For more information and resources, check out our Advisor Resources section. The video for this webinar is below.
Corporate value growth is a key metric of success for all companies. Measuring and driving this growth holds numerous unique challenges for privately-held companies, especially in the lower middle market. Fortunately, there are resources available to assist with that process. In this article, we will focus on four value building online tools:
- Entrepreneurial Operating System (EOS) ®
- EvaluSys
- Scaling Up by Gazelles
- The Value Builder System
This post is part of a series based on conversations with the XPX community about the methodologies and tools they use to support their private company clients in value growth engagements. We split their feedback into four articles:
- How to Start the Value Conversation with Your Clients
- Best Books and Methodologies for Value Growth
- Automated Tools for Assessing Business Value
- Automated Tools to Support Corporate Value Growth
- An initial free 90-minute meeting led by an Implementer
- The EOS Process: Focus Day, 2-day Vision Building using Vision/Traction Organizer, and Quarterly Pulsing
- EOS Toolbox: tools to improve the Six Key Components scores
- Books to help implement the EOS system: Traction; Rocket Fuel; Get A Grip; How to Be a Great Boss; What the Heck is EOS
- EOS Base Camp: an online training resource with 26 downloadable tools, orientation videos, training with worksheets, videos and guides. Option to buy Leadership Team Manuals and other materials.
XPX Member Experience (Andrew W.):
I almost use it as a foundation for growth once we have a growth plan. Before we rush headlong into executing the growth plan, there are various things within the organization that need to be put in place first, which I call “foundations for growth”. The EOS systems, is one of those processes and systems with tools that allow you to do that.
It focuses the business owner on six components: the vision of the business, data, people, process, issues, and what they call “Traction”, which is an execution management system for accountability.
EOS, for me, is very good for the low end of the low-middle market. We’ll be looking at that later, but a similar process is Verne Harnish’s Scale Up Process which is really applicable for slightly larger businesses. Each arrive at the same sort of answer and process in building this system in the company and setting this foundation for growth and then keeping the company on track for growth. I find it very useful to use in conjunction with CoreValue as a process to guide, coach, and mentor the CEOs and business owners through the process of growing their business. I find it very useful indeed. I think it’s a very good system.
XPX Member Gary R: Andy, are you an EOS implementer yourself or do you work in conjunction with an EOS implementer?
Andrew W: You could go down one or two tracks. They have a whole series of books. The first book is Traction. Then they use a story called, Get a Grip, and as a consultant, I have got a lot of experience in building and growing businesses. The tools are all open-source, so once I’ve read the book, essentially, I can do it myself, using my own expertise and experience.
If I wanted, I could take an online course and go down the course route. EOS gives you those options as a consultant and indeed as a business owner. Use the tools. Use the process. Do it yourself. If you want to and you’re not confident in picking up the tools from the books and the information they give you, then by all means go on and take a course and become certified. With certification, you tap into a whole pile of experience. I know that, but I’m fairly confident that given my experience that I can interpret the process and get on with it.
Data Source: Not specified
Inputs: a 15-minute Business Wellness Checkup questionnaire that assesses your business on the factors of marketing, sales, product/service innovation, human resources, management supervision, business operations quality and exit planning.
Output: Business Wellness Checkup score and evaluation report, showing how the company scored in the above factors.
Advisor Support:
- Business Wellness Diagnostic Series: evaluations in business planning, executive leadership, financial planning & control
- Custom Evaluation Authoring: you can devise your own evaluation that’s specific to your industry or issue
- Value Growth Architecture: evaluation tools to identify areas with growth potential, ability to work with experts to hone in on them, build financial projections around them, execute a growth plan
Pricing: Three levels of advisor plans: Basic ($39/month), Evaluation Author ($59/month, plus $750 training fee), Value Growth Architect (cost undisclosed). Evaluation Licensing Fees: private client licenses are $89 per use for 1-9 and $79 for 10+.
Of note: EvaluSys was founded by Tom Bixby, of LEVEL Management Partners (founded in 2005).
Partnerships: N/A
XPX Member Experience (Tom B., founder of EvaluSys):
EvaluSys is a “software as a service” business. Business advisors around the country, right now exclusively within the US, license it to use those diagnostics for business planning, financial control, leadership, HR, and so on. Where that takes off is the value growth architecture process that leverages those diagnostics to identify value drivers and then engages teams of experts to evaluate those ideas, refine them, meet with clients to isolate the specific growth actions that will drive value and then do the financial work to understand how each recommendation is going to add to the enterprise value of the business.
That gives us great ability to prioritize action plans and the all-important stage of helping business owners to make the decisions around investing in those growth actions. It’s always a pivotal step, is making sure that they understand how each action we’re recommending will contribute to value so they can write the checks necessary in order to be able to implement them.
