The Baldrige Performance Excellence Program is the world’s gold-standard of organizational excellence. It was established by an Act of the United States Congress in 1987. Its purpose is to encourage leaders to build solid, sustainable, and highly competitive companies that are able to grow, innovate, and succeed in the long term. Baldrige is used worldwide by the largest and most successful companies. For example past Baldrige Award winners include Motorola, PWC, Lockheed Martin, Boeing, Nestlé, and Caterpillar.
In this series we are listing the top ten reason why you should use the Baldrige Excellence Framework in you business.
Here are a few shocking statistics:
Over 70% of businesses are owned by baby-boomers who are nearing retirement
The value of baby-boomer owned businesses tops ten trillion dollars and contributes significantly to both employment and GDP
Over 80% of baby boomer businesses are not “transaction ready” which means they are unlikely to find a buyer. (The potential negative impact on employment and GDP is significant.)
Of the small percentage of businesses that are successfully sold, over 70% fail to meet the expectations of the buyer. This puts even more jobs at risk.
Will your business be sold or will it fold?
Investment Bankers and business brokers report the same set of deal-breaking organizational problems. Reviewing the following list of common problems can help you determine your company’s saleability:
Operations are not documented with step-by-step operating procedures
The business is too dependent on its owner(s) and key employees for ongoing operations
The business lacks a strategic plan, that is being implemented, and resulting in improving market position and growth
Sloppy record keeping. (If your numbers are real, this can be fixed)
Sales are too concentrated in just a few key customers
The company’s sales process is not systematic and repeatable
Lack of cybersecurity maturity
Unfortunately, most sellers are not aware that their businesses are unsaleable. Most mistakenly believe their business is highly valuable and would be attractive to any lucky buyer. After all, their business is their baby. They are proud of their creation. It is profitable, so what could be wrong?
However, what sellers need to remember is that buyers are risk-adverse. They avoid buying a business that they are not confident they can operate and that will result in a reasonable return of investment.
Business owners can improve their chances of selling their business by using the Baldrige Performance Excellence Framework to “package” their business. The more organized, efficient, and systematic their business becomes, the more confident prospective buyers will be that they can operate the business. Transforming their company into a systematic business can also help sellers avoid deal breaking terms or future litigation. It may even increase the company’s selling price, because adopting Baldrige-based practices often results in increased sales and profitability.
Best of all, sellers who achieve Baldrige-based performance excellence can earn recognition (Bronze, Silver, and Gold Awards) from the Alliance for Performance Excellence, the outreach arm of the Baldrige Performance Excellence Program. This recognition can be used to differentiate your business. It can help assure your prospective buyers that your business is sustainable, scaleable, and worth their investment.
ManageHub and the Alliance for Performance Excellence ~ the outreach arm of the Baldrige program ~ have been working together to create the “Baldrige for Everyone” initiative. The initiative includes tools, training, assessments, support services, and a new Baldrige-based award issued by the Alliance. Our objective is to make adopting Baldrige-based performance management easier, faster, and more affordable.
Take the Success Score Self Assessment. The Success Score was developed in collaboration with the Alliance for Performance Excellence. It measures your organization’s maturity using six Baldrige-based dimensions: Leadership, Strategy, Customer-focus, Employees, Operations, and Results. The assessment generates six individual scores that are explained in a 25-page report that identifies your organization’s gaps and suggested corrective action. [click here to get your Success Score]