Even if you’ve made your business your life and have no intention of selling it, it’s always a good idea to go into any business with the mindset that you may have to, or even want to, sell one day.
If you do eventually sell, you obviously want your business to go for as high of a price as possible. There are many things you can do to increase the selling price of your business. A comprehensive procedures manual is one of the biggest assets you can create to make your business more appealing – and worth more – to potential buyers.
Your Business Runs More Efficiently
Businesses with operations manuals run efficiently. Every procedure, from daily tasks to special situations, are laid out with a clear plan of what should be done and who needs to do it. Employees spend less time making judgment calls, so they can focus on doing their jobs.
When prospective buyers look at your business, they’ll see a business that runs smoothly. Procedures will be in place, and there will be little confusion as to what to do. A buyer will feel like this is a business where profits can be maximized.
Everyone Is on the Same Page
Businesses are more attractive when all of the employees understand their roles and what must be done in every situation. An operations manual helps you clearly define what each person does and who is responsible for which tasks. It also helps keep your employees consistent if someone has to take on another’s role.
To a prospective buyer, your employees will look competent and consistent. They’ll see a business where all of the employees are dedicated to their tasks and know what to do in every situation. Your business will be worth more, because a buyer will know they won’t have to spend extra on training existing employees.
It's Easy to Show How You Operate
When you meet with prospective buyers, one of the first questions they will ask is how you run your business. They’ll want to understand the day-to-day operations and what you do in special situations.
While you can probably detail your operations off the top of your head, your business won’t seem as organized or as impressive as it will with a procedures manual. A manual sends a signal that your business is professional.
The Business Isn't Dependent on You
You may not want to think your business can run without you, but if you’re involved with an M&A, it’s a huge asset for your business to be able to run the same whether you’re there or not. Put yourself in the place of a prospective buyer: they don’t want a business that’ll fall apart once the owner steps down.
A operations manual shows buyers that the business is completely operation whether you’re there or not. They won’t have to worry about a dip in productivity once you leave.
A New Owner Will Have Less to Do After the Transfer
Most prospective buyers aren’t looking for a business that’s going to need an overhaul when the owner leaves, and if they are, they’re looking to pay less. If you want to get a higher asking price for your business, you want it to feel “move-in ready.”
By having an operations manual, the new owner can get a feel for your business before the transition. They can come in on day one and know what’s going on.
Easy to Scale
Oftentimes prospective buyers don’t just look at your bottom line and revenue trends. They also want to see if a business is scalable. Most buyers don’t just want to take over and make the current profits, but instead want to grow a business.
A procedures manual is essential to scaling a business. If you want to expand or open new locations, you’ll need a way to grow and train new employees without losing the essence of the business. For a prospective buyer looking to scale, a business with a comprehensive operations manual is one less thing they’ll have to do. Your business will be appealing because it’s ready to grow.
Even if you don’t feel like you need an operations manual for the day-to-day running of your business, if you intend to sell or find yourself having to sell, a manual will make your business that much more appealing to prospective buyers. The more appealing your business is, the more money you’ll get in the sale.