Golden rules for smaller businesses that want to make it big
Blog: Elliot Cooper, CEO – Enprise Group.
Most of the successful businesses that I see have one common element: they have business systems that can readily scale up to serve a much larger company.
When you are commercialising an idea, part of the business plan is to put business systems in place that can grow with the business as it progresses from start up. By ‘business systems’ I mean much more than just the accounting system. I am talking about a system which includes documenting how things are done, from processing an order to the entire sales process. If manufacturing is involved, then the recipes and manufacturing process need to be documented. Choose an accounting system that readily integrates with Electronic Data Interface, CRM and other applications you will need as you grow.
Cheaper, more accessible capital
I have found that doing this makes it easier to raise capital or debt to fund business growth. If a liquidity event (like the possible sale of your business) presents itself that you want to take advantage of, it makes it easier to transition from the entrepreneur to the new structure. This removes the need for long lock in times, enabling you to exit the business cleanly.
Good systems pay off in other ways too. Few of us have photographic memories: it’s important to have triggers built into the business system that prompt us to take the next action. This might be dispatching the order that the customer has paid for. Or a trigger to call a prospect on X date to follow up on a proposal sent today.
Attracting a buyer for your business
If you sell your business, good business systems will help ensure you get the best price. Buyers see your business as more attractive and less risky, because it’s clear what systems and processes they need to follow to run the business successfully.
Preserving your capital
Consider systems from the cloud on a SaaS (software as a service) basis to avoid tying up valuable working capital that you need to grow your business. It’s also possible to get funding on a lease-to-own basis from finance companies. Most software will work in the cloud. This frees you from the need to invest in servers and the associated costs of maintenance, backup, firewalls etc. One fee to a hosting company can take care of all of that for you if you do not have a SaaS software model. Some of the larger accounting software providers offer different levels of pricing that is intended to suit businesses as they grow. By moving up the levels more functionality becomes available to the user.
Sound business systems are what enable you to work on the business, rather than in it. If your systems and processes are just ‘in your head’ you are not really the business owner – you are the business.
Three golden rules to help turn a small business into a big business:
- Get your business systems in place early. They will help you attract capital and minimise the cost of that capital.
- Choose financial and other business systems that can scale up as the business grows. You will save time and cost in the long run.
- Choose a financial system that integrates readily with other business applications such as CRM and EDI. When you decide you need them, you can implement with minimal cost and disruption.
This blog is based on an original article published in NZ Business Magazine (March 2017 issue, pp 40-41). Read the full article here