{"id":1623,"date":"2017-03-14T14:21:00","date_gmt":"2017-03-14T13:21:00","guid":{"rendered":"http:\/\/www.wikane.co.uk\/?p=1623"},"modified":"2017-03-15T11:20:00","modified_gmt":"2017-03-15T10:20:00","slug":"3-tools-for-sme-value-creation","status":"publish","type":"post","link":"https:\/\/wikane.ch\/en\/3-tools-for-sme-value-creation\/","title":{"rendered":"3 tools for SME value creation"},"content":{"rendered":"

After more than 20 years dedicated to improving SMEs, we can identify 3 powerful ways to increase the value of a company.<\/strong>\u00a0Any potential buyer will want to know not only how much wealth the company has accumulated since its creation, but also, what its wealth creation potential is.<\/strong><\/p>\n

The Owner\/Manager cannot rewrite history, so if they want to maximise the wealth of their business, they must focus on strategies to increase their capital base to provide the company with new prospects and to minimise risk.<\/p>\n

1. INCREASing capital base<\/span><\/h2>\n

The first step should be to optimise the things in your existing operation that will directly affect profit. Imagine how much of an increase in sales would be required to have the same impact as a 5% saving on costs?\u00a0To give you an example: with one of our clients we transformed a barely-break-even result into a 7% profit on sales by gaining 5% on purchases and increasing prices by 5%.<\/p>\n

2. INNOVATing<\/span><\/h2>\n

The future of the company will depend on emerging product\/service offerings positioned in high potential markets.\u00a0It therefore makes sense to have a diverse portfolio of strategic business units (SBUs) and to optimise the company\u2019s resources.\u00a0We find it useful to employ the Boston matrix here to help allocate resources to the different SBUs:<\/p>\n

    \n
  • Dogs generate little margin so there should be little or no investment in those activities<\/li>\n
  • Use the cash generated by ‘cash cows\u2019 to fund promising innovations: \u2018Question Marks\u2019 that tomorrow will be \u2018Stars\u2019 and themselves future cash cows<\/li>\n
  • Use the available cash to maintain the leading market position of the Stars<\/li>\n
  • Milk the cash cows without major investment. In time, a cash cow will either exit the market or will be ripe for rejuvenation through innovation or technological breakthrough<\/li>\n<\/ul>\n

    Having no SBUs in growth markets will seriously jeopardise the future of the business!<\/strong><\/p>\n

    \u00a0\"3tools\"<\/strong><\/p>\n

    3. MINIMISING THE RISK<\/span><\/h2>\n

    This is about structuring the business so that it can operate with or without its Owner\/Manager and ensuring that it is protected from any unusual loss of its client portfolio. There are many ways to do this: setting up a management committee, recruiting people with high-level skills, setting up defensive barriers, diluting customers that represent more than 15% of sales and securing contracts by obtaining commitments over more than one year.<\/p>\n

    These measures are of course, not exhaustive, but any Owner\/Manager who works on these 3 aspects with appropriate resources for financing their growth will definitely create value.\u00a0 This will facilitate obtaining a loan for a potential buyer.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

    After more than 20 years dedicated to improving SMEs, we can identify 3 powerful ways to increase the value of a company.\u00a0Any potential buyer will want to know not only how much wealth the company has accumulated since its creation, but also, what its wealth creation potential is. The Owner\/Manager cannot rewrite history, so if …<\/p>\n","protected":false},"author":32,"featured_media":17,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"cybocfi_hide_featured_image":"","footnotes":""},"categories":[92],"tags":[93,96,94,95,97],"class_list":["post-1623","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-expert-article","tag-creating-value","tag-development","tag-growth","tag-sbu","tag-smes"],"acf":[],"yoast_head":"\n3 tools for SME value creation - Wikane<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.wikane.co.uk\/3-tools-for-sme-value-creation\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"3 tools for SME value creation - Wikane\" \/>\n<meta property=\"og:description\" content=\"After more than 20 years dedicated to improving SMEs, we can identify 3 powerful ways to increase the value of a company.\u00a0Any potential buyer will want to know not only how much wealth the company has accumulated since its creation, but also, what its wealth creation potential is. 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