If you run a privately held Small to Medium Enterprise (P-SME), you’ll know what a tough but rewarding experience it is. It affords you the opportunity to achieve 2 things in life:
At Scale, we work with many companies, and much of the work we do with them focussed on setting Core Purpose, Core Values, and ambitious goals for the business, then putting in place the plans to achieve them. To be clear, this work always leads to a more valuable business – a well-aligned and motivated team drives increased revenues and profits, and a strong management operating system adds significantly to the value of a business.
However, the primary focus of such initiatives is typically not explicitly focus on improving Shareholder Value. And to be clear, in the event of tension between Purpose and Shareholder Value, purpose should always prevail. We work with a business who help companies to improve their performance through diversity and inclusivity. They have a strong culture of bringing their best and latest ideas on diversity to market regardless of whether those ideas are current, popular, or mainstream. Belief should always trump profit considerations in such decisions (in fact, with time, the former usually drives the latter).
However, as the owner of a P-SME, focusing on growing Shareholder Value is important, because:
So why don’t more entrepreneurs have a stronger focus on building Shareholder Value? Having worked with dozens of companies over the years, and our own experiences being unprepared to sell companies previously, we’ve identified the key reasons why entrepreneurs don’t build their companies with enough due consideration of Shareholder Value. Do any apply to you?
Obviously, it takes years to really grow Shareholder Value. Even if you have the notion to sell the company ‘in a few years’ time’, the process of preparation must start now. Often, by the time these issues become apparent, it’s already too late.
The specific actions to take will depend on the current strengths and weaknesses of your company. Head to our Shareholder Value Checklist, which highlights the key areas that investors value in businesses, and that often fall short in P-SME’s. Bring together the management team and decide which one will you focus on fixing first – make it a Priority for the Quarter.
If you repeat that each Quarter, and improve these scores, you will massively grow the value of your business.