How EOS gets your entrepreneurial business *event- or exit-ready*

December 9, 2020

How EOS gets your entrepreneurial business *event- or exit-ready*

Are you building a business which you want to scale to a lucrative exit via trade-sale, PE backed roll-up, AIM listing, or even sponsoring an MBO?

Do you have a strong succession plan in place?

Are you laying the foundations to get your business ready?

What business owners are often surprised by is what it takes to “do this well”. A recent study showed that 80% businesses don’t sell and here are four main reasons why:

  1. Lack of preparation
  2. The business is too reliant on the founder(s)
  3. Poor financial reporting & metrics
  4. Unrealistic valuation expectations

An underlying issue for entrepreneurial-led businesses which have grown quite large is that they are often still run like a small business. Their systems and processes have not been developed as the company has grown.

If you want to raise capital, merge or crystallise the value of your business, it’s important to run it professionally, plan your exit, and solve and overcome the four common reasons why businesses don’t sell.

Using a standardised operating system throughout the business can enable you to do this efficiently, ready for whatever the right choice is for you, when you want to realise the value you have created in your business.

The Entrepreneurial Operating Systemâ dramatically improves your business processes, gets your people aligned and as a result increases the value of your business.

Whether you want to raise money, float, trade sale, or get out of the day to day, EOS helps you get what you want quicker.

When I work clients to implement EOS, my goals are to put them in control of their business, increase its value, and help them enjoy the process as much as building the company in the first place!

How EOS gets your business event-ready

  1. Communicating the Vision

Mergers & Acquisition professionals read hundreds of company prospectuses, so your Information Memorandum needs to stand out, and describe your business in a professional and clear way which summarises the value you have created.

EOS helps you get crystal clear on your vision, identify why you are unique, and define your business model – and helps you articulate all this in a simple and concise way.

When you start to implement EOS, you use a Vision/Traction Organiser to define the most important questions: your core values, your core vision, your core purpose and niche.

Many businesses use this document to cut through jargon and communicate the vision and uniqueness of what they do in simple, understandable language.

  1. Owner-reliance

Often businesses are worth less without the founder working in it.

If you want to sell your business without an earn-out or a two-three year tie-in, you need a team in place who can run it without being reliant on you as the founder being in the business day-to-day.

You need people who match your core values and who will deliver business performance at the same level.

EOS helps you get the right structure in place for the organisation to deliver the business plan and the right team in place (Right People Right Seats) within that structure, with the right skills and values match, so the business can continue to thrive and grow.

  1. Running the business on real numbers

One of the reasons why businesses don’t sell is poor financial reporting.

If you are preparing for an event, your business needs accurate cash flow, robust financial reporting, corporate governance and a strategic accountant who can tell the story of the business through the numbers to reinforce the value.

The first step is to have a strong financial team, with a properly qualified person running the department, who can:

  • make sure statutory requirements are met
  • do modelling, reporting and provide a strategic overview
  • work with colleagues outside the finance team to help them deliver the vision
  • monitor progress and produce variance reports to determine where the company is performing against the plan
  • produce reports in a timely manner so the business can make decisions based on the numbers.

EOS helps the team to develop leading indicators and measurables in order to track the business on a weekly basis and ensure it continuously performs well.

It introduces processes which provide transparency and weekly reporting in order to track what is happening, and run the business on real numbers.

  1. Decision-making

Often issues can linger, days, weeks and sometimes months, which can hold the business back.

Sometimes they have no clear process in place for identifying, evaluating and making decisions which can move the business forward.

In other cases, slow decision making can be a result of the team relying on the owner/founder to make the final call and the leadership team has not been empowered to solve issues within their own department.

Most businesses need to develop the skill of making efficient and effective decisions, where everybody really focuses on identifying and solving issues.

You need a strong aligned team which can make decisions at the right level, around the vision at the right time to move the business forward.

  1. Improving systems and processes

As businesses grow, departments evolve different methods of operating and processes are sometimes not clearly documented, therefore creating a lack of accountability.

When you can provide a way of simplifying and documenting the key processes, it brings consistency, continuity and scalability which can increase the value of your business.

Your processes and systems should be aligned and followed by all, as this:

  • promotes consistent delivery of customer service and quality
  • cuts out inefficiencies and extra steps, making it run smoothly
  • creates a franchise model which can be duplicated, making the business scalable.

EOS helps you to name and define the core processes which your business needs to function, giving consistency and continuity, while still allowing space for creativity.

  1. Performance

For your business to be attractive for investment or a trade-sale, it needs to show consistent performance and a detailed future growth plan, where the goals of the organisation are prioritised and there is evidence the team is executing on that plan, quarter after quarter.

EOS enables you to track this performance, by introducing a regular “meeting pulse” throughout the business, where meetings are held weekly and quarterly, and where issues are identified, discussed and solved, so they lead to actions rather than avoidance.

Conclusion

Businesses decide to introduce an operating system for a whole range of reasons.

One of our clients used EOS to execute on their exit plan. Within 20 months they were able to:

  • put the right leadership team in place
  • have the right structure in each department
  • continue to evolve their technology
  • bring on the right long-term customers and sign contracts, making the business worth more.

At the time of the exit, the owners were able to sell for $68 million.

EOS can help owners understand the strengths and weaknesses of their business, help them solve any weaknesses, and make sure they match the price expectations of their business to the market.

An operating system will establish common structure, principles and practice to your business. It introduces a standard set of processes to drive forward the strategic development of the business.

Many companies find that an operating system becomes the key driver of performance and can persuade both investors and prospective employees that your business is the right one for them.

If you’d like to find out more about EOS, then please give me a call on 07795 667480 or email hello@boldclarity.com, so that I can explain how it works in more detail.

Biography

Julia Langkraehr pioneered the concept of retail pop-ups in Europe with the creation of three multimillion-pound businesses in three different countries which she scaled successfully resulting in a lucrative exit through trade-sale in 2014. Her journey involved building operations in the UK, Germany and Russia as well as navigating the merger and acquisition with the biggest competitor.

Julia founded her business Bold Clarity to help leadership teams get what they want from their business. She works with them to implement the Entrepreneurial Operating System.

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