Preparing To Exit: Tip # 1
- Jason Huett
- May 7
- 3 min read
Are you preparing to exit in the next 6 to 18 months? This series of Preparing to Exit tips is designed to help you ready your business for a successful sale event.
What are SOPs?
As a business broker in Madison, WI, I've seen firsthand how proper preparation can significantly impact your business's sale price. Today's exit planning tip focuses on an important yet often overlooked aspect of business value: Standard Operating Procedures (SOPs).
SOPs are documented step-by-step instructions on how to perform specific tasks or processes in a consistent and efficient manner. They serve as a guide for employees, ensuring everyone follows the same methods, reducing errors, and enhancing quality.
While some activities take a great deal of effort, creating SOPs does not. You may be thinking, "Jason, I don't have time to sit down and write a 50-page SOP manual." Not to worry, we'll cover how to create these quickly and efficiently in just a moment.
Why SOPs Matter to Buyers
Knowledge Transfer
While you've mastered your business operations through years of experience, buyers are often starting from scratch. Well-documented SOPs bridge the knowledge gap and provide several benefits:
Reduced learning curve for new owners
Lower risk of operational disruption
Easier employee training and onboarding
Enhanced business scalability
Increased business value
Creating Effective SOPs: A Practical Approach
1. Start with Core Processes
Begin by documenting your most critical daily operations:
Customer service procedures
Sales processes
Production workflows
Quality control measures
Administrative tasks
2. Use Simple Documentation Methods
Don't overcomplicate the process:
Record yourself performing tasks (video or audio)
Use screen recording software for computer-based procedures
Have employees document their daily activities
Utilize workflow mapping tools
Tip: Leverage the power of AI - Hit the "record" button on your phone and talk through your SOPs one at a time. AI can organize your thoughts and provide an outline and format to get you started.
3. Implement a Documentation Schedule
Break down the task into manageable chunks:
Set aside 30 minutes each day
Focus on one process at a time
Review and update existing SOPs monthly
Involve your team in the documentation process
Making SOPs Work for Your Business
Best Practices for Implementation
1. Keep language clear and concise
2. Include visual aids when possible
3. Test procedures with new employees
4. Regular updates and refinements
5. Store documents in an easily accessible format
Common SOP Mistakes to Avoid
Over-complicated instructions
Outdated information
Missing critical steps
Lack of visual aids
Insufficient detail
The Impact on Business Value
Why Buyers Pay More for Well-Documented Businesses
Reduced operational risk
Faster transition period
Easier employee training
Clear growth potential
Streamlined due diligence process
Next Steps for Business Owners
Creating Your SOP Action Plan
List all critical business processes
Prioritize based on importance
Choose documentation methods
Set realistic timelines
Assign responsibility for documentation
Schedule regular reviews and updates
Conclusion: Investing in Your Exit Success
Creating comprehensive SOPs might seem daunting, but it's a crucial investment in your business's future value. The investment you make into your SOPs will have a positive ROI!
Need Help Getting Started?
If you're considering selling your business in the Madison, WI area and want to learn more about maximizing your sale price through proper documentation and other exit planning strategies, let's connect. Contact Collaborative Commercial Business Brokers at (608) 422-2200 for a confidential consultation.
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To your success,
Jason Huett Business Broker, CEO Collaborative Commercial Business Brokers, LLC.
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