Imagine your company five to ten years down the road: what does it look like? Do you see a well-run organization operating smoothly and proactively? Or is it a more hectic, reactive environment where fires are constantly put out? Maybe you see yourself relaxing on a beach, now that you’ve sold the company? While the beach life may be slightly further out of reach, the beauty of this exercise is that it allows you to plan now for how to achieve your desired outcome. By contemplating what you want your company to look like in the future, you can determine the steps needed to accomplish this.
We’ve developed this series as a blueprint for the steps that should be taken in running and building your business to achieve your desired end-state. Our goal is to help you address all of the aspects of your business that would be impacted by a sale or capital raise. This particular series is geared towards entrepreneurs who have started their own business, but in the future we plan to discuss how to implement “startup culture” into established businesses (which tend to be less agile and flexible).
Lifecycle can be a complicated topic; some companies are “young” but mature, while others are “old” but less mature. Life cycles can vary widely by industry, region, funding type, or even business cycle. Depending upon your goals as owner, your company’s age, and your company’s maturity level, you may or may not benefit from some planning, strategies, policies, or procedures. Throughout this series, we’ll avoid making assumptions about where your company is on its path; however, if your company is still just a twinkle in your eye, you are in the wonderful position of being able to build your company from the ground up using all of the right blueprints and materials we’ll be providing.
If you’ve already established your company, but it’s still in the early days, it’s often easy to implement new procedures and systems. From our work with our own companies and others’ startups, we’ve found that it’s best to establish policies before bringing on additional resources, whether in the form of internal labor or external service providers. Personnel tend to be more open to doing things a certain way when it’s done that way from the start, rather than asking them to change their behavior after they’ve settled into a routine. The same goes for external service providers; critically, vendor selection may even be impacted by certain policies or certification standards such as HIPAA, ISO 27001, or ISO 9001.
Even if your company is further along the maturity curve, you can still implement much of what we’re going to be presenting. It’s more difficult to change or instill a “culture” or attitude once there’s already an established environment, so even if you don’t put all of our action items into place early on in your company’s lifecycle, setting expectations and overarching principles early on is beneficial. For example, your company may not have the resources to implement full security protocols at its implementation, but if you set and convey high expectations with respect to personal accountability for security, adding systems at a later point will be a much easier pill to swallow.
Why Start Now?
It may seem counterintuitive to begin thinking about selling your company when you’re just starting to build it, but this is actually the perfect time to do so. Even if you don’t end up selling your company, operating under the assumption that you will sell someday helps you ensure that you’re taking care of all of the important aspects of your business.
The easiest time to set yourself up for success is from the start, building these things into company structure and daily practices. Often entrepreneurs are solely focused on developing their product or service, and forget to consider the more administrative aspects of running a business. Although it’s not sexy and cool to think about bookkeeping and HR compliance, staying ahead of the curve will pay off when you go to sell. Even if you don’t sell your business, paying attention to these areas will help ensure that you aren’t dealing with lawsuits and audits when your focus should be on building enterprise value.
We’ll focus on the legal aspects of building a business to sell in our first post of the series. The series will also include posts on the following areas (we’ll update this introductory post with links to each topic as they are published):
- Human Resources
- Information Security
- Core Business
- Logistics of Sale