The early development of manuscript copying and evolution into printing has given us several everyday phrases, such as 'Minding your Ps & Qs' and 'Dotting 'i's', crossing t's'. Both point to the need for considerable attention to detail.
These phrases often crop up in discussions on business growth, transition and performance. However, I think it's more helpful to 'mind your Ps and Cs'. Here's how:
There are two simple detail checklists that any business owner/leader thinking about future exit value and operating performance should remember when thinking about selling a business:
Proposition - What is the vision/mission of your business? Does it offer real prospects of sustainable and profitable long-term growth? What objectives must be met to achieve success?
People - Who will be driving the project? Is the management team experienced and capable? Who will remain in place post-exit, whenever that happens?
Profits - Only if/when propsective buyers are satisfied about the first two P's will they begin to review the numbers. It is often assumed that buyers, investors, bank managers are preoccupied with profit forecasts and assumptions. But would they waste their time going into all that if they did not have confidence in the long-term prospects or the management team?
Everything else constitutes a list of objectives and actions through which the three P's will be fulfilled.
The second checklist concerns the operational well being of the company - the vital signs that must be positive, or else be the subject of intense remedial action.
Here are the three C's:
Cash - All too often, cash is monitored closely in hard times. But it should be watched continuously so that any odd movements (up or down) are explained and addressed. For example, you can quickly see if your customers are paying you too slowly and your suppliers are being paid too quickly or too slowly (yes, it is not good to pay so slowly that it impacts your credit rating).
Credit - Apart from payment timings referred to above, monitoring your credit position can highlight early, for example, where expenditure may be running awry.
Communication - Business owners worry about saying too much to their staff, suppliers or service providers about performance. 'Don't want to give away secrets to our competitors, do we?' or 'It's not a good idea to give out bad news to all and sundry'. Without going into detail, I would suggest that one can communicate important information without giving away vital secrets. The long-term benefit is that all stakeholders may share in the challenges faced by the Company, and may be confident in the skills and foresight of the management team at crucial points in the business development cycle. If you start doing it in good times, there will be no surprises if things go adverse, as they do sometimes.
Stripped of all the management jargon about strategic and succession planning, corporate governance, sustainability aod so forth, these are the basic tools that any business needs to attain and maintain a long-term perspective that will result in a stronger exit valuation and greater security for all concerned.
It sounds easy, doesn't it? So how come so many businesses don't do it? That's another story.