Instantly Increase the Value of your Business—by Doing Less

It’s an understatement to say that business owners wear many hats.  Most owners can quickly identify an error in the accounting reports, eyeball a faulty weldment, identify a vendor error, and resolve customer and sales issues. It’s your expertise that grew the business, and you had to have a strong handle on everything that came in the front door and left through the backdoor.  

But as your company grew and as staffing increased, are you still the only one that completely understands your company?  Are you still the only one that can identify when sales are weakening or quality is suffering?  Are you still the only one that can resolve issues with customer deliveries or vendor errors?  Are you still the only one that can determine manufacturing throughputs and processes changes?

If so, then the value of your company has decreased. 

Buyers of companies are looking to purchase a company that can operate profitably, without you.  Not being able to transition a company without you will mean selling it for less.

Instead of selling for less, we suggest doing less!

Key Management

The easiest way to build value into your company is to have a management team that understands your company so well that they can operate it without you.  This means having managers that understand your marketing and sales structure and objectives, customer objectives and challenges, production processes, incoming and outgoing inspection, safety, IT processes, accounting and invoicing, cash flow and intellectual property.

Ensure Knowledge

You might think you have the dream team in place that could easily operate without you or support new ownership, but how do you really know? The answer to this is easy: delegate, and then delegate some more.  And then test them by taking a well-deserved vacation to see how they manage when you are not around.  Nothing will reassure a prospective buyer better, that you are not the only reason a company lives and breathes, than being able to take off for two weeks.

In your organizational chart, we suggest adding key highlights for each team member along with how long they have been with you. Longevity of key team players will be important because prospective buyers appreciate a seasoned team that understands your business.

Documentation

The next way to build value in your company is with proper documentation. Every department should have a book detailing its processes. This way if an employee departs, you still have their system well documented for a replacement or new ownership.  Don’t forget about documenting the all-important passwords, domain names, and other intellectual property that your company owns. This would be invaluable to the replacement employee as well as to a prospective buyer.  Prospective buyers hate risk, and this type of documentation provides tremendous reassurance.

By simply doing less, you will make your company more valuable.  This is not only important for when you do decide to sell, but it also makes for better employees, which is just good for business as well.  

By Gerry Chadwick.  CEO at Sunbelt Business Advisors of Southwest Ohio.

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