Learn And Understand The Vital Impact Of The Management Function Of Your Business On Its Appeal And Potential Value To Buyers.

The management function description in your business details how your business is managed. Are there people in other management roles responsible to you? And they in turn have direct supervisory responsibility over others. Thereby having the potential for you to have minimal daily involvement?


Or, are you in the fray daily? Or even hourly? With direct supervisory responsibility over the majority of your employees? In fact, are you really the key employee? Are you filling more than one of the various management jobs? So that all the management jobs rest mostly, or completely on your shoulders?


There is no right or wrong answer. In most businesses the management function and the related roles are defined by the nature and needs of business and its state of development. To have created and filled more management jobs than the business needs would be foolish. Defining them as part of growth planning is another matter.


Although there is no right or wrong answer on the management question, there are some considerations. And they impact the appeal that your business will have to prospective buyers. They also impact the value that these buyers will place on your business. So it will be helpful to be aware of them.


In another part of this website, we have a discussion on Buyer Types . As part of that discussion we identify that different types are looking for different conditions in a business. One of these is level of involvement. Someone wishing passive involvement will find a situation where the management function and responsibility lies with you as the owner less appealing. And in attaching value to it, will need to adjust for the fact that as a buyer he will need to hire someone to do your management jobs.


The almost mirror image of this is someone seeking a higher level of involvement, evaluating your business if it requires little involvement in the management function from the owner. He may believe that managing managers is beyond his level of comfort or competence.


As there are no right or wrong answers, the real issue may come down to not wasting your time. You don't want to spend a lot of time with prospects, where there is little chance of success. And one good way of minimizing that risk is to have a very clear written description and definition of the management function for your business. Define the management jobs, and related responsibilities. And identify who has those responsibilities.


That way you can help people match their interests with the situation that your business presents. This can be particularly important when you are considering providing any Seller Financing . If you are, you will have a vested interest in the buyers success. So you don't want a square peg going into a round hole.


Clarity and buyer understanding about managerial roles in your business will save you time and stress in dealing with buyers. And minimizing stress in selling is likely a high priority item for you.


You may wish to return to Prepare Your Business For Sale from Management Function , or go to

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