As business owners enter the final stages of their business careers and consider plans to exit, there is a tremendous amount of work to do. They’re frequently overwhelmed by the laundry list of to-dos that must be completed before they can even begin to put a timeline on an exit.
One thing that we emphasize with our business owners is the documentation of processes. Here is a great success story about a business owner with whom we worked for over a decade, leading up to the sale of his business in Dec 2020:
• We began working with this small business when it was barely producing $1m/year in gross revenue. It was profitable, the owners were being paid reasonable salaries, the team was solid, and the business was ready to grow. They needed some back-office support, so we took over their payroll (we don’t do that anymore, but we did at the time), we started paying their bills, and we embarked on a complete overhaul of their accounting procedures.
• About three years into the engagement, the business’ revenue had grown to over $2m and the trajectory was still pointing upward. I encouraged the owner to start documenting his internal processes. He asked me why; I responded with the simple answer, “Processes sell; if it’s only in your head, you can’t pass it along to a buyer.” He understood immediately and started even though he was years away from selling.
• It took another 2-3 years before he was comfortable with the documentation procedure, but he never stopped adding to it. Every time he changed a process, he deleted the old process and documented the new one. Every time we asked him to try a new piece of technology that would allow us to serve him better, he documented it. Meanwhile, his gross revenue grew to over $5m.
• When he sold his business for his “dream number” after a decade of working with us, he handed off this binder of documented processes to his buyer (there was also a digital component). The buyer was ecstatic and told him that this was the easiest transition they had ever undertaken.
• The owner told me later on that we added value at every turn in our work with his company, but the best piece of advice we ever gave him was to document his processes.
It’s incredible how much of what we as owners do every day is just in our heads. We take it for granted in a big way, and we’re only reminded of it when a team member asks us if there is a set of instructions for a process we want to delegate, or if we can take some time to explain something to them. If only we had it in a document someplace, or a video, that we could just send to them…
A mature business needs documented processes. Processes sell. Our Wind-Down Consulting engagement includes advising on how to best embark on this daunting process. Is your business ready for this?