What is Your Business Worth? Part 2
Systemizing your business to make it easier to sell.
Copyright - Ray Pons.
Every business owner at some point in time wonders what their business might be worth.
After all, the whole idea of going into business for yourself is to have a thriving enterprise that spits out cash while you own it and will one day be worth a fortune when you want to sell it.
The problem of course is how to actually get what the business is worth in cold hard cash.
As pointed out last month, no one wants to buy a business if all they are buying is a glorified job.
Savvy buyers will never pay a premium price to buy a job, a series of headaches, hassles and problems.
The real market value of a business must be built not on a person, the business owner; it must be built on a system. Systematize the business and you have something tangible to sell that people will buy.
Here is a 6 step process to systematize your business and make it easier to sell...for top dollar:
1. Don't rush, don't panic. Give yourself at least 6 months to finish your system, the operations manual, that captures (in print or electronically) every facet of your business and clearly explains "this is what we do and how we do it around here".
2. Ensure that the processes, practices and policies are in place and functioning properly (i.e. selling, marketing, order processing, customer fulfillment etc.) If necessary hire business advisers to see that the processes allow for streamlined and consistent operations. Repair the defective elements. Add those components that are missing. Capture all the ingredients before finalizing the recipe.
3. Document like crazy. Get employees to write down the roles, job descriptions and daily, weekly and monthly responsibilities. If you yourself wear multiple hats, define and document the best way to do your various roles. Then replace yourself with someone else.
4. Have departmental managers write down their department's roles, responsibilities and daily, weekly, monthly tasks. Also they must document all the key processes relevant to that department.
5. Assign a champion to document your organization's company-wide (multi-departmental) processes that have not been addressed. For example, customer service most likely needs to be tackled by several people as it spans multiple departments.
6. If necessary hire an expert in organizational design, workflow enhancement or documentation to make the validation of your business system and creation of your operations manual a reality.
These 6 steps will not only document the "this is what we do and how we do it around here" they will highlight under utilized employees, problems in workflow and general areas to improve.
Unless you know how something currently operates you cannot begin to improve it. As you improve it the system gets better. As the system gets better the value of the business goes up.
What is your business worth? Not much. Savvy buyers don't buy the business they buy the system.
Systematize your business and boost its value.
- What does your writing say about you?
- The Why, What, Where and How to Getting Published -- 3
- The Why, What, Where and How to Getting Published -- 2
- The Why, What, Where and How to Getting Published
- You Can Build An Intuitive Organization
- Why Networking Events Stink
- Working With A Designer
- You Have Been Framed