Transfer YOUR Knowledge / by Kerri
When you get ready to sell your business, the value of the business must be in the business to be monetized and for a buyer to see the value without your active involvement.
Before you can sell the business for maximum value, you must transfer all your knowledge and wisdom into your team, systems, procedures to carry on prosperously in your absence.
For each challenge listed below, here’s what you need to do:
The whole business is in your head – only in your head
You must share every idea, policy, system, process, key, password, contract, etc with your management team. You may give specific tasks and responsibilities to specific people or you can appoint a successor to take on your operational role
Don’t know how to plan, when to plan, when to find time to plan.
You must delegate day to day operations and make time to plan strategically. Get training, hire an advisor, or hire a temporary COO to get plans in place
No marketing plan, sales plan, financial plan or operating plans – except in your head
Get all these plans out of your head an on paper and assigned to different people to implement and achieve the goals in each area. Delegate responsibility for each area of your business to someone, not you. Make them operationally responsible, not you.
Don’t know how to automate or outsource
Exit planning is a great incentive to learn to automate and outsource to get more done, cheaper, not by you. Start by automating just one task. Start outsourcing by hiring an individual or a company to take over just one task or project on your To-Do list.
Decide no new tasks will get added to you To-Do list – instead you will always seek to delegate, automate or outsource first.
No operating procedures
Create an Operations Manual. Buyers expect to be able to read your operations manual, instead of calling you for each procedure. Every time you do something that is a process or procedure, write it down. Every time you document or record how you do something, you are adding value to the business. Start by simply taking notes on an index card for each task, process, system, tool you use.
No contingency plans
A contingency plan is like a security blanket for your business. It protects you, your business, your team and your customers. It also demonstrates to your buyer how valuable your business is that you are willing to protect everything that can be considered unique systems, models or intellectual property. You must lay out your emergency plans for fire, flood, other natural disasters, loss of power, computer crash, password security, data security and redundancy, safety and OSHA policies, backup procedures for when each person is on vacation or ill, etc.
No exit strategy in place
You must choose to take action to explore and consider exit options that would suit you. Take responsibility for ensuring the longevity of your company, the legacy you can leave, and providing ongoing employment security for your team. By following an exit plan you will be in control of when you exit, on what terms and the valuation you will receive to fund your reinvention
Keep all expertise in the owners/ executives heads and private files
You must start sharing your knowledge and wisdom in the business and about the business. You will maximize the value you will receive at exit, only if you transfer all of your knowledge and wisdom about the business to your team.
Everything on this list is a challenge all owners face to some degree. You can share your knowledge, understanding, wisdom and guidance willingly with your team and make your business an attractive buy at a premium price. Or you can horde all your knowledge, resist potential buyers’ due diligence efforts to understand the value in your business, and struggle to sell the business for a fair return.
The good news is that we can all learn new mindset/attitudes and beliefs, we can all learn new skill sets, and we can all learn new information combined with experience to produce the knowledge we need.