When my wife and I saw an ad for a small, lemon-yellow cottage, we immediately knew we wanted that house. It was in Toronto's Beaches community. Newly married and without kids, we envisioned going for long walks on the beach and then retreating to our cottage-like abode. We called our real estate agent and arranged a showing.
We walked through the front door into a sun-drenched living room. As we climbed the stairs to the second floor, I turned to my wife with a giddy smile. We both knew we were going to buy the house.
Like your home, your business projects an image to potential buyers, making them more or less inclined to buy your company. One of the traits that can make a buyer fall in love with your business - or walk away from it - is what Jeffrey De Wolf, president and managing principal of Kansas-based Wolf HR Solutions, calls "organizational curb appeal."
"When you buy the company, you buy their history," Mr. De Wolf says.
Boosting your business's curb appeal can help you attract more bidders willing to offer a higher price for your company, while also lowering the chance of the deal falling apart during diligence.
Ready to spruce up your organization's curb appeal? Over the next couple of days, I'll offer you a three-step plan.
Your first order of business is to deal with the fundamentals: your people.
"Many business owners start their business from scratch and, over the years, grow it to a point where they turn around one day and are employing 25 people," Mr. De Wolf says.
"The problem is, they have not put the HR infrastructure in place for a 25-person company. In fact, they often take pride in their informal management style, but it can prove to be a liability when it comes time to sell. Savvy buyers may become concerned about past employment practices and the risks they create."
Think of your curb appeal from the buyer's perspective. While you may not need (or want) formal people policies, chances are the buyer will. Like a speaker who matches his or her attire to the audience, you want to make sure your human resources policies are at least as stringent as those of the company you want to have buy your business.
Here are some basic things to ensure you have in place:
- A written policy making it clear you forbid any form of harassment or discrimination.
- A written letter of employment for each of your staff members.
- A written description of your bonus system.
- Written policies for employee expenses, travel, and benefits.
Tomorrow: A binder that can seal the deal.
Special to The Globe and Mail
John Warrillow is a writer, speaker and angel investor in a number of start-up companies. He is the author of Built To Sell: Creating a Business That Can Thrive Without You, which will be released in April.