Does CGCSE remind you of something?

There is a clue included in the headline itself.

Chances are you came up with the right answer (Sahi Jawaab) – IGCSE Board of Education.

While CGCSE is not a board of education, it’s still an education that we must all have.  In fact, this should be mandatory for every business owner, corporate executive, and prospective business owners/corporate executives.  Another quick question (without a hint/clue this time). It might seem like I am digressing, but I am on the right path so far. With that, it’s time for a one question quiz!

What is the meaning of the word “education”?

Tick Tock…1,2,3…

The word education derives its meaning from the Latin word EDUCO, which means to grow from within. And real education is one that inspires us to do something. The education that we need should be all about growing from within…With the quiz, origin and meaning out of the way, let’s unpack the acronym CGCSE. I created this as something that every business owner/corporate executive must learn and rather know (not to mention deeply understand) before even stepping into the world of business.

The first C stands for Continuity.

This means continuity of your business should something happen to you. This is preparing for the unexpected. Do not confuse continuity with succession even though there is some connection between the two. The right time to prepare for continuity is as soon as you start the business, and you have real clients and team members. Additionally, the future of your family rests on how well you have addressed this plan. World class professionals always think about their clients, team members and ensure that they have addressed this critical variable. It’s not surprising to see many in our industry/profession not having a continuity plan in place. The best part is that we don’t even feel like something is missing.

What about You?

Do you have a Continuity Plan in place?

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The G stands for Growth.

The questions here are – How prepared is your firm for growth? What is the real organic growth of your firm (if we take out the mark to market changes in asset prices)?

Every business in our industry goes through similar growth phases and will hit growth barriers at different levels of AUMs and team size & structure. Once you have crossed the first few years (where the focus is all around client experience, marketing, prospecting, and getting ideal clients), you start to hit the initial real set of growth barriers where you need to work on your processes, systems, people and technology. During the subsequent sets of growth barriers, you will need to work on your service model, talent development, organization structure & management, sales process, rain marketing (while you might be thinking of rainmaking, I got this one right – more on this topic some other day) , world class referral programs,  strategic alliances and innovation. A thing you need to remember is that your profit margins take a hit (if you invest well) during each of these growth barriers. But that’s precisely how you overcome these barriers.

Moving forward, if I had to choose one amongst these 5 letters of CGCSE, my pick would be this second C (and the third letter of the acronym) that stands for CHANGE. This is the most important of all. A firm will change over its lifetime. You will change personally too over your lifetime. You thus need to make your firm ready for change (or to embrace change). It is not whether you should or not. The answer is you need to.

The questions then are –How have you changed over the years? How has your industry changed? And how are you preparing yourself for the change that is happening now and one that is likely to happen in the future?

The first three letters CGC must be tattooed somewhere…Continuity, Growth, Change…Every firm needs this…

The S in CGCSE is Succession

Regardless of the firm you have built, every business must go through this process of Succession. This is true even if you don’t ever want to go through E- Exit. While continuity, succession and exit seem to be interconnected to each other, in reality they are 3 different things. A savvy business owner understands the differences and connections among the three. You will not be able to run the business forever. This is the reality. You need to set up your business now for an effective transfer.

Making a plan for what might happen to your business when you are no longer running it makes the transition smooth for everyone. Most importantly, it protects the value of your business. Rather it builds up value in your business (assuming the following areas of growth, client composition, value proposition and your position in a competitive landscape are well addressed). Because a business that can be effectively transitioned is a business that’s running well – and that’s a business that’s valuable for prospective buyers.

The final E as you know by now is Exit.

One of the most important things to remember is about making your business super valuable to a prospective buyer. And which business is likely to be super valuable?

One that has a clear continuity plan in place. One that is growing well. One that embraces change One that has a succession plan in place.

Another key thing to remember is that if your plan is to sell to an external buyer, there is a lot you must prepare for. Most importantly when should you start preparing for the eventual exit. Even if your answer is never, simply knowing what a prospective buyer values, knowing the costly mistakes to avoid, and knowing the investments to make (including addressing the growth, marketing and client experience) will increase the value of your business.

The thing you need to focus on starts by asking this important question – What do I need to do today to increase the value of your business. Wait…there is something else…Even before you think of increasing the value of your business, you need to first find out the value of your business.

By the way, do you even know the value of your business?

I am going to let you answer this one.

P.S. If you need help in figuring the real value of your business, we are happy to help. We will be doing a workshop on this one. Limited to 25 only. Click on this link to sign up for the workshop.