There are many ways to run a business successfully, but what we’ve always believed in is planning at the beginning with the end in mind. Having a clear goal increases the chance of business success by enabling you to strategically prioritise what needs to be done, with tangible targets you’ll need to hit. Depending on how you view success in your business, here are ways to make it happen.
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If you want to create a business that can be passed on to the next generation, traditional business principles apply — create a company that is both revenue and profit generating.
Your business plan should have a clear revenue generating roadmap and your time frame to reach revenue generation would be much shorter than a start-up getting funds from investors. It’s also never too early to think about succession planning, especially when your business is thriving. Here’s what to consider:
- Who will be your successor? Do they have the aptitude for it? Are they even interested in the role?
- Does your identified successor have external work experience outside of your own company? This exposure will help them develop their own business strengths and expertise.
- Create a transition plan. Will your business be purchased by your successor or bequeathed to them? When and how long will this take to be implemented?
- Offer longstanding and loyal employees a piece of the pie, as an incentive to stay with the company.
A business with franchise potential needs to have a proven track record to be financially attractive to would-be franchisees, and relevant across cultural and geographical borders.
- From the get-go, all aspects of the business need to be documented meticulously and packaged for franchisees. This includes ensuring all documentation of the processes and operating procedures are in order.
- Familiarise yourself with the legal issues surrounding franchising, especially those across borders — consider hiring a reputable franchise consultant to advise on your franchising plan.
- Build and protect your brand so it continues to remain strong as the number of franchises grows and enters international markets. This also means providing strong marketing support for your franchisees.
- The franchising model needs to allow for localisation of content to fit different markets when expanding into international territories. 7-11’s franchising model, for example, is operationally different in Japan and in Singapore. Stock replenishment in Japan are delivered on bicycle on demand to the different stores, even for a carton of milk. Stock replenishment in Singapore is done on a pre-scheduled basis.
Aim for a buy-out
If you’re looking to be bought out, strategic fit is key. Know the kind of company that would want to buy your business and what they stand to gain.
- Are they buying you for your customer base?
- Are they looking for expansion into a new market or to expand their range of offerings in the same market?
- Is your business a key part of their supply chain, which would make sense for them to invest?
- Have you developed a new product or IP that is beneficial to their business?
Do you happen to be their biggest competitor and they want to buy out the competition?
In this instance, the best-case outcome is to have multiple potential acquirers get into a bidding war over your business.
Look to IPO
The basic principle of having an IPO is to raise money to help the company grow and in turn, generate liquidity for co-founders, employees and investors. If you’re looking to IPO at some point, consider the following:
- Does your company have a solid record of high gross margins, which are steady if not growing, and in an industry that is fast expanding or has a lot of public interest?
- What’s your story and your business roadmap? Your business identity, vision and the plan you have for expansion and maintaining a competitive advantage is important to set you apart.
- The organisation’s financiaal and accounting statements for the past few years need to be audited and in tip-top condition. Your CFO in this case would be almost as important as your CTO.
- Especially in your initial investment rounds, it would be wise to target investors with a proven track record of taking companies to IPO.
- The entire IPO process is both administratively and financially gruelling. You’ll need to have a tidy war chest of funds for IPO roadshows and for things like IPO transaction costs.
While taking a company to IPO is a traditional marker of success, there are some disadvantages to note. These include losing control of your business because anyone can buy the shares, increased regulatory demands, being at the mercy of the markets and being subject to greater public scrutiny.