Want to make your business worth more, whether you’re planning to sell or attract investors? The key is to strengthen your Structural Capital – the systems, processes and know-how that keep your business running like a well-oiled machine. Structural Capital can boost efficiency and reduce reliance on key individuals. When you get it right, it’s part of your secret sauce. Here are two ways to improve structural capital.
1. Document processes. Imagine if your business was a busy kitchen. If your head chef (you) is the only one who knows the recipe for your most popular dish, chaos will break out when you’re not around. Documented processes are like a detailed cookbook that anyone can follow to whip up the same tasty results as you. Write down your core workflows – sales, customer service, inventory management, etc. and create clear standard operating procedures (SOPs). Keep them centrally located and accessible. This will make it easy if staff changes to keep your operation humming along.
2. Upgrade your technology. If your business is like a car, outdated technology is like a clunky engine sputtering along. Investing in the right tools gives your business the horsepower to zoom ahead. Tools like a top-of-the-line CRM, project management tools, and other software systems can lead to better automated processes and centralized data, making the business more efficient. Data analytics tools can boost profitability. Automation tools can reduce errors.
Remember, Structural Capital is like the skeleton of the business body. Without a strong skeleton, the business could collapse. If processes and procedures are well-documented and clear, and the technology you use in your business is current and effective, you’ll run a more efficient business. Companies with robust systems and documented processes often command higher multiples during sales because there is lower risk to buyers.
Along with the other three intangible capitals – Human Capital, Social Capital, and Customer Capital – Structural Capital can be a difference maker in the multiple you can receive for your business. Most business owners plan to sell their business in order to retire, so prioritize your structural capital to build a more valuable asset for tomorrow. Call us at 602-923-9800 to learn more!
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