Selling your business: Can it run without you?
You’re ready to sell your business, but can it run without you? If the answer is no, it’ll be hard to find a buyer. And even if you do, the bids are likely to be low.
If your company is overly dependent on you, it’s time to establish well-documented, repeatable processes. Employees should know these by heart and apply them consistently.
“You want to be able to go on vacation for up to three months without anything breaking. That’s the ultimate test,” says John Warrillow, author of the book Built to Sell: Creating a Business That Can Thrive Without You.
Warrillow is also founder of the The Value Builder System, a web-based platform that helps entrepreneurs improve the value of their company. He offered these five steps for creating repeatable processes in your business.
1. Review your workflow
The first step is to have someone interview everyone in the company about how they do each step of their job. The person should start with looking at what you do. Then, he or she can move on to employees. Next, work out an optimal workflow for everyone in the business, including you. For guidance, look at best practices in other businesses.
It’s important to pick the right person to do all this work. If it’s someone from inside the company, he or she should be process oriented and able to think critically about how work gets done, including your own. They should also have the trust of employees and your blessing to inquire deeply into how work is done.
Because all that is a tall order, it’s worth considering hiring an outside consultant, who can bring a fresh, expert perspective to this work. “Many entrepreneurs have a hard time putting on their process hat,” Warrillow says. “They aren’t always good at thinking through all the details and ramifications of creating processes.”
2. Document your processes
Now document in detail the optimal processes you’ve identified—ideally, in an electronic form. “Printed manuals become obsolete almost as soon as you print them because processes are always evolving,” Warrillow says. “You have to be able to update constantly.”
You can use free sharing applications such as Google Docs and Evernote, or business process management software, which can offer additional features such as a dashboard, alerts and workflow scheduling.
3. Train employees
Next, train your team to ensure they know the processes and execute them consistently. You should regularly inspect work to make sure it’s done as documented. Put a senior manager in charge of ensuring compliance with processes and updating them.
4. Get leaner
Continually analyze your processes to look for steps that you can do more efficiently or automate. Automation can improve efficiency, reduce errors, help your business run better on its own and boost its value. Think about technology that can help. Consider bringing in an operational efficiency consultant to assess your company and help you make improvements.
5. Foster a self-reliant business
Review your business to identify areas where it is highly reliant on you or an employee, a customer or a supplier. Such overdependence makes you vulnerable in case of a disruption. The added risk reduces your value to a buyer.
Look for ways to reduce such overdependence. For example, you may need to delegate more of your responsibilities to key managers. Or if you’re highly dependent on one client, find ways to diversify your customer base. If you rely heavily on a few key employees, you can cross-train some of your team in each other’s tasks.