Use Leverage to Increase the Value of Your Business

Wednesday, September 7 2011

Throughout history, humans have used leverage to ease their burdens. Applying the physics of leverage, an average person can move loads many times his own weight, thus in ancient times the Pyramids, Stonehenge, and the aqueducts were built using huge stones. Leverage enables you to achieve more with less effort.

Business owners can achieve more with less effort if they build a business that continues to grow and prosper even if they aren’t there doing the work. This becomes even more critical as you plan for the transition of your business.

Let’s suppose you’d like to retire in three years, and that you’d like to sell your business for 50% more than its current value. With this concrete goal in mind, what is the best use of your time over the next three years? How can you use the principle of leverage to your advantage?

Reduce or eliminate all activities that don’t contribute to the achievement of your goal. The 80-20 rule suggests that 20% of your current activities produce 80% of the important results. Conversely, 80% of your activities produce only 20% of your preferred results. Therefore you should identify the critical 20%, do more of those and fewer or none of the other activities that have a low payoff.

Work ON the business not IN the business. Leverage the skills and abilities of your employees.

  • Slowly but surely delegate everything and teach your people to do what you used to do. Coach more, do less.
  • Dedicate someone to document all the processes that make your company successful. Use a software tool like Camtasia to record all the keystrokes required for any complex processes that can be captured on the computer.

Join a group of like-minded entrepreneurs who are wrestling with the same challenges. Change is hard, but you can learn from and support each other.

Get a coach. A business transition coach will keep you focused on what’s important, leveraging your time and unique talents.

Spend less time at the office. Play more golf. Go fishing.

By focusing on high payoff activities, developing your employees, and learning how to implement necessary changes, you can leverage your business’s value and prepare for a positive transition. In the process, you might find you can run your business from the cottage and don’t have to sell it. That’s what happened to me.

Would you like to know more on this topic? There are a limited number of copies of The Business Transition Crisis available as a book giveaway. Click here for your chance to win.