Planning to sell your company? Part 2 : Even if you’re not.
What is the most important change which will affect your company when you sell it?
The answer in most cases is that you will no longer be there. The new owners or a general manager may take your place. They will not have the benefit of your experience in developing the business. There are at least three perhaps four steps that you can undertake which will help the new owners overcome that disadvantage. If they are in place they will undoubtedly increase the value and therefore then the price of your business.
1. Written procedures.
This is something I recommend every business does from when it starts. For three main reasons:
a. If by the time you want to sell your business the important procedures are written down.
See the advantage to the buyer.
b. While developing your business and you want to delegate a task to someone.
You will have a procedure.
c. Having delegated a task with a procedure you will get fewer questions to use up your time.
What about getting your other employees to do the same thing too. For more details on one way to do this see the article Preparing to delegate
2. Tight informative financial control
This means monthly management accounts, and KPI's (Key Performance Indicators) covering quality, profitability, delivery, and marketing. This is more costly. But as management accountants we specialise in this area. Our techniques can help you develop this for not much more than the cost of the statutory requirements. Ask us to help and give you a price.
3. Customer records
The key information about customers and prospects includes contact, conversion, and cohesion. Different business will need different information, but all can take advantage from:
Contact: Who your customers are and how can you contact them. For preference all four means email, address telephone and fax. If one goes down you can use another. If your business is currently mainly walk in why not collect this information anyway. A website can be a tool to collect this and later a tool to expand your business.
Conversion: Information about how often you initiate a sale and how often they do. How much they spend.
Cohesion: is what connects them to you. How did they found you? What are they interested in?
If you sell books they might mainly buy romances.
How do you collect it and store it? Your web site might or an auto-responder? You can use excel. It is easy to store data in fields sort it and filter it. You can also easily transfer it in .csv files. That is a list separated with data separated by commas. This is a simple standard way of transferring information to a more sophisticated system later.
4. Frequently asked questions
What are the frequently asked questions in your business?
If you have clear answers, that's great. Put them in the procedures. But some questions don't.
Try these: As you think about these you will see the value of customer records.
How do we increase our sales? Or how do we stop our sales dropping?
Can we increase the profit per sale?
These are about marketing but they could be technical questions too.
The procedure type approach mentioned above can be helpful. For each question when you hit it the first time make notes in note pad or word.
What could you do? What did you choose? Why? How can we measure success?
Can we test two approaches?
On subsequent occasions remember it must be brief and refer to prior projects
The idea is to build a useful tool to aid future decisions.
What have you done in the past?
What worked? (Remember the need to measure that?)
Did we test one approach against another?
Refer to files
As an example this article is an attempt to practise an approach that has been recommended to me. I will need to note the time it took to prepare this article. i.e. the resource required.
I hope you can see the benefits both current and future in putting some of these suggestions in place
If you require further help please do not hesitate to contact us. For part 1 of this article on how to smarten up the company financially in preparation for a sale see the July 08 newsletter.
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