The growth and flowering of a company, on the way to the 'dot on the horizon'. Passion, vision, strategy and added value. It makes entrepreneurs' hearts beat faster. These relevant topics are usually topics of conversation once entrepreneurs sit down with each other or with advisers. They are also the nicest topics to 'tree' with each other.
In this regard, organizations and business owners sometimes forget that increasing the chances of reaching the future goal or 'dot on the horizon' (faster) can be properly influenced as of today.
Understanding the current state of a business gives business owners a better view of the "road map and action plan" toward the goal. Sharing this insight, roadmap and action plan within a company ensures support among staff. It also prevents the 'dot on the horizon' from merely wandering around in the entrepreneur's mind. The question now is how do entrepreneurs and organizations gain this insight into the current state of the enterprise?
A hard lesson from an acquisition process
If the parallel is made with a merger and acquisition process, an important lesson can be learned. In the closing stages of an acquisition process, due diligence is performed by the advisers of buyer on the relevant business information of seller. In this investigation, the seller's company goes belly up, so to speak. The findings of the investigation are included in a report, with relevant recommendations of "actions to be taken" to mitigate the risks identified.
Not infrequently, the results of a due diligence investigation give the buyer cause to question the deal terms. In such cases, the selling entrepreneur frequently asks why he or she has never (independently of the sale) had an investigation of their own business data and risks conducted before. A legitimate question.
Internal control as the basis for the roadmap
More and more companies know to make the step to the 'permanent' dataroom in which businesses house all their relevant business data in one system (e.g. a dataroom in cloud environment or an ERP system) where the information can be viewed clearly at all times. This is a situation where one can talk about permanent due diligence by the business itself.
Part of the data room would include the areas of finance (e.g. revenue and cost price analyses, debtor-creditor turnover, financing documentation), organization and personnel (e.g. description of processes within company, personnel data and development agreements), contracts and obligations (e.g. rent, lease, insurance, key partner agreements) and marketing and sales (e.g. measurement and follow-up of marketing initiatives, sales funnel).
In addition, a KPI dashboard can be added to the data room that automatically signals certain developments and generates "to do's" of actions to be taken. With the help of an IT data consultant, the setup of the data room and dashboard can be designed. These specialized consultants can make connections within data and systems to obtain more steering information.
Setting up and establishing such a well-functioning system takes time and effort. Different businesses use different IT systems and each has its own information needs. Implementation therefore goes step by step, with many times fine-tuning through the cycle of signaling-reacting-evaluating.
Working towards the common corporate goal
Whether you, as an entrepreneur, want to sell a business next year or only 20 years from now, the permanent screening of your company is always of added value.
By having the right information available, an organization is more in control. The manageability of an organization allows business owners to set clearer goals and achieve them faster and with a higher success rate. That's actively working for value.
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