A Stylish Business Holds Attention

... From Biz2Biz NWA April 2009

Part 4: Buying and Selling a Business

By Tami Greever / Crye-Leike / Bentonville

Last month in Biz2Biz Northwest Arkansas we explored a management model containing three hard or rational spheres: Strategy, Structure and Systems in the 7-S Framework. The model, made popular by consulting firm McKinsey & Company, reminds owners and managers to cover all bases when positioning a business for sale. These hard elements are relatively easy to identify and document. They include strategy statements; organization charts and reporting lines; and formal processes and IT systems.

The three soft or emotional spheres: Skills, Staff and Style influence public opinion and manage internal harmony. These soft elements are less tangible and more influenced by culture, but are as important in grooming your company for a buyer.

According to model developers, when these aspects are aligned, a company is destined to be successful. Use these principles to position your sale, and you’ll be more likely to improve performance, examine changes needed, align departments during acquisition, and determine how best to implement strategies.

Have you ever noticed a company with every marketable detail ideally aligned – from sleek promotions to a suave sales team to cutting edge collateral – yet the message feels disingenuous and the growth stagnant? A company whose hierarchy is unwilling or unable to appreciate the needs of the community; one that blindly reacts to new inventions, consumer trends and growing regulation will ultimately cause customers to move on – right on to the competition’s door! Just as a blatant disregard for a safety procedure, a recalled product, a skinny insurance policy, a corrupt manager, or sudden change in the wind of whims can turn hard-earned success caput.

The seasoned owner or manager understands that growth is a cultured process. Communicated at every level of management, the message is understood by the consumer, lender, media and vendors. Then, when it comes time to pass along the company’s legacy, the next team will seamlessly move forward with the same enduring message. Whether selling or buying, consider these vital business elements:

Skills
In light of growth, skill is the ability to adjust to management’s observations. The next wave of success can be ridden only if the team has the necessary skills to seize it. A perceptive manager will encourage increased employee skill levels as well as viable systems to manage the business.

Staff
Formerly, capital or land was king, but in today’s economy, human relations take top honor. Professional excellence is nurtured, and when matched by employee confidence you invite a win-win situation. Looking at job descriptions that pinpoint the people and skills actually required is a far superior approach than filling meaningless job titles. Remember, growth could require extra staff. Consider how staffing options affect cash flow. The company with the most employees doesn’t necessarily win, but the company with a contagiously motivated group of team players will go the distance.

Style
To a conscientious manager there is nothing more desirable than kudos coming from an adoring public. A solid leadership style is a cost-effective strategy that invites interest and repels doubt. Whatever the management style, growth will follow when the chain of command articulates the company’s style to vendors, customers, associates and advisory teams.

With classic style, the business demonstrating slow, steady growth will hold its value right through a change of ownership. This is the kind of business buyers clamor around with their best offers. Style is not priceless – when your business has style, you can name the price!

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