Value Based Management
“If You do not know the values of the components of your business, you will find yourself in the hands of someone who does.”
- An (unnamed) investment banker -
Value Based Management (VBM) of the company, or business is the common denominator for all Argon Pro services. VBM is also a key part of Argon Pro's services for growth and SME companies.
Value Based Management combines the organization's reporting, management and decision-making with business modeling and the key value drivers that have the most impact on its cash flow (Key Value Driver) and monetarized value.
Technically Value Based Management mindset focuses especially on business modeling and the Key Value Drivers discovered through business modeling.
The main philosophy of VBM is based on the fact that organizations make three types of financial decisions:
decisions related to operational activities,
decisions related to investments, and
decisions related to financing.
VBM process combines those decision-making situations with business modeling, cash flow management, forecasting and value driver analyses of strategic planning, as well as valuations of the company, or separate business.
The main goal of the process is to find the Key Value Drivers that have the greatest impact on the cash flow of the entire organization, or business (and thereby also its value). The end results of the process can then be utilized in reporting, management of the company, or business, and other operational activities, including the different levels and phases of the organization's decision-making. The Value Based Management concept works in strategic decisions at the board level, as well as in the daily decisions and actions of the executive management, or the entire staff.
”Cash is a fact, profit is an opinion”
At the "core" of the Value Based Management is the cash and cash flow of the whole organization, or a separate business. This eliminates the "giggling" and "biases" made possible by different accounting methods.
VBM is a useful and common tool for entrepreneurs, executive management, investors, as well as financiers. VBM can be implemented as an operational method covering the entire organization, or it can be used in separate parts in the form of tools and processes.
The attached pdf document describes the Argon Pro VBM framework, concept, and its possibilities in more detail.