Create Space for a Top-Dollar First Impression

... From Biz2Biz NWA March 2009

Part Three: Buying & Selling A Business

By Tami Greever / Crye-Leike / Bentonville

Question: When does space matter the most?
Answer: When you are selling it.

The same family who will ignore laundry spilling over the basket will suddenly faint over a wispy cobweb when their house is on the market. A young man using the passenger side of his ride for a garbage-slash-tool chest will remodel with finesse and vigor before a hot date. Same goes for selling a business – if you want a buyer to take the wheel, provide a first class, tricked-out space powered by a smoothly running operation, complete with an accurate odometer to display where the business has been, and a honed GPS to highlight where it is going.

A single business has multiple “spaces” to consider when making its first impression, and no matter how tempting it is to divide them into a list, resist. Lists do little to create common ground between owner and the outside world collectively known as buyer. The business is “your baby,” so highlight your space in a holistic way to tell its story with spirit.

A fluid way to connect separate spaces is represented in the 7-S Framework – a methodology made popular by McKinsey, a global consultancy corporation. Unlike a checklist, the McKinsey 7-S Framework is interconnected by three hard or rational spaces:
• Strategy
• Structure
• Systems

and three soft or emotional spaces:
• Skills
• Staff
• Style
These components encircle the seventh element of Shared Value, which is the heart of what the business owner believes as its value, and the legacy it will eventually pass to a new owner. Below is a deeper study of the three hard/rational components:

Structural Space
Generally, documents help provide a map of what must be maintained to hold the structure together. Review documents and corporate minutes with a critical eye for how decisions have impacted development.

What does the business own and/or lease? Are industry specific safety standards and insurance policies still adequate today? Appraisals, plat maps, and warranties verify ownership and provide a road map of growth. Drag out the lease agreement, agreements with customers, vendors, and advertising agencies. Each helps develop the story of structure, while franchise obligations and licensure/ permit regulations establish guidelines and limitations.

Remember, your trials and tribulations don’t have value to a new buyer and can’t be used to overprice the bid. Instead, add value by highlighting key historical elements that made the business what it is today.

A Space for Strategy
Organize this space by considering how the company’s resources reach the goals established. Put competitors high on this list, and address skepticism or fear by identifying their role in the market and your competitive edge. Naturally, customers will be on this list. You’ll want to share particulars about them, such as who and where are they? What do they expect? Why (or when) do they begin or end a relationship with the company? How can this customer base be expanded?

Environmental concerns might also be on the forefront – from recycling initiatives in the employee lounge to full-scale EPA evaluation. Display these strategies proudly, or initiate a campaign to embrace change. What other resources identify your uniqueness?

Systems Make the Final Space
Procedure, process and routines for how work is to be done take the high road here. Include financial systems, hiring, promotion, performance and the flow of information in your space-planning map. Be accurate to a fault here. It is, by far, the most scrutinized area because it involves how tax returns were assembled, and how accounting statements and physical assets and organizational relationships are managed. You may want to involve key advisors or employees who can provide details of their departments.

Locate job descriptions and demonstrate how employees work their way up. Review computer software for obsolescence and consider what value would be added by updated technology. Is there a system in need of an overhaul? If so, take ownership of the problem before it derails a potential buyer.

Whether currently engaged in a sales transaction or not, you might say a business owner is always in the various stages of selling – from the swipe of a card to the signature on a loan. By continually articulating what is best about the space known as your business, you will not only help your business grow, but elevate its competitive preparedness. When the ultimate journey to sell your business approaches, it will be a natural extension to a first-class first impression.

Author / expert Tami Greever 
is a seasoned entrepreneur and Business Broker Realtor® with
Crye-Leike Commercial in Northwest Arkansas, her home of 18 years.