In Part 1 of this series, we looked at how we define and measure value in a business. In this blog, we’ll look at the importance of your business’s vision.
Or put another way, why your business exists and what its purpose is.
This is relevant as too often business owners lose sight of the purpose of their organisation – they forget why they started it in the first place. Day-to-day concerns and priorities start to take up disproportionate executive time, pushing strategy, goals and long-term thinking down the pecking order.
It’s vital to identify and stay mindful of what you and your business stand for. Your vision and purpose will anchor your business and create clarity around your ambitions. They will act as your stake in the ground around which all your stakeholders, internal and external, can unite. They’ll also attract people who share your values to do business with - and work for - you.
In my experience, companies that define their why in this way always realise the highest possible value.
In Part 1, I used the hypothetical scenario of the prospective sale of your business as a way to focus the mind on the building blocks of value. It’s useful to think like a buyer at this stage too as, while the sale of your business should not be its vision, it is a possible outcome of having a clear vision and strategy in place.
Defining the vision and purpose is of your business means asking big questions, which can be challenging to answer. Therefore, we break it down into four key areas which, when considered together, will help you arrive at your vision and purpose.
1 What do your customers value?
How do they evaluate and measure the quality and usefulness of your products and services? Understanding your target audience’s needs and how potential customers compare you to alternative providers will give you greater clarity around your purpose. Also, consider how you would like your customers to describe and position you.
2 What are your rivals doing?
Do you know what your competitors are up to? The more you understand and appreciate their activity, the more effectively you’ll be able to use your knowledge and experience to leapfrog them.
3 What are the aspirations of the shareholders?
Often, the shareholders of a business are at different life stages and have differing aspirations. Take time to discuss and understand what your co-shareholders’ perceptions of value are and what they personally want from the business. To really succeed, the vision of the business needs to be aligned to the vision of the shareholders. So often, this alignment is missing and this can have a huge detrimental impact on the business.
4 What are you best at?
It's said there’s no such thing as a new idea - just new ways of bringing existing ideas together. So, don’t always try to reinvent the wheel. Instead, build on what you can be better than anyone else at. Think about the skills, resources and knowledge you have in your business and how you can leverage those to your advantage.
Having answered these questions and determined one or possibly multiple visions for the business, you need to put it into context by reconciling your answers against four further questions:
what are the potential rewards of pursuing the chosen strategy?
how much effort will be needed to deliver it?
do you have the resources and capabilities, both human and capital, to deliver it?
Finally, you’ll need to assess the level of risk involved at every stage and how that tallies with your appetite for personal and business risk.
Considering the questions above, and with all this knowledge at your disposal, you’re now well placed to articulate a clear vison and purpose for your business. However, it’s all very well having a strategy, but without a clear plan to deliver it, it’ll have very little value. So, in a later blog in this series we’re going to look at how you can turn knowledge into action in your organisation.
Coming up, we’ll be exploring the eight value drivers – these are the areas of focus in your business that will maximise the M (multiple) in our V = P x M equation. They are:
quality of income
people and culture
positioning and offer
new business and marketing
In the meantime, to talk about growing your business, call me, Dan Egerton on 07879 845845, or drop me an email.