The opinions expressed by Entrepreneur authors are their very own.
Many small business owners wonder how they will grow while maintaining the top quality of their work. Regardless of the form of business – whether it is service-based or product-based – you need to follow a few basic steps.
You can start a business without these items, but you cannot grow it effectively without them.
1. Create a clear company structure: A well-defined structure is essential for the successful development of a company. Introduce and document the different titles and responsibilities of each team member.
As a business owner, you may wear many hats – marketing, sales, quality assurance, customer support – but as your business grows, it’s vital to hire people for specific roles and hold them accountable. The job commercial should clearly define what the person is responsible for.
2. Document business processes: Michael Gerber, writer of “The E-Myth,” a must-read for business owners looking to grow, states that a common problem for all small businesses is inconsistency and scaling difficulties.
Imagine that you are the owner of a small bakery and you want to expand. You’ll need a process for hiring latest employees and documented best practices. Without them, opening more locations could lead on to uneven quality and service. Describe each step in detail: When should employees arrive? What is the first thing they do in the morning? Where are the ingredients stored? Business should run like a well-oiled machine. Adopting structured procedures helps maintain consistency across all locations.
3. Train your employees: Creating a business is like creating art; Smooth cooperation between people is truly artistic. You need motivated people with specific skills, but you also need a reliable, repeatable infrastructure.
Without proper implementation and training, even if you exchange best practices, the quality of labor will vary, especially if you open multiple locations.
Review best practices for latest hires, then allow them to shadow you before they begin doing the tasks themselves. Watch them closely at first to make sure they are doing things appropriately. Once you are sure they will handle the task at hand, allow them to work on their very own.
Preparing the company for sale
1. Step away: If you plan to sell your business, it must function without you. An actual company has interchangeable parts and does not rely on its founder. When purchasing a business, a potential buyer will likely be looking for order, structure, and scalability.
2. Be prepared to spend time and money: If you want to sell your business to finally loosen up and get a return on your investment, I have bad news for you. Selling a business is very expensive and resource-intensive. Understand that not every transaction will likely be accomplished. This is a part of the process, so don’t get discouraged if this happens.
3. Clean up your record: Financial records ought to be transparent and third-party verified profit and loss statements ought to be available. Keep detailed records of all costs, including salaries and expenses, in an organized and easy-to-track manner.
Steady growth over several years is more impressive than sporadic success. Buyers can offer you many times more profit, and a company with high growth potential can obtain a much higher price. For example, technology firms with regular user growth may outperform other firms comparable to restaurants, which can attract lower bids unless they have precious assets comparable to equipment or prime locations.
Put yourself in the buyer’s shoes. What would you be looking for? Be ready to discuss your development plans. If your sales are stagnant or declining, show that you have strategies to grow your business.
4. Find potential buyers: If your business is growing like Digital Silk, you may receive inquiries from interested buyers every week. Don’t waste hours talking right away. Start with a short, easy message – 3 or 4 lines that describe your company, mention that you’re preparing to sell, and highlight any growth indicators. For example, you could say: “We have grown 20% annually for the last three years and are looking for the right buyer. Let’s schedule a phone call to discuss further.”
Hire brokers who can promote your company to potential buyers, comparable to private equity firms or larger firms in your industry. You might also consider hiring someone who knows the key players in your industry. Brokers can charge a significant fee, sometimes greater than expected, leading to frustration because they have not shared in the labor and dedication that went into building the company. However, hiring a broker may yield higher results than doing it yourself. Alternatively, it could also be profitable to hire a consultant with a small sales premium.
It is critical to consider who pays for third-party audits and legal fees. They might be negotiated with the purchasing company.
How to negotiate and close a contract
Be transparent. Once buyers show interest, they often ask for detailed information. Sharing this information is common, especially with competitors, so you should enter into a non-disclosure agreement (NDA) with them before sharing sensitive data.
Please do not forget that due diligence is a thorough and lengthy process. Buyers will take their time to analyze every aspect, so be prepared and be patient.
Buyers will often want to talk to management and key employees. They will even look at your customer base to check their satisfaction levels. Expect them to audit your funds and ask about growth strategies. They want to ensure that they are making a secure investment and that the company will operate stably after the sale. Keeping all the things organized and ready for inquiries can simplify the entire process and increase your possibilities of a successful transaction.
Take care of your employees. Most business owners are empathetic and truly want to avoid putting their employees in difficult situations. Generally speaking, when a company changes hands, employees don’t desire to leave just because of the sale. The acquiring company typically makes significant announcements, generating excitement with guarantees of improvements. They will highlight how the acquisition will lead to higher connections and advancement for the company and its employees. Sometimes they might offer small incentives to retain key leaders, but more often discussions focus on how joining a larger entity provides a higher future for all involved. Typically, the buying company wants to retain employees, believing that they’ll perform higher in more stable conditions.
In my approach, I like to set clear goals, indicating to the team that they’ll receive shares after the sale. It is vital to encourage motivation and maintain transparency. Once the prospect of a sale arises, word will inevitably spread, making honesty essential.