Good planning means winning the battle before the first shot is fired

One of Osprey's core activities is to work with company owners in formulating business strategies and preparing business plans. Our approach is based on two fundamental notions:
(1) good strategy creates shareholder value (while, conversely, a misguided strategy can destroy value); and
(2) a good business plan, properly prepared and supported by financial analysis, is worth its weight in gold.

Too often, we at Osprey have witnessed good businesses stumble (and even fail) because of inadequate strategic planning and financial analysis capabilities. The growth in competition, combined with increasingly sophisticated markets, make such planning processes indispensable within any business wishing to succeed. Good planning is a crucial precursor to the successful implementation of business strategies.

We use a rigorous and interactive process with business owners in making explicit their strategy, making explicit the assumptions on which their argumentation is based, and writing a business plan which does full justice to the business idea being promoted. The resulting business plan is far more than a mere written document: it incorporates analytic methodologies and an approach to planning which can be adopted by the company as a permanent strategy formulation tool. Our most successful clients have used the business plan approach to improve the skills of management and staff.

The Importance of Incorporating Shareholder Value perspectives in Strategy

In formulating and assessing strategies, Osprey puts particular emphasis on the use of financial valuation techniques as a "measuring stick", an approach that has gained considerable acceptance in the past 15-20 years across the business world. Indeed, it is difficult to open an Annual Report of a listed company these days without encountering prefatory statements such as “we have delivered on our promise to deliver value to shareholders” or “the return to shareholders puts us in the top quartile of NYSE performers”. It is probably not coincidental that those business cultures that have embraced Shareholder Value as the overriding metric for company strategy making, notably the US and UK, have economically outperformed those that have not.

The quest for shareholder value requires the formulation of sound corporate strategy, a process which has been assisted by advances in technology, namely the use of sophisticated spreadsheet analysis on personal computers, and the use of the internet for research purposes. With such tools at hand, all business owners can formalize their strategy and business planning processes and also prepare superior and rigorously argued business plans.

Using “Shareholder Value” as “the metric” for testing strategy is practical to implement. It allows business owners and managers to set relevant and clearly measurable goals as well as the possibility to measure performance against those goals. Achieving shareholder value requires the identification of so called “Value Drivers”, which include:
Sales
Direct Costs (raw materials, energy, labour)
Indirect Costs or Overheads

The use of Shareholder Value as the Strategic Planning metric allows managers and owners alike to be “goal congruent”, allows for total transparency within the organization and allows results to be quantified. The concept of managing for Shareholder value has become almost synonymous with the application of the Discounted Cash Flow (DCF) method of company valuation. One reason for this is that cash flows (upon which the method depends) are so much more widely understood by all managers, whether financial or not, and also because the DCF method captures the intrinsic value in a company.
Also increasingly important to investors is the fact that focusing on Shareholder Value has been shown empirically to benefit other stakeholders. Thus in an age where value is placed on corporate governance, transparency, environment and interaction with local communities, it pays to focus on Shareholder Value!