Jan 31, 201911:39 AMExit Stage Right
with Martha Sullivan
Protect your value: Stage two of value maturity
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Lately, I have been struck with the awesomeness of the human body — how all the various systems that keep us alive, healthy, and thriving are all interconnected.
Consider the circulatory system, for example. This system is vital to our very being, feeding organs throughout the body. The health of our heart and circulatory system directly impact the health of the rest of the body. If something is running amok in the circulatory system, the rest of the body is likely going to go down with it.
This came to the forefront as I witnessed a close friend, Lyle, going through a series of medical challenges. Lyle has had high blood pressure most of his adult life, but it never caused him issues. He’s as active as ever, exercises regularly, and generally enjoys life — until recently. Out of the blue, he had a mild stroke that fortunately left no material damage. In the course of the diagnostics, a baby aneurysm was detected that warranted treatment.
The treatment for aneurysms is fascinating. It includes filling the bubble and using a sheath/stent to safeguard the filling and the vessel from further distension. All great news for Lyle, but if he doesn’t take other steps to protect himself or work with his medical team to address the blood pressure issue, he’s vulnerable. The filling could shift out of place, the bubble could stretch, there could be other potential future strokes, and, according to recently published research, there’s a higher risk of mild cognitive impairment or dementia.
I share this story because our companies — whether we own them or just work in them — operate as a living organism, too, with their own circulatory and other major systems. Our survival depends on those systems being healthy and our efforts to protect ourselves.
In prior posts, I introduced the concepts of the five stages of value maturity of a business and expounded on the first stage — Identify. For Lyle, the Identify stage was the battery of physical exams and tests he underwent to assess his overall health and the strength of his systems. The results were clearly mixed — his heart is strong and other vital organs reasonably sound, yet his blood pressure and circulation situation are concerning.
The same is true of a company going through Stage One. Like Lyle emerging from the doctors’ office with a diagnosis and plan of action, your company emerges from Stage One with a standard set of deliverables — a valuation of your business; a comprehensive assessment of your business strengths, weaknesses, and risks; and a solid business/strategic plan to improve your results and drive your goals. Aspects of the business are reasonably strong and other aspects present risks.
The focus of Stage Two — Protect — is to identify and act upon those activities in your business plan that first and foremost protect your company, its operations, and its sustainability. Your priority is to mitigate risks to your operations and the transferability of the business.
Your business operation risks are multilayered. You likely have policies in place to insure your vehicles, commercial liability, employee practices, directors and officers, and cybersecurity risks, to name a few. Hopefully you conduct an annual policy review to be sure your levels of coverage and plan designs evolve with the growth and changes in your business. When you set up or renew these policies, you and your insurance provider likely review and implement additional risk mitigation steps, procedures, and training to protect yourself and the business.