The time will come for everyone: one way or another, you’ll be ready to exit your business.
After devoting years, possibly decades, of blood, sweat and tears into building your company, you might be counting on a payoff. You might be depending on selling your business to fund your retirement. But what if you can’t sell?
The irony is that the more personally involved you are in your business, the harder it is to transfer operations to someone else. To maximize your company’s appeal, build a business that can run without you.
Running a business on autopilot demands systems, discipline and consistency. Those values are crucial to business success, and they’re often central features of franchise operations.
Consider the statistics on business survival. 80-90% of independent businesses fail in five years, whereas 80-90% of franchises are successful five years in.
What Do Franchises Have in Common?
They’ve had tremendous opportunity to make a lot mistakes and learn from them. If 100 franchise restaurants are pursuing improvement for five years, that’s 500 combined years of experience. Their strength is the combined experience and wisdom of legions of owners and managers, all wrapped up in a network which has honed the art of learning from trial and error, and perfected analyzing and communicating the results.
They harness the power of consistency. They have highly developed systems and processes ranging from employee handbooks to accounting templates. These enable them to operate profitably and reliably without the constant presence of ownership.
If you plan on exiting your business someday, it’s up to you to multiply its value by building it to operate profitably without your day-to-day engagement. By escaping the routine grind, you’ll free up time and energy to devote to concrete improvements. At the same time, you’ll build a business which is exponentially more attractive to buyers.
Lessons from the Franchise Arena
Franchises provide buyers with a handbook for success.
Your handbook for success has to include documented and repeatable systems for every element of your company, from sales and marketing to bookkeeping to inventory to shipping. Every task has to be systemized, every element has to be documented so employees can be trained accordingly. SOPs (Standard Operation Procedures) must clearly explain tasks, and employee manuals must clearly express responsibilities. Without these, consistent training is impossible.
Management must also conform to consistent, repeatable, trainable responsibilities and routines.
When these systems are successfully established, they’re nearly guaranteed to boost profits and increase efficiency. By documenting your strategies and procedures, you’ll reassure potential buyers that your success can be replicated.
Even if you don’t anticipate trying to sell for a few decades, these efforts will pay dividends.
When the owner is relieved of daily responsibilities and can focus on big-picture, process-oriented improvements, the possibility for real growth blossoms. Additionally, unexpected circumstances can confront any of us at any time, and having the option to sell your business keeps you flexible. Lastly, by the time many owners are ready to sell, they’re often too burned out to transform their business, so they’re forced to accept a lowball offer, or to shut their doors entirely.
Even if you’re convinced your business is one-of-a-kind, embracing a franchise mentality will boost its value and make your exit a financial success.