One of the most important aspects to controlling and managing any company is improving its value. We want it to grow in as many ways as possible, especially in terms of returning investment for shareholders, including ourselves. But how we go about achieving this goal remains difficult. There is no clear cut path, as every business is different and all are competing, finding new angles constantly.
However, there are broad approaches we can consider in our efforts to put our business in better standing.
Focus on leadership
Often, the fact a business is functioning is proof enough it has good leadership. However, too often leaders do not acquire their positions by virtue of their leadership skills but rather because of internal politics and sometimes being charmed by individuals. Neither aspect is a guarantee of excellent leadership.
Robert Hogan, president of personality test provider Hogan Assessment Systems, has done plenty of research on what does make a good leader. Speaking to the Society of Industrial and Organizational Psychology, he counts four properties we should interrogate when thinking of leaders.
- Integrity: Can we trust this person and are they honest? Company information can be used to benefit themselves personally, but harm us as a business. We must be certain they are loyal, by virtue of being decent, open and honest.
- Judgement: Are they able to make smart decisions, informed by evidence and willing to reflect on their mistakes? This is the only way to grow.
- Competence: Staff need to know they can trust this person to deliver. They need confidence in their leaders.
- Vision: The direction a business or project takes must be central to a leader. We must know they can articulate and develop what this vision means for everyone.
Another way to improve is focus on cutting costs. How we value a business is a difficult assessment, but one way businesses improve is when they’re spending less than they’re earning. In other words, improving profits. Every business should aim for this, of course, since it shows a business can continue. This is exactly what shareholders want to see in their investment.
Removing bad investments
This could be considered cost cutting, but we should also focus on getting rid of bad investments. For example, we should get rid of working with subpar people and companies, since we’re putting in time and effort and getting little in return.
Basically, the overarching importance is managing corporate finance. Once we do this properly, we can present a more valuable business to our shareholders.
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