<\/p>\n
<\/p>\n <\/p>\n <\/p>\n <\/p>\n <\/p>\n <\/p>\n <\/p>\n SOPs document repeatable processes that deliver predictable results \u2013 particularly revenues. These are essential process steps and activities for businesses to perform consistently regardless of the owner, executive team, or employees in various roles. Without them, you will find yourself tethered to the business\u2019s operations to maintain its performance and therefore, its value. When managing a transition of ownership, you will not have the time needed to oversee operations at a granular level.<\/p>\n <\/p>\n <\/p>\n <\/p>\n <\/p>\n As stated already, managing a business exit requires extensive time, energy, and focus. You will not have the bandwidth to manage the business and <\/em>manage the sale process. Make sure your management team can run the business without you<\/a> before you begin a transition, or both processes (the business\u2019s performance and the sale) will suffer.<\/p>\n <\/p>\n <\/p>\n Demonstrating that the business operates well independently from you is an important measure of your management team\u2019s capability. The incoming owner wants to see that it will continue to thrive after you exit.<\/p>\n <\/p>\n <\/p>\n <\/p>\n <\/p>\n Controls provide guard rails to keep the business going in the right direction, running efficiently, protected from potential risks and losses, and complying with regulations.<\/p>\n <\/p>\n <\/p>\n <\/p>\n <\/p>\n <\/p>\n <\/p>\n <\/p>\n <\/p>\n <\/p>\n <\/p>\n <\/p>\n <\/p>\n <\/p>\n <\/p>\n As the leader of your business, one of your primary responsibilities is to look ahead and choose a direction. This is a proactive role involving creating plans, setting goals, and measuring progress. Drafting a business plan and a finance plan helps your business grow by equipping your team with the goals, opportunities, strategies, communication tools, and metrics needed to keep the business on track. These plans are roadmaps that allow you to hand off leadership to others in full confidence that the business will continue to grow without your daily attention.<\/p>\n <\/p>\n <\/p>\n <\/p>\n <\/p>\n Once your business begins a sales or transition process, it will consume a significant portion of your time and attention. If you haven\u2019t built the SOPs, leadership team, and controls needed to keep your business running without your daily involvement, it will stumble, and its performance may deteriorate. Your primary role during the transition is to keep your leadership team focused on the business\u2019s performance and daily operations while you manage the transition. <\/strong>Taking your eyes off the ball is the biggest valuation mistake you can make.<\/p>\n <\/p>\n <\/p>\n If you\u2019re wondering how to build a self-sufficient business and avoid this major mistake, we\u2019re here to help. Read our full series about planning a successful exit<\/a>. We also offer a complimentary half-hour consultation with a team member, where you can get a quick sense of who we are and we can learn a bit about you and your business. Request your consultation here:<\/p>\n <\/p>\n <\/p>\n <\/p>\n <\/p>\n<\/div>\n <\/p>[\/et_pb_text][\/et_pb_column][\/et_pb_row][et_pb_row _builder_version=”4.27.2″ _module_preset=”default” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.27.2″ _module_preset=”default” global_colors_info=”{}”][et_pb_post_nav in_same_term=”on” _builder_version=”4.27.2″ _module_preset=”default” global_colors_info=”{}”][\/et_pb_post_nav][\/et_pb_column][\/et_pb_row][et_pb_row _builder_version=”4.27.2″ _module_preset=”default” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.27.2″ _module_preset=”default” global_colors_info=”{}”][et_pb_divider color=”#eeeef0″ _builder_version=”4.27.2″ _module_preset=”default” global_colors_info=”{}”][\/et_pb_divider][\/et_pb_column][\/et_pb_row][et_pb_row _builder_version=”4.27.2″ _module_preset=”default” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.27.2″ _module_preset=”default” global_colors_info=”{}”][et_pb_text _builder_version=”4.27.2″ _module_preset=”default” global_colors_info=”{}”] You\u2019ve been working on the sale of your business for months now. All the work, not just to complete this sale but to build a business someone else actually wants to buy, is about to pay off. <\/p>\n You hold your breath as the sales agent slides a piece of paper across the desk towards you…with a number completely different than you\u2019d negotiated! <\/p>\n \u201cAs you know, we did a final business valuation last week to determine the final sale price for the closing today,\u201d she explains. \u201cAfter reviewing all of your records, we have determined that the value decreased from our initial estimate a year ago. As a result, the sale price will be 25% lower than we originally planned.\u201d <\/p>\n What happened to the profitable sale you worked so hard for?! <\/p>\n","protected":false},"author":9,"featured_media":967,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"on","_et_pb_old_content":"\n You\u2019ve been working on the sale of your business for months now. It\u2019s finally closing day, and you enter the conference room with anticipation. All the work, not just to complete this sale but to build a business someone else actually wants to buy, is about to pay off. The sales agent opens her folder, pulls out a stack of neatly printed documents, and slides one out to show you. <\/p>\n\n\n\n \u201cAs you know, we did a final business valuation last week to determine the final sale price for the closing today. After reviewing all of your records, we have determined that the value decreased from our initial estimate a year ago. As a result, the sale price will be 25% lower than we originally planned.