4 ways to build wealth

 At a pre-show GIE+EXPO conference in Louisville, Jeffrey Scott of Jeffrey Scott Consulting and Ron Edmonds of the Principium Group spent the day talking about how to develop a plan for building wealth, understanding succession options and expanding the value of a business.

Sponsored by Caterpillar and Landscape Management Network, the Wealth Building Summit was a day-long meeting focused on how landscape contractors can grow their businesses as assets and formulate an exit strategy.

Scott, a consultant who coordinates peer groups, outlined four key metrics contractors should keep in mind to build a sellable business:

1.       Growth prospects. Referrals are good, but they can vary with the economy. They shouldn’t be the sole source of your new business. What are you doing to keep new customers coming in the door and gaining market share from your competition?

2.       Scalable, sustainable operations. Do you have individuals who come together as a team, or a team of individuals? The biggest challenge to a scalable company is usually a person – someone who is the only employee who can do something. To see if your company is sustainable, which means it can survive without you there monitoring everything every day, ask if yourself if you could take three weeks of vacation.

3.       Positive financials. Obviously, you want a profitable company, but look at your accounts receivable and your accounts payable. They should be the same, and you shouldn’t be having cash flow problems and making up the difference yourself. If you made money on paper, but can’t find it in the bank, Scott says, “you haven’t really earned anything.”

4.       Risk reduction. Look at your company and see if there’s one person – a superstar, Scott says – that you over-rely on to get things done. That’s a risk. Have you become so successful or efficient that you’ve stopped innovating or reviewing your processes? That’s a risk.