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Business Strategy

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How Data Impacts the Value Drivers of a Business

In the first of a three-part series, EKS&H Lead Consulting Partner Lori Gibson introduces how data can support – and increase – the value of a business.

Introduction

All business owners eventually face the day when they exit their businesses, which often means the companies will be sold. In order to operate most profitably, and prepare for the day they may sell, savvy owners and their advisors anticipate what buyers will be looking for and plan a corporate strategy around a set of business value drivers, which include:

  • The company’s management team
  • Financial controls
  • Operating systems and technology
  • Market position
  • Diversification
  • Company facilities

What many owners don’t realize, however, is the increasing importance that a business’s data plays in maximizing all of these value drivers. There is a corresponding need to protect and capitalize on that data to retain, and hopefully increase, business value when the day comes to sell.

In this series, I will focus on the role data has on each of the key value drivers of a business.

Management Team

One of the most important value drivers in a business is the management team. This core group sets corporate goals, monitors key activities, and guides and motivates the team.

It is well-known that buyers look for solid management teams that can maintain and grow the businesses. However, to perform at peak levels, managers increasingly need to be “data minded” and “data driven.” This calls for individuals with the propensity and competency to analyze and rely on metrics and data analysis to make good business decisions. Not only do they need to understand the relevancy of data metrics, but they must also be able to bring thoughts to the table about other data source points that don’t currently exist in their companies.

Following the lead of the Fortune 500, data-minded managers are increasingly working their way into mid-market businesses. Combined with cost-effective mid-market business analytics solutions, these managers are ushering in a new generation of data-driven corporate leadership.

Financial Controls

Other critical value drivers for a business are the financial controls and systems in place to manage the business. A buyer will require complete confidence in the financial activity of the company; therefore, high-quality financial systems, associated data, and timely information output are essential to support growth and profitability claims. Before and after the sale, this data is used to set guidelines and benchmarks for continuous company improvement.

In part 2 of the series, I discuss how data is used to support operating systems and technology and market position.

If you are not yet thinking about how data can drive the value of your business, we recommend you begin learning about this important strategy. The benefits, specific to your business goals and objectives, are significant. For more information, please contact Lori Gibson at lgibson@eksh.com or 303-740-9400.