The value of your business may slip if you aren't careful!

Put your business up for sale - even if you don't intend to sell it!

Do you think that sounds foolish?

You might learn, at little cost, a lesson many business owners learn painfully: The "value" of your business (or department) is a living thing, likely to shrivel without the care and sustenance it needs.

Nothing makes the hard facts about the value of your business clearer than putting it up for sale.

That's when your doubt or inadequacy in answering buyer's questions suddenly tells a tale about needed documentation.

Or, the documentation you never wrote makes your business "too risky" for your prospective buyers.

Does documentation really add value to your business?

Here are some ideas to ponder. I'd say that nine out of ten businesses need documentation updates right now just to maintain their present value. Probably one out of ten is beyond maintenance.

(Could you name a company that couldn't use new or improved documentation.)

Why haven't these business owners done something? Is maintaining the value of their businesses too difficult, too expensive?

I guess many of them must think so because the most popular excuse for not developing documentation is "not in the budget."

What if Ray Krok "couldn't afford" to write an operations manual?

Well for one thing, non-experienced restaurateurs couldn't buy a McDonald's cash cow - a money-makin' machine. McDonald's detailed operations manual is a key part of that machine.

Your McDonald's franchise (the right to do business as a McDonald's) costs only $175,000. McDonald's provides the land, building, and documentation to run your franchise.

You pay rent to McDonald's for using their land and building. (Typically, other fast food chains do not own the land where their restaurants operate.)

Plus, you must equip the building, purchase your inventory, advertise, decorate, etc. McDonald's Corporation does not provide any of these, but has a list of approved suppliers with whom you may do business.

Thus, a new McDonald's restaurant will cost you about a million bucks resulting from many expenses that far exceed the $175,000 franchise fee. Plus, you must be financially able to operate about 6 months before turning a profit.

However, their operations manual makes your McDonald's franchise a simple turnkey business.

The McDonald's operations manual dictates every move made inside its restaurants.

For example, rules govern how many hamburger patties to a pound of beef (10), how long to toast a bun (17 seconds) and how much sanitizer to use when cleaning the shake machine (1 packet for 2.5 gallons of water).

Still, an operations manual doesn't guarantee a perfect operation. Operations manuals must be kept up to date.

For example, McDonald's has always checked in with customers. Until recently, customer data were mostly anecdotal (unconfirmed rumors).

This meant there was no way to tell whether the same passing grade from two different reviewers meant they each received the same quality of service.

Jim Cantalupo, McDonald's Chairman and CEO, decided it was time to start grading restaurants on a standard scale everyone could understand.

Can you say, "update the manual!"

Will your documentation pay for itself?

Your operations manual will pay for itself repeatedly in sales, lowered costs, better service, and hassle-free business control.

By giving your employees faultless direction in your business or department, you will reduce the time and cost of supervision.

Your operations manual should contain detailed, written explanations of your business systems and the way your company or department must be operated.

Your operations manual must be comprehensive - it is your blueprint for success.

This is what your buyer pays for, more than any other item in your business system.

By showing your prospective buyer your operations manual, you will gain their respect and achieve a sale because your proven expertise is outlined in your manual.

Your manual proves your business format is comprehensive and complete. The SYSTEMS and business methods you have instituted can be passed on, so your buyer can instruct their people how to use them.

Here are a few of the areas you should cover in your operations manual:

* Your Company Philosophy, who you are and what you stand for
* Requirements of administering the business
* Legal requirements in day to day operation
* Accounting procedures to your standards
* Methods of Marketing and business promotion
* Personnel hiring and complete Human Resources legal requirements
* Maintaining standards, proficiency and quality
* Pricing policy and suggestions
* Product Sales Procedures

CONCLUSION:

When presenting the facts about your company to prospective buyers, there is nothing as impressive as a detailed operations manual.

Faithfully in Freedom,
Mike Hayden

PS: NEWS FLASH Now, it's official. You must now refer to CYA memos as "Defensive Documentation."