This article contributed by Christopher Neve of Millstream Consulting, a leading Gold Coast based SME business consultant. Business Brokers Queensland recently launched the new ‘Prepare Your Business For Sale ‘ service in conjunction with Christopher.
During my travels as a business coach and advisor I go into many businesses and meet many Managing Director Owners. Some common themes I hear are “I am so tired I just need a break”, “I have lost my enthusiasm”, “It would all be OK if it wasn’t for the staff issues”, “Just not getting as much interest as we used to” . I also get the message from some Managing Director Owners that I see that they are thinking of selling as they are reaching retirement age. “My wife wants me to sell and enjoy some of the fruits of our labour”.
I then say “You are not alone and what you are suffering is not unusual and there is a way out if you are willing to try it”.
So what can you do to help yourself?
1. Have a defined management structure with stand in staff to cover each of those roles, and that structure to be well understood in the business.
If you are the MD, have you developed the systems and processes so that you can hand over to an employee deputy (preferably not a family member)?
Create a simple structure preferably no more than 3 or 4 layers deep so that each head of dept. has a no 2 that covers them when they are away, if you are the MD then choose up to two heads of Dept to train to as your stand in whilst you are away. I say two because it’s better not to be too dependent on any one individual and those two can support each other if you are away for a long period of time. They also have their own jobs to do. Practice that delegation anad make sure your deputies are qualified
Advantages are career progression for employees, you are creating a team of people who might even want to buy you out one day and making the business less dependent upon yourself which is very attractive to many buyers.
2. Have a good internal performance management and communication systems with a culture that supports these processes
But… I hear everybody say, “I tried to create a management structure and it didn’t work”, “I lost x members of staff because they didn’t like the guy I put in charge”. You can help overcome these common issues by having weekly communication meetings. I remain amazed at the number of companies I see who never have weekly (or even monthly) meetings of the management or any of their teams and even if they do have a meeting there are no minutes or action points kept. You can pick up many issues before they become a problem. If run properly these meetings involve and empower your team around you. I also recommend an appraisal system to track and involve the employees in their career aspirations. This system should be two way and involve both parties. I recommend written appraisals every six months, with a verbal quarterly review diarised. These appraisals should involve goal setting, personal aspirations and training requirements.
Advantages are normally committed and informed staff. If you are away a deputy should run these meetings without you, just send you the minutes!
3. Create systems so that your accounts, diary, ordering, customer relationship and delivery systems are automatic, computerised and all interface with each other
Many companies use MYOB, QuickBooks or perhaps a new cloud based accounting package and don’t use a system for recording customer details properly and a system that can leverage that information. This is vital! If you have good comprehensive system it can save you many costs, helps highlight inefficiencies, and helps create the figures and data that can measure all productivity. The newer systems can upload data to the internet and also receive orders direct from the internet into your systems. IF your customers and systems are out of the owner’s head you now are no longer selling you.
4. Just because you are thinking of exiting – don’t forget INCOME
A very common mistake I see is that in the act of deciding to sell, the owner can take their eye of the ball, lose focus, and the turnover drops, the profit dips and what was a valuable business becomes less valuable. It’s really important to still refresh the brand, aim to slaughter the competition and remember why you started/ bought the business in the beginning. I recommend that you have a budget and if ahead spend the profit on continued improvements. All buyers like it, and if you are growing market share then that is making your business more valuable. If for any reason you are behind budget, you can then react quickly.
In a nutshell your role is to try and make yourself surplus to requirements with a well-oiled machine working by itself behind you.
Depending upon industry and turnover there are still grants available to help you from the federal government. I recently organised for one client an Enterprise Connect business review. He is putting in place the recommendations, and the Federal government will be matching his clients spending upon the approved outcomes dollar for dollar up to $20,000 value. Now that can’t be bad.
Christopher Neve – Millstream Consulting