The Business Advisory Blog

The Business Advisory Blog

Insight, news and updates from Alliott NZ Chartered Accountants, Auckland New Zealand. The views expressed here are the views of the author and should be discussed in further detail should an article be relevant to your individual circumstances.

While every effort has been made to provide valuable, useful information in this publication, this firm and any related suppliers or associated companies accept no responsibility or any form of liability from reliance upon or use of its contents. Any suggestions should be considered carefully within your own particular circumstances, as they are intended as general information only.

Vanessa Williams
Published on

Why a Global Franchise is Worth More Than the Local Corner Store

Imagine you decide to sell your business and a prospective buyer asks you to show them how things are done in your business.

filingWould you bring out your fully documented systems manual with every key process systematised and presented step-by-step? Or would you point to your head and say, "It's all in here."?

If your answer was, "It's all in my head", let's call you Joe's Burger Bar. You're the owner of the burger bar on the corner of the street, and there are no systems in your business. You flip the burger, you know what goes in the burger, and you know how to serve it up. But anyone coming in to help is only able to learn by watching how you do it. There is no place for them to learn how to do things in your business without your being there.

If you are on the other end of the spectrum, if you said, "Here is my fully documented systems manual," then your business is the McDonald's of the burger industry. You have a ‘this is how we do things here’ system, and any new person coming into any role of the business knows exactly what has to be done, and how to go about it.

Going back to the original thesis where you are considering selling your business, which of those two businesses do you think is worth more? We believe we both agree the answer is the McDonald's franchise.

The value of a systematic approach

A business that is fully systemised whereby someone can pick it up and say, “I know exactly how to run this business”,  is always worth more than the business that is completely reliant on the business owner.

You may be somewhere in between this spectrum, and the key for entrepreneurs is building a business that is not solely dependent on yourself. This means you are able to step out from your business and it continues operating without you.

This could be a goal to change your lifestyle, or a goal of succession to depart from the business. You could be considering how to get the maximum price for your business if you were to sell it today. It is our strong belief that you only get the maximum price when you have a fully documented system of key processes in your business. A new owner could purchase your business with confidence that the business and the existing team can continue delivering even without you.

We have experience with this service to record and document procedures, and then present it back to the business in a sensible fashion. The outcome will be a complete manual of how your business runs and the responsibilities of each team member. These are tied to job descriptions so each person knows exactly what they are doing, and you only recruit to fill specific needs for the business. You can benefit from an external party to undertake this critical work without disrupting or drawing resources away from your business running as usual.

Let’s have a conversation if documenting your business systems or a succession strategy would benefit you. We would relish the opportunity to discuss how we can help turn your business from Joe’s Burger Bar into the McDonald's of your industry. Call Alliotts' team of business advisers in Auckland on 09 520 9200.

Topics: business sale or succession processes systems