One of the hardest parts of growing a business is the transition from a great idea with initial customers to a solid, trusted concern. Employing staff, building momentum, daring to dream! After all, building systems improves business value as you develop.
I know a lot about how this feels – i’ve been there, in many shapes and forms and it is a daunting, but exciting time in the development of any business.
If you are at all serious about maximising your value on exit, my advice is that you need to choose the systems your business works with carefully. Keep thinking ahead to the value they are helping you create as well.
Embedding good systems give you three key things. All of which make assessing the opportunity for an exit easier for all (plus, of course, help you grow that bit quicker and more securely):
Predictability improves business value
Systems help you produce the products and services with the same level of consistency each time. Create your systems, ensure the process is effective and ask your team to follow the proper procedures consistently helps produce predictable outcomes.
Building systems helps efficiency
Good business systems allow your team to focus on what they do best. For example, as an accountant, I can focus on adding value and insight to an owner when management accounts are readily available, on a timely basis and a format we can use for forecasting. Rather than a one sheet excel page that may be riddled with errors and needs to be reviewed line by line each day before you even start.
Good systems help show credibility. In your reporting, in your method of running the business and also, often most critically of all, to your potential acquiror. After all, one of the assumptions of an exit is that you are most likely to depart the business (if not immediately, at least in future). Having great systems in place removes the over-dependence on you, or for that matter, any one staff member once the deal goes through.
In other words, it removes risk to the buyer. Which in turn can create extra value for you. Certainly when it comes to negotiating to price, good systems and transparent data and processes help reduce the number of issues your acquiror might seek to haggle with regards to price.
And do not forget, robust systems may also help provide the consistency that a potential acquiror is looking for when they go to benchmark company performance and assess the future growth potential of the business. Historic performance and track records can only be assessed as far as the underlying figures and processes will allow.
Would you like my help in assessing where you are today?
Helping owners and managers build better systems is what I do, and have done, for over 20 years now. After as we have seen above, building systems improves business value.
If you want to like a short chat with me about how I might be able help, please feel free to contact me here.
Three tips to help build your business processes today
Here are three great ideas for finding more on how you might build better systems:
Financial systems – www.icaew.com Home of the world leading Institute of Chartered Accountants (I’m biased – I’m a member!). Lots of helpful content and factsheets to help you supercharge your financial and insight analysis.
Marketing systems – www.hubspot.com. One of the leading marketing technology platforms, the site has a huge amount of helpful content and ebooks.
Growth Hubs – choose from one of the 38 Government backed growth hubs around the UK. Find mentors and grant funding available to assist you.