Author Michael Podolny at Google+

Creating Your Formula for Selling a Small Business

Creating Your Formula for Selling a Small Business

A Deeper Dive Into Improving the Drivers that Affect Business Value

Repeatable Human Capital Development and Management (Part 3 of 4)

This month I’m covering specific things you can do in your business to increase its value, make it more salable and make it easier to do succession.  In this post I’ll be discussing the third of our four topics, repeatable human capital development and management. This subject is a subset of the sustainable business system we discussed in part one but in my opinion is so important it calls for individual attention.

Over my long career I couldn’t even count the number of times I’ve heard an owner say something like “I would love running this business if I just didn’t have to deal with all these employees.”  Do you feel that way?

Let me ask another question.  How well will your business perform and how much money will you make if all your people up and left?  It’s an exaggeration for effect.  Unless you are a one-person business, you can’t possibly operate your business without its people.  And if we’re honest with ourselves, our ability to achieve our goals is very near completely dependent upon how well our people do their jobs.  Yet when I assess businesses, it is rare that I find any type of systems for defining jobs and roles, for developing collaboration, for integrating the work of different departments, or for recruiting and training new talent.

This is on one hand is a bit of a mystery to me because there is a huge industry of advice givers, organizational development, human capital management, business coaches working at all organizational levels, etc., who specialize in helping businesses develop healthy, productive people processes.  On the other hand it is not mystery at all because most owners look at these disciplines and advisers as soft, fuzzy, and not ‘real’ business.

I’d suggest that if you’re in that camp, it would be in your own best interest to rethink your position.  When a buyer comes and values your business, he or she is going to look at how much your business is dependent on you.  Then they’re going to look how dependent it is on a small number of key people.  Then they’re going to see if the business can continuously develop the people necessary to produce the business results they want to buy.  If he or she finds you are the one driving all the performance, you will find you may not be salable at all.  If your business is driven by key people with no way to replace them, you may be a bit more marketable.  Only if you have the ability to continuously add, train, manage, and improve people, will you maximize your value and salability.

Are you ready to challenge yourself on this?  Contact me (michael@podolny.com) and let’s talk about what it might take.