Profit Building Cycles

For the past few weeks, we have been exploring the theme of “Building” and the impact that focusing on your business can have on its short—and long-term outcomes. It seems evident that as leaders in the marketplace, we would have already focused on building our businesses. One response to that is accurate, but then we must ask ourselves, are we really focused on building our company or simply existing it along, hoping for growth?

A client of JKL Associates recently called to ask if we might be able to help a colleague with the perpetuation or exit strategy for their business. We were very thankful that our client realized the value of our relationship and wanted to pass us a potential opportunity to help their colleague. Before just jumping at the opportunity, we had a brief discussion about the situation so we had a better chance of preparing to help before contacting the prospect.  During our client conversation, it was not directly stated, but the impression was left that although the prospect had been working in the business they owned for some 30 years, the company’s actual value was maybe not what it could be.

Armed with this critical insight, we contacted the prospect to start a dialogue to see if we could bring value to their situation. The prospect danced around the concern of the actual value of the business almost because they were a bit embarrassed to let the cat out of the bag.  They had been so involved in the day-to-day working of the business that they never built the business to be an asset.  It was not that the company did not provide excellent products and services and that it did not provide suitable employment for the community.  It was a well-respected business from everyone looking in from the outside, but they needed to know what was taking place internally.

This story happens more frequently than most people would expect. Business owners are not some magical success machine made up of substantial dollars just busting at the seams to make money. No, many business owners are the ones taking the pay cut to ensure employees get their paychecks. After 30+ years of operating a business, the owners are now looking to cash in on all their efforts and sacrifices.  Deep down, they know the absolute truth about the value of their business but have pushed this recurring thought off until they are at a point where they are exiting the business.

The good news in this situation is that the prospect was reaching out in advance of their actual exit timing.  This gave us an opportunity to infuse some strategy to build the business’s profit to attract potential buyers from the outside or to groom talent from within to purchase the business internally.  The good news is that the business owner did not wait until they were walking out the door to retire.  It can take 3 to 5 years to prepare a business for the best outcomes in perpetuation.  Yes, there are all kinds of ways to exit the business, but the best one is where the owner gets a fair value for their efforts, and the team at the business is sustained to continued quality employment.  The key here is to build profit into the business from day one and craft the business growth to ensure profit happens just as much as quality staff, quality products and services, and all business relationships.

Looking at the future and need a strategy to perpetuate your organization in a profitable and stable way?  Give JKL Associates a call in MI (313) 527-7945 or FL (407) 984-7246 for a no-obligation conversation.

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