Does Your Company Have Enterprise Value? And, ... How Do You Grow It?

Note: this article was posted on-line at last Friday. In today’s coffee, we get to share how we think you might take your first steps to greater Enterprise Value (EV)

We have noted multiple times that the Custom Integration business is made up of “10,000 different companies doing the same thing 10,000 different ways.” You might argue that not all companies do exactly the same things – your company is different, right? – but there’s no doubt they are run in different ways. Every integration company we have ever seen manages their company differently.

So when it comes to how you run yours, you’re 100% correct – your company is different.

Now, imagine an investor were interested in buying your company, along with a number of other companies. Would the differences in how the companies are managed be attractive to the investor? Probably not.

Which is why it’s often written that if you don’t have recurring revenue, your company has no value. We agree, sort of – if you don’t have recurring revenue and your company does not run on some sort of standardized management system, it would have little value to an investor. But if it did run on a standardized system – one that is used by other integrators – enterprise value could be significant.

No recurring revenue necessary.

We believe the entire industry would be better off if integrators managed in a more standardized way. Think of it – with a standardized way for running the business, integrators wouldn’t have to guess, or figure out their own way. The way would be documented. There would be FAQ’s; most problems would have ready solutions.

Unfortunately, there is no “standardized way” endorsed by the industry. But VITAL’s management system – a direct descendant of the TLM System developed by Fast Forward – is firmly in place at dozens of companies. Many others have adopted some or most of the system’s basic precepts. It’s the closest thing to a standard that we know of. And it has proven to be remarkably effective at helping CI companies realize enhanced profitability.

The system includes a comprehensive set of integrator-specific metrics by which to regularly review and assess performance. This business intelligence (BI) is now being presented using infographics and comparatives via VITAL’s Bi4Ci on-line dashboard service. Check it out:

The First Step

Bi4Ci could be your first step towards greater Enterprise Value. It’ll get you on a standard Chart of Accounts, and let you compare your company’s performance against industry benchmarks. You’ll even see how your company ranks relative to other CI’s using the system.

These two points of feedback – performance vs benchmarks, & performance vs other CI’s – will readily reveal not just where your company can improve its productivity and profitability, but by how much.

Maybe Enterprise Value doesn’t interest you. But wouldn’t it be really smart to at least get your company moving in a direction that could build Enterprise Value in the long run – while creating a more profitable, efficient company in the near term?

That’s the step you take when you sign up for Bi4Ci.

Featured Posts
Recent Posts