4th Key Area: How Upgraded IT Systems and Processes Can Increase the Sales Value of Your Business

^{"The knock-on effect of a data breach can be devastating for a company. When customers start taking their business and their money elsewhere, that can be a real body blow.” ~ Christopher Graham}

Last time on the Growth To Exit® Blog, we talked about the 3rd Key Area in your business, the Financials and how you can best prepare your own financial forecast and due diligence before a sale.

Interested buyers will specifically evaluate and scrutinize 5 Key Areas of your business. Flaws and problems in any of these areas can lower the value of your company and result in a reduced offer from the buyer, who will need to spend extra money and time to fix these issues. To be sustainable, you must implement best practices, processes and systems in these five critical areas.

As a reminder, the five keys areas include:

1. Legal
2. Human Capital
3. Finance & Accounting
4. IT/IP Systems
5. Sales & Marketing

This week we will take a deeper look at the IT and IP Systems inside your company and talk about how you can upgrade your operating methods and processes before the sale of your business and the change of ownership.

The best way to determine whether your systems are up to date is to hire an outside IT expert. They will tell you which systems need to be upgraded, which ones should no longer be used, and how to build data storage to recover your customer information and make all your data easily accessible.

Maybe you are already working with a vendor that you trust, and maybe they manage your email, all your data, your internal network, or maybe they have developed a piece of software that you use on a daily basis. Don’t get too comfortable with your current systems and assume that just because you have got them in place, they are your only option.

Contacting a third-party to come in and help you evaluate your IT operations is the best way to test whether or not the system that you have is the best system for your company and your growth potential. It will also help you create an IT Plan, that demonstrates the systems in place to protect your company and your customers.

An external IT advisor will help you with the following objectives:

• Create a Disaster Recovery Plan – Buyers want to ensure the profitability of your company post-closing, and whether the number of your sales is going to be there, whether your customers will remain and whether your systems will be stable enough. Therefore, having a disaster recovery plan is part of this whole process, and will help you shield your personal and customer data, your historical invoices, your pricing information, etc. There is a lot of ransomware out there, and your information might be hacked or lost and your networks might be locked, but if you have a back-up plan, it will give the buyer greater confidence that the value that you are asking them to pay for the business is justified.

• Update your Software and Agreements – Buyers are looking for advanced technology implementation that creates efficiency in the business. It is important that you check if the software you are using is licensed, and whether the license has an expiration date or needs to be renewed every year. Most license agreements restrict the use to the company and you cannot sell or transfer your right to use the software. Evaluate the antivirus software you are using on your internal systems, and secure that all the entry points for hacking.

• Secure your Passwords – One of the things that may seem pretty obvious when you are evaluating your IT systems is accessing your devices and software. However, on many occasions, key employees that know the passwords and have access to all the domains within the company, leave the business and make it impossible for the buyer to access and control the company’s website and accounts. To create a smooth transition, be sure to have access to all passwords and domains.

• Manage your Historical Data – Every business owner has historical data, and that historical data can take a lot of different forms; it could be emails with customers, sales data, purchase data, pricing data, etc. Historical data is valuable to the buyer because they will make the transition much easier and quicker, and therefore add more value to your business.

You may be wondering why you should change what is already working.

Because buyers think differently. What works for you will not necessarily work for the buyer. It is in fact, very unlikely that a seller’s IT systems are adopted in total by a buyer. Buyers have their own way of doing things and it will differ from yours.

Therefore, the more you spend on upgrading your systems and processes, the more valuable your business becomes, since the buyer will have one less thing to worry about in the future.

The Bottom Line

When you're looking at your IT infrastructure, there is one thing that you should keep in mind; Change is coming.

Remember, if you do not go through this evaluation process, the buyer will do it for you, and if the buyer discovers any outdated software or systems, a discount will be taken from the purchase price.

The Growth To Exit® Course and Worksheets guide you through the steps needed to evaluate your company’s IT systems. When you are prepared for the buyer’s questions and give the buyer an IT plan, (describing how your company protects customer data, what your recovery plan is, and the current status of your software), that buyer will know that your company is valuable.

Next time at the Growth To Exit® Blog we will talk about the fifth and final Key Area, the Marketing and Sales processes.

Your company is the product. Growth to Exit® is the process. The Buyer is your customer.

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