Pet Product News Editorial Blog:
Thursday, May 06, 2010
Fix That Gutter Now!
This is about your business and the negative effects of delayed “fixes.” One of our managing directors at SDR Ventures, Don Van Winkle, loves to tell a story that brings home this point in a manner we can all relate to—fixing up and selling your house.
In Don’s Own Words:
“Several years ago I put our home up for sale. You know the routine: new front door, paint, carpet, fence repair, and reattaching a gutter that had come loose. I hired repairmen to do some of the work and performed a few of the projects myself. The house looked great and my wife remarked, “Why didn’t we do this two years ago so we could have enjoyed it?” Her point was solid. The refinements along with reattaching the gutter gave our house a new look: cleaner, well kept, cared for, and ultimately worth the asking price.
The untended gutter, however proved to be a problem later when the inspection highlighted possible damage to the foundation. This easy but neglected repair had allowed un-channeled water to runoff around my home’s foundation. “Foundation compromises can be big,” the home inspector observed as I kicked myself for procrastinating. Ouch! In the end, no structural compromise was evident and the sale was successfully completed.
Why did I postpone a straightforward repair for as long as I did? I had become blind to the unsightly hanging gutter, to the disheveled appearance and the potential foundation problems until I decided to sell the house.”
How many of us have done that with problem issues in our business?
It is the simple fixes, those that are easiest to put off, that can undermine the value of your company. But when addressed, those minor fixes/refinements and the efforts made to posture your business to be an attractive acquisition typically yields both current and long term benefits. Don’t wait! The discipline that results will increase cash flow and efficiencies. You benefit regardless of whether a sale is 6 months or 6 years out: Prepare your business to be an attractive acquisition now. After all, everyone will eventually transition out of his or her business, so why not plan to have that transition provide maximum value to you, the hard working entrepreneur?
Below are a few of my favorite “gutter fixes” that will drive cash flow and owner value today AND maximize the value of what is probably your largest asset–your business:
1) Clean up books and records. Make them tight, accurate, and easily accessible. In the spirit of one of my favorite books, The E-Myth Revisited, document processes, procedures, legal contracts, patents. Keep them in a centralized /accessible place.
2) Move beyond the small business/entrepreneurial tendency to expense or write off personal expenses through the company (quit filling up your kid’s gas tank). Don’t give your non-family employees a reason to take liberties based on your behaviors.
3) Diversify and evaluate revenues and suppliers. Document the relationships thoroughly. Identify alternative suppliers, new markets, complementary product lines, subcontracted manufacturing options, etc. One of my favorite sayings to entrepreneurs is that “options are not optional.” Having proven options and choices in all areas of your life will result in reduced stress and increased success.
This process of “gutter fixing” should begin today and become a cultural foundation of how you run your business. Not only will you sleep better at night, but also the disciplines and efficiencies the process brings to your business will result in greater value in the event you do decide to sell your business.
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Fix That Gutter Now!
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