Two-thirds of SMEs have a lower value than their owners think

Up to 75% of SMEs (small and medium-sized businesses) would experience operational problems if their management were “out of order” for more than a week. The main reason is the absence of automated company management processes that would keep the company running when the management was absent. If such firms were sold, this would lower their value by up to tens of percent.

The labour productivity analysis revealed that the owners of smaller companies devote 50% of their time to administration and micromanagement, and only 10% to strategic company development or contract development (40%).

“Owners or top managers usually hold more posts at the same time, their presence is also required for trivial decisions. The normal operation of a company is practically impossible when they’re absent. If there is a problem with such dependency, it will be fully revealed by a longer vacation or a sickness leave, as was the case with the Covid-19 pandemic last year. In case the firm is sold, this will be reflected in its value,” comments Petr Pavlita, CEO of INVEST FORUM, a business broker assisting with sale of companies.

Unproductive work due to the absence of automated processes significantly reduces the company price at the time of their sale. The selling price can be cut down by tens of percent; in some cases the company can become unsaleable.

Up to 80% of decisions can be made by subordinates

Low management productivity is typically a bad habit of many company owners, who humbly built their businesses from the bottom. The fear of decision-making without their own participation as well as loss of control over the company’s daily life make it impossible for the company to grow, prepare it for sale or leave it to a new generation of managers.

The only way to further develop the company is to transfer its activities into processes. “Up to 80% of decisions can be made automatically by individuals with appropriate competencies. Top managers only deal with exceptional situations and can focus on company development,” says Martin Lonský, CEO of Aputime.

* ApuTime publishes the rate of unproductive working time based on an analysis of 267 companies of various sizes and specializations. The analysis concentrates on the “office jobs” only, i.e. intellectual job activities performed using computer technology.

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