Why you need a strong backend office strategy before considering selling your business
A strong backend office strategy will not only maximize profitability but also ensure performance if you’re a minority stakeholder
For an entrepreneur, making the choice to sell a business is a big decision. It involves many considerations, and it’s potentially the most significant transaction you will ever undertake that impacts your future.
Whether your intention is to sell complete ownership of your business and walk away fully, or you want to retain partial ownership but be less involved in the operations of the business, careful preparation is vital for maximum profitability and continued performance.
Smart buyers look at both the value of the business from the viewpoint of performance and profits as well as of the establishment of backend business processes and efficient systems that can maintain productivity and set the foundation for growth. Unfortunately, a common mistake that entrepreneurs make is only focusing on the performance and profits of a business, while not taking into consideration the selling advantages of having a strong backend office strategy.
By structuring the company operations optimally, you can sell the business from a place of stability and desirability – because, let’s face it, no buyer is going to be attracted to the idea of walking into operational chaos that will cost them months and months of time and money to understand, untangle and rebuild. As the seller, you want to make it so buying the business will be an easy transaction and transition.
The big question then becomes: how strong is your backend office strategy currently? And can the business succeed if you’re no longer or less involved?
If there is uncertainty to those answers, then you’ll need to consider the following:
1. Conduct an audit of processes
Examine the processes and systems used in your business to determine how productive, effective and efficient current operations are – as well as if there may be areas for improvement.
For example, how often are SOPs updated? Is there a system in place so that evolving procedures are captured correctly and those who rely on those procedures are notified?
As well, how efficient and organized is your process for making financial transactions? Are you confident that the current processes don’t run the risk of missed payments and record keeping?
A thorough investigation of backend office processes will provide a solid understanding of the health of your operations so you can either feel assured about current practices or can start to take action in tightening things up.
2. Review your playbook and SOPs
Consider the state of your SOPs in terms of organization, readability, and clarity of instructions. In the event of employee leave or quick turnover, would a new employee be able to step into the role easily without setbacks to standard performance?
Potential buyers of your business will want to know how easily they and others will be able to onboard without significant impact to productivity. Ask yourself: if you were to hand over your SOPs now for testing, would someone be able to go through it without confusion and many questions? If not, then you may need to invest time into revising your SOPs to eliminate uncertainty.
Similarly, review your company playbook to ensure it’s up to date and the company rules, policies and framework are still relevant.
3. Level up training and consider opportunities
After conducting an audit of processes, and reviewing the company playbook and SOPs, you may find there may be gaps in employee knowledge and skills. Through this investigative process, you may notice talents and weaknesses of employees, which can be valuable information when preparing to sell a business. This is the time to train employees if necessary as well as create opportunities for those employees who demonstrate the ability to lead and strengthen the business.
While a solid backend office strategy can take some time to fortify, the efforts will attract better buyers and increase profitability.
If auditing processes, and creating and revising SOPs seems like too much of an undertaking though, you don’t have to do it alone. At Northern Primrose, our Virtual Executive Assistants are skilled at project management as well as extensive experience creating and improving operational processes and procedures.
