history shows business cycles lasting between 3.5 and 7 years. According to the National Bureau of Economic Research, business cycles run on average for about 69 months – slightly less than six years. This makes some people worry that the next crisis is disturbingly close.

The financial crisis of 2008 brought many businesses to the brink of disaster. That was several years ago now, and the currently feverish pace of the Western Canadian economy makes it all seem like a distant memory. It is easy to become complacent when the economy is chugging along .

For those business owners who managed to survive the economic downturn, the prospect of fighting through another recession might leave them a bit weak in the knees. This is especially true if the next crash will likely be worse than the last one, due to a range of government interventions that have made the economy more fragile.


It is better to sell your business when the economy is in the “boom” phase. Confident buyers will pay higher prices than buyers who are prevailingly negative and think the world is ending. If you worry about the next recession, now might be a good time to test the market for your business sale.


Wondering if you have a sellable business? Contact the MAXIMA Group for a consultation. We focus on privately held companies with annual revenues of $3 million to $60 million. We also advise larger public and private companies on buy-side engagements.