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Value Creation Blog

Does Language Matter In Creating Enterprise Value?

Posted by Josh Patrick

built to sellIn John Warrillow’s book Built To Sell he suggested that professional service firms change the language they use when they talk about their firms and their clients.

I agree with this idea.  Words do matter.  The way we speak about what we do has real effects on how we think and act.

When we talk about customers as clients we change the focus on what a customer is.  A customer belongs to a company and a client belongs to a person. 

If you’re going to sell your business someday and want to get cash upfront, the buyer is not interested in acquiring clients.  They are interested in acquiring customers who will continue buying services and products from your company.

The language you use around your company is important.  When you speak about your company as a firm or practice, you are talking about clients.  When it comes time to sell your firm, you will find buyers will discount the value of your firm because of the individual nature of client relationships. 

Instead, if you think about and describe your practice as a company, present and future stakeholders are going to think about your company in a different manner.  A potential buyer will be excited about buying a company that has a diverse customer base that continues to do business with the company.  When you develop a company you have recurring cash flow and in the end, that’s what many buyers are looking for.

If you think of yourself and describe yourself as a private business owner, your actions around your company will be different than the usual professional service provider.  Thinking about your business enterprise as a company will encourage you to take actions to make yourself operationally irrelevant, service your customers in a team manner and document operations in your company.

Language is important.  I’ve found that when we change our language, we change our actions.  What are your thoughts about this issue?  Does language matter?  Please either contact me at Jpatrick@stage2planning.com or click here to set a time to speak with me.

Josh Patrick

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Topics: for business owners, enterprise value, business exit planning, exit readiness

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