\u201d <\/p>\n\n\n\n This is the single biggest valuation mistake owners make while exiting their businesses: they take their eyes off the ball and fail to maintain (or increase) the value of the business during the months-long sales process. <\/p>\n\n\n\n We\u2019ve talked with hundreds of business owners over the years, and we\u2019ve heard this story over and over. Business owners get distracted and lose focus on their business\u2019s performance in the months between signing the term sheet on an offer to buy the company and the closing date. If they haven\u2019t built the necessary infrastructure, systems, processes, and team to keep the business operating at full capacity, the business\u2019s performance suffers. <\/p>\n\n\n\n The biggest mistake business owners make with their valuation is forgetting that the value will be reassessed just prior to closing the sale. <\/strong>At a minimum, they must maintain the company\u2019s value through the entire sale process (ideally, this value increases!), or they risk a significantly lower sale price and personal profit. This could derail their future plans or require them to make major changes to have the resources they need for their next chapter. <\/p>\n\n\n\n SOPs document repeatable processes that deliver predictable results \u2013 particularly revenues. These are essential process steps and activities for businesses to perform consistently regardless of the owner, executive team, or employees in various roles. Without them, you will find yourself tethered to the business\u2019s operations to maintain its performance and therefore, its value. When managing a transition of ownership, you will not have the time needed to oversee operations at a granular level. <\/p>\n\n\n\n As stated already, managing a business exit requires extensive time, energy, and focus. You will not have the bandwidth to manage the business and <\/em>manage the sale process. Make sure your management team can run the business without you<\/a> before you begin a transition, or both processes (the business\u2019s performance and the sale) will suffer. <\/p>\n\n\n\n Demonstrating that the business operates well independently from you is an important measure of your management team\u2019s capability. The incoming owner wants to see that it will continue to thrive after you exit. <\/p>\n\n\n\n Controls provide guard rails to keep the business going in the right direction, running efficiently, protected from potential risks and losses, and complying with regulations. <\/p>\n\n\n\n As the leader of your business, one of your primary responsibilities is to look ahead and choose a direction. This is a proactive role involving creating plans, setting goals, and measuring progress. Drafting a business plan and a finance plan helps your business grow by equipping your team with the goals, opportunities, strategies, communication tools, and metrics needed to keep the business on track. These plans are roadmaps that allow you to hand off leadership to others in full confidence that the business will continue to grow without your daily attention. <\/p>\n\n\n\n Once your business begins a sales or transition process, it will consume a significant portion of your time and attention. If you haven\u2019t built the SOPs, leadership team, and controls needed to keep your business running without your daily involvement, it will stumble, and its performance may deteriorate. Your primary role during the transition is to keep your leadership team focused on the business\u2019s performance and daily operations while you manage the transition. <\/strong>Taking your eyes off the ball is the biggest valuation mistake you can make. <\/p>\n\n\n\n If you\u2019re wondering how to build a self-sufficient business and avoid this major mistake, we\u2019re here to help. Read our full series about planning a successful exit<\/a>. We also offer a complimentary half-hour consultation with a team member, where you can get a quick sense of who we are and we can learn a bit about you and your business. Request your consultation here: <\/p>\n\n\n\n![\"Reality](\"https:\/\/ecngx364.inmotionhosting.com\/~capcon7\/wp-content\/uploads\/reality-check.png\")
<\/figure>\nHow To Avoid Making the Biggest Business Valuation Mistake<\/h2>\n
Implement Standard Operating Procedures (and hold your team accountable for following them).<\/h3>\n
Delegate Day-to-Day Operations of the Business to Your Management Team.<\/h3>\n
Develop a Robust System of Business and Financial Controls.<\/h3>\n
\n
<\/ul>\n<\/ul>\n
\n
\n
\n
\n
\n
\n
\n
\n
Write and Follow a Business and Financial Plan<\/h3>\n
Help to Avoid This Business Valuation Mistake<\/h2>\n
Related Articles<\/h1>[\/et_pb_text][\/et_pb_column][\/et_pb_row][et_pb_row _builder_version=”4.27.2″ _module_preset=”default” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.27.2″ _module_preset=”default” global_colors_info=”{}”][et_pb_blog fullwidth=”off” posts_number=”3″ include_categories=”current” show_thumbnail=”off” show_author=”off” show_date=”off” _builder_version=”4.27.2″ _module_preset=”default” header_text_align=”left” body_text_align=”justify” text_orientation=”justified” border_width_all=”0px” global_colors_info=”{}”][\/et_pb_blog][\/et_pb_column][\/et_pb_row][\/et_pb_section]","protected":false},"excerpt":{"rendered":"
A Common (and Costly) Valuation Mistake <\/h2>\n\n\n\n
<\/figure>\n\n\n\nHow To Avoid Making the Biggest Business Valuation Mistake <\/h2>\n\n\n\n
Implement Standard Operating Procedures (and hold your team accountable for following them). <\/h3>\n\n\n\n
Delegate Day-to-Day Operations of the Business to Your Management Team. <\/h3>\n\n\n\n
Develop a Robust System of Business and Financial Controls. <\/h3>\n\n\n\n
\n
Write and Follow a Business and Financial Plan <\/h3>\n\n\n\n
Help to Avoid This Business Valuation Mistake<\/h2>\n\n\n\n