Running a private company like it’s public may seem like an intimidating task, but it’s a crucial step towards building a valuable business. In this blog post, we’ll explore the benefits of running a private company like a public one and how it can increase the value of your business.
Why Run Your Private Company Like It’s Public?
Small businesses are often run with little regard for financial rigor. They are viewed as a means to fund the owner’s lifestyle rather than a valuable asset. However, the most successful and valuable companies are those that are run with financial rigor. By operating like a public company, you can formalize your operations and predict the future of your business. This helps to reduce risk and make your business more attractive to potential buyers.
Jay Steinfeld, the founder of Blinds.com, is a great example of how to run a business like a public company. Despite being a private company, Steinfeld built his business with the same rigor as a publicly listed company. He assembled an experienced management team and even put together an outside board of directors, which is unusual for a private company. Steinfeld was determined to run his business with the same rigor as a publicly listed company and it paid off when Home Depot acquired Blinds.com for over $100 million in 2014.
The Benefits of Running Your Business Like It’s Public
- Predictability: By formalizing your operations, you can predict the future of your business. This helps you to reduce risk and make better decisions. You’ll have a better understanding of your financials, which will help you to make informed decisions about future investments and growth opportunities.
- Clean Books: One of the most significant benefits of running your business like it’s public is having clean books. Clean books make it easier to identify potential issues and opportunities. They also make your business more attractive to potential buyers, as they’ll have more confidence in your financials.
- Outside Perspective: Building an outside board of directors provides valuable outside perspective. They can provide insights and advice that you might not have considered before. This can help you to identify new opportunities and avoid potential pitfalls.
- Attracting Investors: Running your business like it’s public can help you to attract investors. Investors are more likely to invest in a company that has clean books and formalized operations. They’ll have more confidence in your ability to manage the business and achieve growth.
- Increased Valuation: Running your business like it’s public can ultimately lead to increased valuation. By formalizing your operations and reducing risk, you’ll make your business more attractive to potential buyers. This can lead to a higher sale price when you’re ready to sell.
How to Run Your Private Company Like It’s Public
- Build an Experienced Management Team: Your management team plays a crucial role in the success of your business. Building an experienced management team is essential to running your business like it’s public. Look for individuals with a track record of success in your industry.
- Assemble an Outside Board of Directors: Building an outside board of directors can provide valuable outside perspective. Look for individuals with experience in your industry and a track record of success.
- Formalize Your Operations: Formalizing your operations is essential to running your business like it’s public. This includes implementing proper record-keeping procedures and financial controls. You should also develop a formal budget and forecasting process.
- Hire an Audit Firm: Hire an audit firm to complete a full audit of your financials each year. This will ensure that your books are clean and make your business more attractive to potential buyers.
- Embrace Transparency: Embrace transparency in all aspects of your business. This includes sharing financial information with your management team and board of directors. Transparency builds trust and makes your business more attractive to potential buyers.