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Building the Perfect Infrastructure for Your Company - Inc.

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Have you ever wondered why some businesses thrive while others take a nosedive, or why some entrepreneurs are successful when so many are not? Why do some businesses sell for maximum value, some sell for pennies on the dollar, and some don't sell at all? 

Over the last 20-plus years, my clients have asked me all the above. Many of them expect me to give a variety of complex answers. They are quite startled when I simply say "YES, I know the answer and it's not complicated, it's actually quite simple!" 

As a 22-year veteran in the M&A industry, I have sold businesses in pretty much every vertical, and I can ensure you that even though industries have their nuances, the problems and mistakes made are typically the same. Many times, it's a lack of knowledge that gets business owners in trouble. Most of the time, though, it's an absence of implementation that causes a lack of success.  

I always tell my clients that lack of profits, lack of success, and lack of a huge buyout is never the problem, it's the symptom of not operating on the Seiler Tucker 6P's. The 6P's are the business's foundation, it's your infrastructure. It's what allows you to build a sustainable, scalable, sellable business. When you buy, build, or have a house built, I'm sure you ensure there is a solid foundation to weather all the storms that may come your way to keep you and your family safe. The same holds true for a business, the 6Ps will help you weather all the financial storms that you may encounter along the way, and it will dramatically increase your success to Exit Rich. 

According to Steve Forbes, 80% of businesses on the market will never sell, giving business owners less than a 20% chance of a successful close. The main reason businesses don't sell is a lack of infrastructure. 

Based on my experience, business owners don't plan to fail they fail to plan. Most business owners have built themselves a glorified job in which they go to work every day, rather than building a business that works for them. If your car runs poorly, it's typically not running on all 6 cylinders, same holds true for your business...

You must run your company on all 6 cylinders, in other words, all ST 6Ps.

If one of the 6Ps is missing and or out of alignment then the business will run insufficiently, sluggish, and lack profits.

We will dive into the 6P's in the next several articles, however, to whet your appetite and measure the success or failure of your company, rate your business on a scale of 1-5, one being the worse and 5 being the best with each 6P. 

The ST 6Ps

PEOPLE: Do you have the right people in the right seats? Do you have a management team, can the business run without you?

PRODUCT: Is your product, service, or industry on the way up, or on the way out? For example, do you own a business like Amazon and are in your prime? Or do you own a business like Blockbuster and are about to BUST and go out of business? Do you have at least 3-5 congruent revenue streams?

PROCESSES: Are your processes designed with the customer experience in mind, or are they based upon your own agenda? Do you create a WOW experience for your clients? Does each department have policy & procedure manuals, along with an SOP checklist?  

PROPRIETARY: Are you well branded, have federal trademarks, patents, transferal agreements, databases, a sass component, reoccurring subscription model, celebrity endorsements, digital real estate, etc.?    

PATRONS: Do you have a loyal client base that will go out of their way to purchase your products/services? Do you have customer concentration where 80% of your revenue comes from 20% of your clients? Or do you have customer diversification? Are your clients aging out and needing to be replaced with newer generations?  

PROFITS: Is your business operating at the highest profit margins per your industry? Are you generating profits or losing money? Do you have at least a year of working capital in savings?  

If you build your business with a solid infrastructure using the ST 6Ps, your business will grow into a sustainable, scalable, profitable, and sellable asset. I always tell my clients, "It's FULL PROOF and BULLETPROOF so give it a try!"  

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.

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