For some of us, our end game is to simply shut up shop when we have had enough, for others, we want to pass it on to a future generation, and for most of us, we have big dreams of selling our business to fund our retirement.
If you want to exit your business with enough cash to fund your post-business life, then having effective systems and processes in place is not a question of ‘should I’, but more a ‘I MUST’.
Even if you are not thinking of selling now, it’s a good idea to start acting like it and work on building a sellable business. As an owner, it creates good discipline operationally and it allows you to get an incredible head start for when you do eventually decide it’s time to sell up.
One of the problems with building a sellable business is that there is no sense of urgency. Realistically the wheels are not going to fall off if you do not start now. But procrastination can have it’s consequences too. It can take time to make changes to your business that will increase its value prior to selling. Most business brokers and advisors will encourage you to dedicate at least two years to prepare your business for sale.
Savvy buyers understand that in some businesses, the most valuable asset is the seller. As the seller, your job is to convince potential buyers that they will be able to continue to successfully operate the business after you are gone and/or as current staff move on. The way to do that is to develop and document airtight processes that enable your business to function without your direct involvement. While you are doing this, you will also have a chance to review them for efficiency, to work out better ways of doing what it is you are now, and to update any outdated technology.
Systems run your business. People run your systems.
So the earlier you start with systemising, the easier it will be when you are ready to sell. The heavy lifting will be done, and you’ll likely see benefits in the form of a higher valuation, better deal terms, and smoother and quicker due diligence periods.
Yes it may cost you money to hire a systems coach/consultant to do it for you, or time if you are going to do it yourself. But it costs a lot more to leave a company without financial security.