What Is Your Most Important Annual Audit?
When was the last time you had your CPA firm audit your books? How often has that activity found things that surprised you? How large were the misses or opportunities identified? Although these discoveries are definitely important, not often do they turn out to be valued into the seven figures.
I just completed an audit of an eight-figure company’s culture and found opportunities in the leadership, the team’s esprit de corps and the growth plan. All three areas hold profit-improving potential as managers could improve communications and the culture, but the greatest growth to the bottom line will come from fleshing out the growth strategy.
At another company—one run by a former Fortune 500 CEO—I facilitated a short growth audit. The company made more than $200 million in annualized revenue. We mainly focused on identifying, prioritizing and quantifying untapped growth potential. The CEO estimates having nine figures of clear growth potential we hope to capture. In the next 12 months, we likely will build the EBITDA by seven figures based on those opportunities. Considering the company will likely be sold soon thereafter, that growth audit and the resulting improved performance should increase the valuation and sale price considerably.
Does your company have a growth strategy? If so, then how much confidence do you have in it?
A good growth strategy begins with a vision of your enterprise’s potential. Sometimes, the CEOs have the clearest picture of growth potential. Other times, more optimistic vision comes from the front lines. But most often, I find the boldest input into visioning growth comes from input that is shared by customers. As I write about in my “Growth or Bust!” book, one of the most often missed steps in strategy is the depth interview process.
Don’t Miss A Key Step
Depth interviews with customers were first proffered by Peter Drucker, who was the first to use the term “strategy” in conjunction with business. In his view, depth interviews are one of the most important—and thus, required—steps in effective strategy.
Are you investing in third-party customer interviews on a quarterly basis? Is that effort focused on how you can innovate the relationship, add more value for your customers or grow your customers’ businesses? Finally, are you reaping incremental revenues and building profits as a result? If not, then you’re missing key elements of your growth strategy. In fact, you aren’t even completing the basic steps required to effectively build and adjust your strategy, so it is sentient to the marketplace and your customers’ evolving needs.
Missing a step usually leaves growth and profits on the table. But how would you know if you don’t conduct a growth strategy audit?
My colleagues and I have built detailed auditing tools that help to prioritize cost-cutting opportunities as well as potential growth levers. Owners and leaders are amazed at what savings they identify using our free tool. But the more impressive numbers and results come from the analysis and resulting plans, projects, objectives and actions taken around true growth levers.
If you would like free digital copies of my books or would like to go through a free first hour or two of a growth audit, reach out. Remember, auditing your growth strategy and listening to customers are usually far more valuable than focusing on cutting costs.
Mark Faust works with owners, CEOs and sales managers who want to grow their businesses. You can schedule a free profit improvement session with Mark by visiting
calendly.com/markfaust.
