Looking to sell? How documenting procedures can help maximize your profit
When preparing your business to sell, one of the essential steps you’ll need to take is ensuring that all of your processes and procedures are documented. This is especially crucial if your business relies heavily on you to complete most of the day-to-day tasks.
Retaining full instructions on everything from invoicing to sales shows potential buyers that a smooth hand-off is possible and helps employees understand their roles.
Here’s what you need to know when it comes to documenting procedures in your business:
The benefits of documenting processes.
Documenting processes and procedures greatly benefits potential buyers as it helps them better understand how they can operate your business. It gives them a chance to put themselves in your shoes and better envision what their day-to-day would look like should they decide to purchase your business.
Writing down what you do and how you do it also takes the guesswork out of how a process should be completed and gives you a chance to speed up and streamline those processes. Additionally, having these documents in place helps guide new employees when it comes time to add to your team.
There are numerous other benefits to documenting your current processes, including:
Improving and analyzing an ongoing process.
It can be challenging to analyze a process without first documenting how it’s done. Ideally, a process should first be documented as you make your way through it. Then, you can review the process and ask yourself some questions:
Are there any flaws in the process?
Is there a way this process can be improved to help with overall costs?
Are there any ways this process can be streamlined to become more efficient?
Can this process be reviewed by anyone else on your team for additional input?
Once a process is documented, it’s easier to go back and understand what can be improved and tweaked to get the most efficient result.
Documenting your processes and procedures aids in creating consistency throughout your business operations. It can also help current employees better understand their roles and guide new employees on their job functions.
Additionally, a potential buyer will feel more confident in your business when they can see and understand your operational process. Therefore, be sure to document the following:
Which members of your team should be accomplishing which tasks.
What the end result of the process is.
Exact steps from start to finish.
Transfer of knowledge to others.
As mentioned, documenting procedures and processes is especially crucial if your business relies heavily on you for most tasks. Additionally, if you have any experienced staff members, there is a risk of losing their knowledge should they retire or find new employment.
Without proper documentation, it will be challenging for a potential buyer to envision themselves taking over your business.
As you work to document your business’s day-to-day tasks, be sure to consider the following:
What do you know that’s crucial to running your company?
Are there tasks that only you complete?
Is there anyone on your team with pivotal knowledge that needs to be passed on to new employees or other team members?
What experience do you or someone else on your team have that can aid in guiding and mentoring new employees or potential buyers?
Documenting what you and any other experienced members on your team know about your business can ultimately create a smooth transition when it comes time to sell.
Tips for efficiently documenting procedures.
While documenting processes can seem like a daunting task at first, keep in mind that there are a few ways to make it simple and efficient:
As you start, document just one process at a time.
Each process should have its own separate documentation to avoid confusion.
Keep process documentation saved in an easily accessible place (such as a shared drive or folder) so they can be found by others on your team.
Choose a time to regularly review processes so that you can keep them up to date and easy to maintain.
As you document, look for ways to improve the process.
Processes that should be documented.
The more processes you can document to show a potential buyer what running your business looks like, the more at ease they will feel about purchasing your business. So, as you look at your business and strive to make it less dependent on you, the owner, consider documenting the following processes and procedures:
Sales and Marketing procedures.
Documenting how to interact with a potential customer at every point in the sales transaction can greatly help your current salespeople and potential buyers. Consider the following:
What is your target market?
Who is your ideal customer, and what do you know about them?
What are your current products or services, and what price point do you have set?
Consider creating a sales playbook that answers all these questions and documents your entire process.
Daily operational processes.
Creating procedure manuals on day-to-day tasks can increase your team's ability to operate efficiently. For example, document how you complete the following:
Product creation process.
Is there anything else you do daily to complete operations in your business? Then, be sure to document it for future use. The more you can show a potential buyer what their day will look like should they purchase your business, the more valuable your business becomes.
Creating an employee handbook.
An employee handbook is an incredibly beneficial tool to help answer questions for employees and provide all staff with uniform guidelines of work expectations. When building an employee handbook, be sure to include the following:
Your company’s goals, values, and mission statement.
Workplace code of conduct and what is expected of each employee.
Employee benefits including insurance options, PTO, holiday pay, and bonuses.
Dress codes, if any.
You may be the sole member responsible for the hiring and firing at your company. Sharing your process on how you look for and onboard new employees can be massively beneficial to a potential buyer. Be sure to document how you complete the following:
Creating and maintaining job ads.
Interviewing process and questionnaire.
Crafting and sending an official job offer.
Onboarding process for new employees.
Review process and timeline.
Firing procedure and checklist.
While these processes can give you a good starting point, you may want to consider what else in your business should be documented as not every industry is the same.
While creating and writing down procedures can at first feel time-consuming, documenting what you do and how you do it can ultimately make your business more attractive to potential buyers when it comes time to sell. Retaining documented processes shows potential buyers that purchasing your business is less of a risk, which can in turn maximize your profits from the sale.
Looking to start the selling process? Contact us for a free assessment of value.