I've been talking to several people who are interested in selling their business or lining it up for sale in the next two to five years, and my most popular advice that I'll give them is to make sure you're organized. That means documenting your procedures. If you haven't documented the procedures of your business, is there really a process?
I'm Donna Bordeaux, and I want to dive a little deeper into how you can make your process documentation super easy and increase the value of your business. When you try to sell your business, you'll typically have to teach that new owner how you make your money and how you do things in your business. Sometimes, that arrangement is to hire you on for six months as a consultant to the new owner. Honestly, it's kind of a drag for both parties to have that happen. A lot of sellers have checked out after receiving their check and aren't interested in being an employee for another six months to a year. The new owner is excited to do things their way. Yes, they want to learn from how you do it, but they're not going to do it the same way you did. Your processes might just serve as a starter template for how they revamp their business, so they may not be all that excited to have you in their way for the next six months to a year.
I want you to pull out three tools to document your processes and procedures. This applies to you whether you're going to sell your business today or in 20 years from now. You should be documenting these procedures so that anyone on your team can do the things you do. If someone had to step in or if you want to grow your business, you'll have to delegate those tasks. Documenting procedures is a must for every business owner.
Let's first start with the easiest tool that everybody has, and I guarantee it is your phone. Pull out your phone; you can record things as you're doing them and talk through them. When I work with owners of businesses, there are a lot of things they just have to see to know if they're right or wrong. Maybe it's on their production line or in their process of opening for the day. So turn on your phone and video it, telling it what you're looking for. For example, if your morning opening procedure involves walking up, unlocking the door, shutting off the alarm, turning on the lights, turning on the coffee, and turning on the server, document that. What will it hurt? You do it every day, so why not document it?
The second tool I highly recommend is Loom. Loom allows you to record what you're doing on your computer screen at any point and talk through and show what you're doing. You can point and click to things and describe your actions. Maybe it's your end-of-day closeout process that you do in your point-of-sale system. Record how you do that and talk through it, pointing to where you look at the numbers and what you do with them. Loom is free for recording short videos or about $20 a month if you want to record longer formats. It's well worth it. Loom also creates a standard operating procedure (SOP) from your video, documenting it in words as well. You may have audio learners, visual learners, and some people who prefer reading, so you'll get both in one fell swoop.
The third tool is Scribe. Scribe takes individual screenshots, showing you where to click and what to type as you record your session. It will create a magical tool with screenshots or step-by-step guides that you can use repeatedly to show your team or document a process. In the case of a sale, we always want to ensure you have a contingency plan so that everyone can step in and take over a role in an emergency.
Make sure you document your processes and procedures. I know of another business that sold, and I had two franchisees that were very similar in their processes and what they did. However, one was highly documented, while the other relied on just the franchise manuals and said, “That's enough.” The one who had documented processes and procedures personally for that specific location sold for about $100,000 more. It depends, obviously, on the type of business you're selling, but these truly bring a lot of value and facilitate the sale for both you as a seller and the buyer. So document, document, document!
Another little tidbit I'll throw in: there are some things you only do once a year. For example, there are some forms that only need to be filed once a year, and even if I'm the one who does them, I will record a video showing what I'm doing. That way, when I have to come back to it next year, I can pull that video right up and see exactly what I need to do and what I need to gather. Document everything you've got and create a library of knowledge for your staff, yourself, and for a potential buyer, so you can achieve an increased selling price.
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Donna Bordeaux, CPA with PYOPAccounting.com
Creativity and CPAs don’t generally go together. Most people think of CPAs as nerdy accountants who can’t talk with people. Well, it’s time to break that stereotype. Lively, friendly, and knowledgeable can be a part of your relationship with your CPA, as demonstrated by Donna and Chad Bordeaux. They have over 50 years of combined experience as entrepreneurial CPAs. They’ve owned businesses and helped business owners exceed their wildest dreams. They have been able to help businesses earn many times more profit than the average business in the same industry and are passionate about helping industries that help families build great memories.
