Add Value by Creating Systems and Documenting Operations

Buyers are naturally skeptical and concerned the business will continue to operate profitably after the owner’s departure.  By systemizing and documenting your business operations and by developing second-level management, you can alleviate this obstacle.

A good place to start with systems documentation is with flowcharts of your business’ overall processes with more detailed flowcharts of the component processes.  After doing so, requiring employees to document their daily procedures and job functions provides another level of detail.  Hiring outside advisors to help develop systems documentation can help expedite the process with the additional benefit of receiving independent third-party recommendations for improvements.

Other types of documentation that should be considered include: organization charts, customer agreements, supplier agreements, loan documentation, legal issues, job descriptions, key employee agreements, employee manuals, employee incentive programs, employee benefit programs, corporate documents and minutes of meetings, permits and licensing documents, facility and equipment leases, all contracts and intangible asset documentation (tradenames, trademarks,

The benefits of systematizing and documenting your operations are many. It helps in training new employees, makes it easier to delegate thus helping develop key employees; enables you to spend more time working on your business rather than working in your business which should lead to improved profitability and ultimately, simplifying a buyer’s due diligence review.

In addition, the process of reviewing your procedures for the purpose of documenting them may surface opportunities to improve the efficiencies and results of your operations.  There may be redundancies or unnecessary steps that can be eliminated or improved.  Encouraging employees involved in the review process to make suggestions for improvements might yield significant opportunities for enhancements.

It is so very important to develop qualified second-level management / key employees. There is no better time to consider what you need to accomplish to achieve that goal than when you are developing systems documentation. If no one on your current staff has the ability to rise to the level and responsibilities of a trusted second-in-command person, you may need to recruit and hire qualified personnel from outside your existing business.


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