Today, I want to chat about what the “Switzerland Structure” means for your business.

The nomenclature of this business term draws from the historical neutrality of which the Swiss are so proud. It represents the fact that Switzerland did not pick sides during World War One, they did not pick sides during World War Two either! And it's maybe not commonly known by Jill Public on the Zoom call, but it is a phrase that you've likely heard as a business owner or founder.

Perhaps the most common way in which you've heard it is in the context of a dispute. For example: “I'm not taking sides; I'm Switzerland.” When it comes to business, what we are really talking about when we say “Switzerland Structure” is the system of creating a robust structure within your business, in which you are not overly dependent on any one employee, client, or manufacturer.

To dive deeper into the subject, I invited Louise Motuzas - Co-founder of Thrive Business consulting, an accredited exit planner, and specialist in the Value Builder System.

“Switzerland Structure” is one of the eight drivers of company value that have been developed through the Value Builder System. The more autonomous your business is, the more valuable it is to outside valuation.

Problems can arise from any type of dependency in a business

The more you rely on a singular individual or company (client, employee, or supplier) within your business, the more your business loses attractiveness to potential buyers. “If one key employee delivers all new business leads, for example, what happens if they decide to move to a new employer? Potential buyers for your business in the future would look at that factor and say, ‘Well, if that key employee leaves, then what am I buying?’ So, from a buyer's perspective, it's very important that there's independence in a business.” Louise explains.

An over dependence on any one factor makes your company less appealing to potential buyers simply because of one key fact. It means you are more vulnerable to risk. Any changes in the aspirations of key employees, clients, and suppliers can change your supply chain and upset your bottom line.

Particularly in the case of reliance on owners or founders, a buyer will want to know that the company in question can succeed if the person were to change. Remember, in the case of a planned business sale, the core goal is to transfer ownership AND operation, so potential buyers will approach your business with a fresher set of eyes than most business owners possess :)

Prospective buyers will also want to know whether your company would continue to operate if some of your clients left; or if a key supplier stopped contributing.

Allow a system to guide you

The Value Builder System offers an assessment that can look at the 8 drivers of business value that we've been talking about over the past two month in this masterclass series. If you’d like the take the assessment, I can offer it to you (for free as a loyal member of this list). It takes less than 20 minutes (depending on how well you know your business numbers). It'll give you a baseline to either validate what you already know, or open your eyes to some areas where improvement can be made as it relates to the value of your business. This is particularly important if you are looking to make a cash rich exit from your business in the next 5-10 years; and perhaps exponentially so in view of the recession ahead.

This Value builder masterclass series is sponsored by “Elevated Conversations” with me, Colleen O'Connell Campbell, a roundtable mastermind for co-founders and business owners who want a cash rich exit in the next five to 10 years.

An invitation to an Ottawa community.

If you’re in Ottawa, you may be interested to hear that I'm reintroducing “Elevated Conversations” which originated in 2018 where I brought together smart investors and business owners to talk about interesting topics in technology and finance that were disrupting our world. With COVID and the end of dinner parties, we moved to virtual roundtables and now I’m bringing back masterminds in person.

The event is on October 26, 2022, and is by invitation only.

Let me know via LinkedIn or email if you’re interested, and I’ll send you more information.