What is the Wealth Creation Process?

By Christos Papoutsy

Christos Papoutsy
Wealth is created by initiating and guiding the entrepreneurial process. Most often it is realized by rejuvenating underperforming businesses operating in selected areas of opportunity.

What are the requirements for success?

• Following a relatively coherent method of developing and evaluating ideas, and of quickly rejecting those that do not possess potential.

• Gathering together a core group of essential people who are supportive and skilled: shareholders and organizational members who encourage and enhance creativity; operating people who are entrepreneurial in attitude, yet have exceptional marketing, financial, legal and conceptual skills.

• Implementing a financial plan which allows for injections of capital, large or small, into attractive opportunities.

• Developing the ability to attract the right people to build and operate a specific business.

Each of these requirements has implications for strategy formulation. Owners and investors should incorporate a strategic plan based on these requirements as soon as possible, using the comprehensive plan as a guide for growth and for creating value.

Next, the owners and investors should look for or establish strategic roots for a business. Theorists often liken this step to the formation of roots on a tree—a valuation tree--with each deep root representing a key element in establishing a strategic foundation: trends, diversification, sourcing, elimination of the competition, timing, market share, and so on. From this carefully prepared foundation, the business develops and produces strong, healthy branches.

Each of the limbs of this theoretical valuation tree must be tended and pruned carefully according to the strategic plan. They represent sales, growth, earnings before interest and taxes, discounted cash flow, cash flow, net present value, and return on investments. Neglect of any one of them may lead to the wrong conclusion or decision.

Fortunately, however, a tree with solid, deep roots, just as a well-established business, can survive adverse conditions and thrive again under proper management. The process to realizing value starts by looking at the roots of the business.

Mr. Papoutsy is a business executive, author, lecturer, mediator, musician and conductor, and philanthropist. Other articles of his may be viewed in the Business Arena section of the website of Hellenic Communication Service, a free online news and information service developed by him in support of Greek businesses and communities at the URL http://www.HellenicComServe.com and at the webpages of the Christos and Mary Papoutsy Endowed Chair in Business Ethics on the website of the Southern New Hampshire University at http://www.snhu.edu. He also welcomes viewer comments at email HellenicComServe@aol.com.