“I don’t want to grow my business any bigger – it’s a lifestyle business.”
“It’s just a small business so we don’t need – or want – loads of paperwork and processes.”
“I have got a firm grip on the financial aspects of my business –it’s just that the spreadsheets are in my head!”
If you’re nearing retirement or simply happy to keep your company at its current size, you probably aren’t running it like a big business. Why would you? Why should you?
As the owner of your business, maybe you don’t feel you need to put as many rigorous processes in place as a big business would. “What’s the point when the team is so small?” you might wonder. As for documenting those processes, who’s got the time?
Your finances might be healthy in practice – but how well can you evidence it on paper? Perhaps one of the reasons you started a business was to avoid all the cumbersome administrative obligations of a larger organisation. Your contracts might be verbal, or you just haven’t got around to updating them.
However, when the time comes to sell your business, how will you show a potential buyer what a successful company they’re about to take on? That’s why we advise businesses of every shape and size to think like a big business – and get organised!
Run your small company like a big company
Even if you’re years from selling up or your aspirations are modest, running your business like a larger organisation will make it more predictable – and ultimately a whole lot more attractive when it comes time to sell. Formalising your operations today will show what your business could look like tomorrow – and that will allow you to give your buyer confidence.
Adopt big business best practice such as proper record keeping, clean books, written contracts with customers, staff and suppliers, and protected intellectual property. All these features are green lights to smart buyers, and they’ll often pay more for companies when they are organised, compliant – and less risky. When it does come time to sell, you’ll fetch more for what you’ve built – and you’ll feel more in control of the day to day running of your business in the here and now.
Let this story inspire you
Jay Steinfeld is a great example of how to run a small business like a big company and reap the benefits. Steinfeld studied Accounting at the University of Texas and joined KPMG after college. His wife owned a small retail store selling blinds and window treatments. The store was successful but, inspired by the success of a certain company called Amazon who were having great success selling books online, Steinfeld wondered if he could get consumers to buy blinds online. Soon after, Blinds.com was born.
Many first-generation online companies that were typically run with few financial controls, but Steinfeld grew Blinds.com like an accountant, running the business with the same rigor as a larger company by:
- building an experienced management team
- assembling an outside board of directors, even though Blinds.com was a small, private business and Steinfeld owned all the stock
- holding quarterly board meetings, where senior managers were asked to prepare and deliver formal presentations
- hiring a ‘big four’ firm to complete a full audit of his financials each year, even though all he legally needed was a simple tax return
By 2014, Blinds.com had grown to 175 employees and, and at more than over £77 million in revenue, was the largest online retailer of blinds in America, outperforming U.S. retail giant Home Depot. This made Blinds.com and irresistible acquisition proposition for Home Depot, especially coupled by their fastidious bookkeeping.
When Home Depot announced its acquisition of Blinds.com, it made Steinfeld and his wife very wealthy indeed.
Helping you evaluate, prepare and succeed
Entrepreneurs Hub is a boutique corporate finance company that supports business owners to grow, prepare and sell their business to maximise value.
If growing or selling a business in the future is on your agenda, then why not consider a highly valuable Shareholder Business Evaluation Session? An Entrepreneurs Hub Director will meet with you for approximately 3 hours to:
- independently review your business, with no obligation and in the strictest confidence
- assess how you can improve saleability by improving your processes and reporting
- identify any barriers to growth and exit, such as inconsistent bookkeeping
- discuss valuation methodologies and current models for valuing your type of small business
- talk through your exit plans and options, including the best time to sell your business and how to get it to that stage
After the meeting, we will provide a highly valuable Entrepreneurs Hub Shareholder Options Report with a guide valuation range of how much your small business could potentially be worth.
Ready to think like big business and sell your business for more money? Contact our friendly and experienced team in confidence to arrange your free Shareholder Business Evaluation Session.
Download the full eBook How to avoid the pitfalls when selling a business