It’s a little bit different than some of the other toolsets. It’s not a plan in the box type of tool, like maybe Value Builder. It’s not really designed to offer a complete framework for operating businesses like maybe EOS and Gazelles. It’s designed around the management consulting process and the collaboration among really talented people in marketing and sales and finance and operations and human capital and technology in order to identify the value drivers that really help lift a business, improve the value of a company.
Data Source: Not specified
Inputs: A four-minute Scaling Up 4 Decisions Assessment has 32 questions that assess a business based on: People, Strategy, Execution, and Cash
Output: Results from the assessment
Advisor Support:
- Scaling up Scoreboard which features:
- One Page Strategic Plan: BHAG Core Values, Core Purpose, Brand Promises and KPIs; 3-5 targets, annual plan, quarterly targets
- Dashboard with Critical Numbers
- Daily and Weekly Huddles in the cloud
- Priority ownership and tracking
- Scoreboard Integrations to automate data collection
- Reporting
- Books: Mastering the Rockefeller Habit, Scaling Up
- Education: Masters Program, Coached Workshops, CEO Bootcamp
Pricing: Not listed
Of note: Verne Harnish, Founder and CEO of Scaling Up, has founded Entrepreneurs’ Organization (EO) that has over 14,000 members worldwide and Gazelles, an education and coaching company. He has written multiple books, including Scaling Up and Mastering the Rockefeller Habit.
Partnerships: EO and Gazelles
XPX Member Experience (Andrew W.):
Verne Harnish’s work is a step-up from EOS in terms of working with larger businesses. It takes you through an operating system and process with tools to help grow the business to all stages of its growth journey and focuses on essentially four areas; execution, strategy, people, and cash and various decisions that owners need to make.
I like the processes because if you come from a broad business consulting background as I do and having run businesses myself as a CEO, I think it’s very important that when you’re helping and working with business owners, they can follow a system which has tools associated with it, one-page tools if you like. I like it because it is open-source. You can do the courses, you can become certified, but if you have the expertise and experience, you can pick up those growth tools and plug them straight into a business and facilitate in coaching, guide the CEOs through the process.
For me, when I look at it, it’s more applicable to those businesses that have come to a halt in the growth, they’ve reached a stage where they can’t grow anymore. If they think they can’t grow anymore, then they’re ready for something like Verne Harnish’s work to scale up the business to break through the barrier that they’re facing. That’s more like businesses have been operating for about 10 years plus, maybe hit a ceiling at around 20 million plus and want to grow and scale up. Verne Harnish’s book would be ideal for them.
Data Source: Not specified
Inputs: 13-minute survey related to eight value drivers: Financial Performance, Growth Potential, The Switzerland Structure, The Valuation Teeter-Totter, Recurring Revenue, Monopoly of Control, Customer Satisfaction, Hub and Spoke
Output: A score on the eight value driver categories used for value building approaches
Advisor Support:
- Value Builder Advisor which provides access to the questionnaire, five hours of training, and associated marketing materials.
- Certified Value Builder advisor which allows access to Value Builder Engagement tools designed as 12 module/12 month program to improve the score on the eight drivers. It has an online and in-person training requirement.
Pricing: Not listed
Of note: The Value Builder System is based on the founder John Warrillow’s book Built to Sell: Creating a Business That Can Drive Without You. Value Builder asserts that a typical average score from their system is around 59 but if a business can raise it above 80, the owner will get offers that are 71% above what the average owner gets.
Partnerships: The Value Builder System is in a partnership with EPI and the CEPA certification, which we discuss here in our article on exit planning certifications.
XPX Member Experience (Eric T):
About 80% [of the companies that come to us] were falling into this category of, “Yes, I’m still thinking about selling, just not right now.” That can be anything from a year to five years or 10 years or who knows. Everybody has a different time horizon. The question became what do we do with that 80%? Do we have a simple program that we could take folks through that? It’s not cost-prohibitive, and at least gets them thinking on a monthly basis about the actions that they’re taking and the value that it has in their company.
Value Builder came up as a very simplified solution for what I would say is the very lower end of the middle market. I can’t imagine a company with a valuation above 10 million going through the Value Builder program, but I can anticipate companies say worth $2 million or so that would be very comfortable going through it.
If you become a client of Value Builder, there’s all kinds of customized canned product, if you will. You can put your logos on it. You get to participate in basically their pulse program or their drip program however you like to think about it: their podcast branded under your company name, white papers printed under your company name, other materials, presentation materials, all branded, that they provide as CRM product that helps support everything.
The Bottom Line
(Andrew W.) For me, it’s about taking one system and sticking with it. In my experience, if you try to take a system like EOS or Scale Up and then add things like Six Sigma, Lean Manufacturing, it confuses the management team a little bit. It can be done, don’t get me wrong, but I rather like to stick with one system for this process for building growth, and then in addition to that, I look at value drivers.
We hope this article was helpful to you. It’s part of a series of posts about methodologies and tools advisors use to support their private company clients in value growth engagements. Here are the other articles in the series: