The same can be said of business owners and leaders who want to improve their levels of performance and that of the organizations they lead. That's also the reason why we've incorporated business coaching and business mentorship into many of the programs and services we provide to our clients through Pro-Vision Solutions Inc. We'll add a few comments on that for you at the end of this post, but for now, here's another great instalment from our friends from Sunbelt Business Brokers in Edmonton.
Bringing in a business coach is an excellent method to provide an objective view of your operations and understand how it may be seen by someone who may be interested in buying your business. More importantly we look at what operational factors can really improve your business value now and in the future.
Like homebuyers, prospective business buyers spot what’s worn, cluttered and dated. Like moths to a flame, they’re drawn to defects, totaling up renewal and revitalizing costs. Some may see the business as an opportunity; all will see it as worth less money. Like financial and organizational factors, operational factors can add or take away value.
Clean up the shop, warehouse, office, store. Dirt and dust say you don’t care. Show customers and staff that you do. Clean and freshen up all store, work and rest areas. Do assets need repair or replacement? Deal with it. What about inventory? Do you have more than needed to sustain average levels of sales? Sell off the excess. Take the same approach to eliminate unneeded files, equipment and programs.
Tighten up operations: non-performing or unsatisfactory employees, non-performing or unsatisfactory suppliers, slow or non-moving products or services. If an employee isn’t working out, tell them. Give them a chance to improve. Provide coaching, an improvement plan and feedback. If they’re unwilling or unable to improve, start progressive disciplinary action. Understand the steps that you take when you prepare to terminate employment matter; you do not want to end up paying out for unlawful dismissal. A lawyer can help you understand your options. Are family members who work in the business competent in their assignments? Are they held to the same performance standards as other employees? They should be. Are your suppliers punctual; do supplies arrive in good condition? If not, take it up with them. If they’re at fault, review the penalties. Can you go elsewhere? If the contract isn’t exclusive, you may be able to dual-source. If you terminate early, there may be penalties. Again, legal advice may be in order. Do you set and monitor profit margins for each product? You may need to keep some slow-moving items in your inventory if they’re high profit or critical to the operation. Consider discounting and selling the balance. Our next set of operational factors relates to systems used to run the business—the collection of processes or rules that govern our attitudes and actions in support of customers and staff.
Document, communicate and apply Vision, Mission, Goals, Values and Principles. A Vision Statement defines what the business will be like in five years; a Mission Statement defines the benefits customers can expect from the business. Goal setting involves establishing specific, measurable and time-targeted objectives. A business plan sets out how you will achieve these goals. These documents aren’t just for large companies; by being closer to where the rubber hits the road, smaller businesses can often respond faster and better to needs. While these documents provide common purpose and direction—who you are, why you’re in business, what you sell, what you want to achieve—the values and principles define how you do business. Have you an identity or brand? Is it recognized by your target customers and reflected by your employees? Carry it through every point of contact. Practice your elevator pitch. Can you explain your business in 30 seconds? Try using three points—the name of the business, what it does, what defines it and makes it successful.
Keep the Operations Manual current and complete. An Operations Manual pulls together the processes and procedures needed to run a business. One that’s current and accurate will be worth its weight in gold. Just having a plan can have a dramatic effect on the development of efficiencies that may be overlooked. If you are selling your business they are worth their weight in gold. Standardizing activities across your business also makes your operation more efficient and effective, incenting employees to follow the "rules." A typical Operations Manual has general company information as well as position specific information (job description, duties, results expected, Health and Safety Policy etc.). It should also reference any legislated requirements.
Maintain clean documentation, records, minutes and financials. Always know where you stand as a business. Are all contracts and licenses documented, current, and readily available? Is the minute book up to date? Are all required filings done? Meet with your lawyer at least once a year to review your corporate records—buyers lose confidence in a business when the legal due diligence turns up a long list of outstanding issues.
Building Value: Top Operational Factors Does your reported revenue adequately represent what your business is doing? Is your accounting supervised by experienced professionals and performed by competent bookkeepers? Keep in mind that buyers need three to five years of financial statements. An accountant’s Notice to Reader Statement is the quickest and cheapest type of financial review; a Review Engagement Report is more thorough and reliable. An Audit is the most comprehensive but costs more than most small businesses can afford. Look beyond financials: ensure Health and Safety records, licenses and/or permits are up to date; hold regular staff/management meetings and document their minutes.
In our next instalment “Minimizing Taxes When You Sell Your Business”, we explore some of the challenges and benefits of planning for the sale of your business in today’s economy. Many business owners are experiencing their second recession and wondering if they should hold on, or risk a hit to their retirement by selling sooner rather than later. Join us as we go over some critical areas to consider.
Sunbelt’s team of brokers, operating at local and regional levels, have experience selling small to medium sized businesses.
More than 1,400 Sunbelt brokers annually coordinate an estimated 4,000 Main Street and Middle Market business transactions.
A variety of strategies are required to sell businesses from different industries, of different sizes, and in different economic climates. Many Sunbelt brokers have specific industry experience and cooperate with their counterparts to identify the buyer and create the right framework for the sale.
Your Local Sunbelt Business brokers sell a diverse mix of main street businesses valued under $3 Million. Mergers and Acquisitions of larger and more complex business transactions of up to $30 Million are managed out of the Ottawa Head Office. We would like to help you plan and look forward to retirement, expansion or an exciting new business opportunity.
Sunbelt represents clients who may be interested in buying a business like yours. If you are thinking of selling a business now or in the next 3 years, discover what your next steps should be. Feel free to contact our Sunbelt Business Brokers Edmonton office if you have any questions or would like a free confidential consultation. Give me a call. Dale Alton – 780-878-8787
* Thank you once again Michael and Dale for providing us with the valuable insights provided in this article!
Over the years, we've enjoyed assisting entrepreneurs who are based in a number of different locations. Technology has allowed us to extend our reach and work closely with those who are even further afield! Our Business Coaching and Mentoring assistance can be tailored to meet your needs. Here are some of the many comments that business owners have provided regarding the help they received from us with their business development plans:
· This will help focus my attention, instead of being scatteredHaving a business plan can help ensure that you're heading in the right direction with your business, and that you have the necessary resources to get you safely to your intended destination!
· It will get me more organized, streamlined, and keep me on track
· I’m able to really evaluate the risks associated with moving forward
· I’ll be better prepared for what to expect as I grow my business
· It reinforces the need to have a well thought-out business plan
In closing, we invite you to consider Pro-Vision Solutions Inc. as a part of your TEAM of business professionals. We're pleased to assist you with your business planning, through start-up, growth and expansion. Let us know if you would like to have a conversation!
NOTE: For more information on the services provided by Pro-Vision Solutions Inc. and how we can assist ... please visit our Website: www.pvs4u.ca