First, Keep Your Value In Mind: 7 Ways
By Tom Schramski, PhD
Volume 1 Issue 15, August 19, 2014
In his 1969 classic, “The Seven Habits of Highly Effective People,” Stephen Covey referred to the importance of “beginning with the end in mind.” From his view, most successful people create a clear vision of their destination and then flex their operational muscles in the pursuit of their goals. While most owners of middle market healthcare companies keep this in mind part of the time, they also allow others to shape their fates and the value of their enterprise.
Professional and personal goals are not ultimately about EBITDA. Our goals are about what’s under the hood, and that’s where most successful entrepreneurs focus over time.
To build perceptible value and ultimately attract the largest audience of buyers, here are seven ways to behave:
- Always act as a lean start-up whatever the size of your revenue. Bureaucracy kills innovation.
- Include performance-based compensation in some measure at all levels of your organization. It will encourage outcome-oriented behavior throughout your organization, including service quality.
- Keep your records current, especially financial documents and outcome-related data. The information is not just for buyers, it’s also to help you and your employees continually monitor your performance and make necessary changes along the way.
- Regularly (at least three to four times yearly) re-evaluate and re-calibrate your business approach. Most healthcare marketplaces are rapidly evolving and require this kind of re-assessment.
- Continually reconsider the economics and cultural cost-benefit of outsourcing vs. insourcing services. For example, the emergence of Professional Employer Organizations (PEOs) has provided many companies a great alternative to traditional in-house HR support (and the record keeping is often superior).
- Implement as much operational transparency as you can tolerate. Consider transparency as an accelerant for your growth and a contribution to a well-educated workforce.
- Encourage self-management throughout all levels to provide a flattening of your organization and a path to extricating yourself from operations, which is a traditional measure of business value.
There is a theme in this non-exhaustive list. Owner transitions, especially the sale of a healthcare business, are an “open your kimono” experience. Keeping this in mind as you build your company makes it easier for buyers to see your value beyond the initial EBITDA calculation.