Business

Creating value in business

Ideas panel

BY DENNISE WILLIAMS
Contributor

Friday, March 09, 2018

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Business owners start businesses for a variety of reasons. A few do it to make a lot of money, but a vast majority do it for other reasons. Regardless of your reason for having a small business, this show is all about creating value for yourself and the community you serve.

Our income ideas panel discuss how business owners can create value for themselves and the community they serve.

So what is value? Is it just to be found on the financial statements or is it the number of jobs you create or the impact on the community?

Robert Taylor, attorney at law explains, “Business value includes any type of value that will add to the long-term health and success of the business. It is more than simply economic value, and includes forms of value, such as customer good will, employee satisfaction, supplier value, managerial skills and experience and ethical or community value. Business value can include intangible as well as tangible assets, such as intellectual property and the business plan.”

Business coach, Kerrie Ann Richards adds that, “Value can also be consider what you bring to the customer as the primary purpose of any business. However, there are other ways to measure value such as value to communities. When the Goodyear factory was booming it meant that there were direct and indirect jobs. When Alpart and Alcan boomed that meant great things for the economy of central Jamaica. Then there is value to the market. When there are innovative technology-enabled businesses it forces other players to level up to remain competitive. And of course, there is value to the business owner which could represent a potential legacy to family or upward mobility for the business owner.”

After establishing what value is, the question is where is more value to be found within the business? Decreasing expenses or increasing revenue?

Dino HInds, director of MicroFinancing Solutions answers this way. “To be able to answer that question, one would have to review the numbers to see what impact is made on the bottom line. Cutting some cost can have an impact on your revenues and therefore on your profits. Most companies however will have some amount of non-essential cost that if you can find a way to eliminate these it then it goes straight to the bottom line.

"Similarly we would have to analyse the cost involved in generating the extra revenues. Only after doing this then one can determine which has created greater value for the company.”

Richards adds “An increase in revenue may have associated cost of sales.In the current state of the economy, a decrease in expenses is a better marker of success. It is also a great indicator to investors and potential partners that you have a robust monitoring, evaluating and reporting mechanisms in place. In short that you run a tight ship and that their investment would be secure.”

As business owners sharpen their various tools to create value, Taylor offers this checklist for business owners.

1. Make and keep realistic promises on service, quality and delivery. This will give you more credibility with your customers. By making and keeping promises to your employees, you can also build employee loyalty, confidence and morale. Keeping promises and delivering consistent results is a key to proving the reliability of your company, product or service, and this is a major intangible business value.

2. Use information technology to create business value by having in place an IT plan and investing to support the IT development that you need to meet the goals of your IT plan.

3. Develop and encourage effective decision making practices by employees. This can be achieved through leadership training programs, delegation of responsibility, and encouraging and supporting employees to take more day-to-day control of their own projects. This leaves top management free to focus more on strategic issues, and gives employees more experience and confidence, so they can step into higher roles.

4. Strengthen your core competencies by investing in development and spending more time and money on those areas that are most important to your long-term success and growth.

5. Increase your business value by building capability within your business. This includes focusing on attracting and retaining good employees; making sure customers are satisfied and your business has a good reputation; having in place procedures that ensure high performance; encouraging collaboration and cooperation across the business; developing leaders who can support and motivate employees and supporting employees to develop the skills and knowledge they need to innovate.

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