Creating a Turnkey Business: How to Delegate and Document Your Processes
Businesses that use a proven method to generate consistent results are the most valuable.
If you’re considering selling your business, you need more than just a recipe for success. You need to document your processes, so that a buyer can take over and produce the same great results.
What many buyers want is a turnkey business.
A business that provides a roadmap for every key task the new owner must perform. If you can create a track record of success and thoroughly document your processes, you’ll own a valuable asset. Follow these steps to create a turnkey business and to sell your company for an attractive price.
It all starts with your value proposition.
1. Understand Why Your Business is Valuable
Each of these company traits may be attractive to a potential buyer:
Your business is seen as unique in the marketplace, and customers can differentiate between your product and the competition.
Impact reports that: “the average person is exposed to upwards of 5,000 brand messages per day.” If customers know about and like your brand, they are more likely to buy your product.
You focus on a particular niche, and become the preferred business in that niche. If you operate in a niche, you can target your marketing efforts to a smaller market. You’ll know your target market and do a better job at solving their problems.
As an example, The Balance points out that fitness and weight loss is the most popular niche for online businesses.
You make it easy to find, understand, and buy your products. The customer’s journey from finding your website to receiving your product is clearly stated.
This 2018 study notes that 73% of companies with “above average” customer experience maturity perform better financially than their competitors. Make the buying process easy for your customers, and they’ll keep coming back.
If your business has one or more of these traits, you can generate consistent sales, positive cash inflows, and net profits. You can generate recurring revenue streams with a loyal following of customers.
When you start due diligence with a potential buyer, share your written marketing plan.
2. Formalize a Marketing Plan
If you’re growing sales and profits, you have an effective process for getting attention, generating interest, and a method that differentiates your product from the competition.
Your marketing plan is a valuable resource to a buyer, and your plan allows the purchaser to drive sales and profits moving forward.
A buyer will want to see your ongoing plans to increase brand awareness, and a strategy that differentiates your products and services in the minds of customers and prospects. Explain your system for generating leads and driving sales, and the future growth opportunities in demographic segments and geographically.
Buyers want to feel confident that your successful marketing plan can be continued after the purchase.
How well are your other processes documented?
3. Create a Procedures Manual
A procedures manual documents every routine task in your business.
The manual lays out your procedures for sending an invoice, ordering materials, and how you reimburse employees for travel expenses. The document explains who completes each task, and how often.
Using a manual eliminates staff confusion about how tasks should be completed, and the document also serves as a training tool for new employees.
Meet with your staff and discuss each task you perform. Once you agree on a particular task, add it to the manual. Put an electronic copy of the manual in a shared drive where everyone can have access, and update the manual periodically.
If you can provide a comprehensive procedures manual, the buyer will have fewer questions and feel more confident about taking over your business.
To sell your turnkey business, you need a business broker who can serve as a trusted advisor.
4. Work With a Business Broker
If you’ve created a successful business and documented your systems, a business broker can help you navigate the sales process.
A broker can compute a current valuation for your business, and explain the factors that are used to generate the valuation.
Brokers use metrics and online valuation tools to determine the business price. They analyze the sales of similar companies, industry trends, and market factors
Develop marketing plan
Business brokers add value by developing a marketing plan to sell your business. Brokers use their industry knowledge and marketing efforts to find sellers, and they can address any potential obstacles to a sale.
The broker can create written materials to promote your business, and identify prospects that will understand the value of your firm.
Identify the seller’s reasons for exiting and life after the sale
Selling your business is both a financial and a personal decision, and a broker can help you navigate the personal side of your company sale. Potential buyers will want to know why you’re selling the business, and your broker can help you answer that question.
A business broker can also help you consider how your life will change after the sale. What will you do, and how will you use the proceeds of the sale?
Your broker will prescreen buyers to determine if they have the financial resources to purchase your business. If a buyer has resources and is willing to sign non-disclosure agreements, the broker will help you through the due diligence process.
If a purchaser makes a formal offer, the broker will negotiate the final price on your behalf.
5. Gather Other Documents
- Organization chart: The chart allows a buyer to understand how your business is managed.
- Current supplier and customer contracts, employment agreements: Contracts and agreements are important, because a buyer may need to negotiate and change these agreements to complete a purchase.
- Documenting automated processes: Automating your business helps you to leverage your time, and to operate more productively as you grow. If, for example, you purchase software to automate the invoicing process, you can process more invoices in less time, and support company growth.
Providing business operation documents helps the buyer plan for running the business after a purchase. If the acquiring firm has a clear picture of your operation, a buyer will be more motivated to buy your business.
So, where do you go from here?
Make a Compelling Case
Consider each of the steps listed above, and what’s needed to complete each step.
Determine the traits that make your company valuable. Talk with your team, and document your processes.
Finally, work with the experienced business brokers at Raincatcher. They can assess your business, and operate as a trusted advisor during the entire sales process.
Follow these steps to sell your turnkey business with confidence.