I spoke at a breakfast seminar on the topic of business growth, acquisition and transition. Here is a summary of the presentation.
The theme for my discussion is, what NOT to do if you are intending to grow your business, acquire a complementary business or transition out of your business.
These are my top 4 do not do’s…
1. Don’t accept poor information.
If your “Management Information System” isn’t capable of providing you with reliable information within 2-3 weeks of month end then your business is not ready for sale, and embarking on a growth trajectory could be disastrous. The importance of having quality information available to assist in decision making can’t be overstated. Until you can do this consistently every month you are not ready for the next step.
2. Don’t proceed with any action without documented systems and processes.
A prospective buyer is going to want to be assured they can reproduce the results you have been achieving – and documented systems will help provide that reassurance. If growth is your strategy then inevitably it will involve hiring more people and documented systems and processes will assist them in getting productive more quickly. Most importantly, it removes reliance on the owner to be the ‘fountain of all knowledge’ pertaining to the business. In fact, the greater the level of reliance on the knowledge of one or two individuals the higher the likelihood that any strategy to grow, acquire or transition will be unsuccessful.
3. Don’t contemplate it without a clear strategy. Document it into some form of business plan.
Make sure you understand your ‘valuable formula’ by being able to answer these 4 questions.
A. What is it that you sell?
B. To whom do you sell it?
C. Why do they buy from you?
D. How do you make a profit from it?
4. Don’t ignore the people issue.
To quote a favourite author of mine, Jim Collins, “you need to get the right people on the bus, the wrong people off the bus and the right people in the right seats. And then figure out where to drive it.” Almost without exception the underlying cause of most of the business problems I encounter in client’s businesses are caused in some part by poor people management.”
About David Officen
David is the Founder and Managing Director of proCFO. David combines an accounting and consulting background with commercial experience both as a manager for large commercial businesses and as the owner of private and family businesses.