In the realm of business, the distinction between public and private companies often seems worlds apart. Publicly traded companies, with their stringent financial regulations and transparency, are often viewed as the gold standard for operational rigor. On the other hand, private businesses, especially small ones, are sometimes seen as entities solely intended to fund their owner’s lifestyle. However, the story of Jay Steinfeld and his venture, Blinds.com, offers a compelling case for running a private company with the discipline and precision of a public corporation.
The Value of Operational Formalization
Small businesses frequently start as humble endeavors, often born from a passion or a simple idea. While these origins are undeniably genuine, they can lead to an informal approach to operations. Owners may prioritize immediate profits over long-term planning, relegating financial rigor to a secondary concern. However, for those who dream of taking their businesses to greater heights and potentially selling them for a handsome profit, it’s crucial to lay the foundation for future success from the very beginning.
Predicting Your Business’s Future
Building a business is a laborious process, one that requires unwavering dedication and a clear vision. Even if the thought of selling your company is far from your mind, instituting formalized operations early on can be invaluable. These practices will allow you to gain a more accurate understanding of your business’s financial health and trajectory. When the time inevitably comes to explore selling your company, you’ll be better prepared and capable of securing a more substantial return on your investment.
Minimizing Risk: The Key to Attracting Acquirers
When it comes to acquisitions, potential buyers are primarily concerned with risk assessment. Acquirers are most willing to pay a premium for companies that present fewer uncertainties. Confidence is derived from clean books and proper record-keeping, attributes that can significantly reduce perceived risk. Thus, running your private company like it’s public, with meticulous financial controls and transparency, becomes a strategic advantage that sets you apart from the competition.
Jay Steinfeld: A Case Study in Operational Excellence
Jay Steinfeld’s journey serves as an inspiring example of how to run a private company with the same precision as a publicly listed one. With a degree in Accounting from the University of Texas and experience at KPMG, Steinfeld was well-versed in the importance of financial rigor. His wife’s small retail store, specializing in blinds and window treatments, offered him the opportunity to apply his expertise.
In 1994, as online retailing was beginning to take off, Steinfeld recognized the potential of e-commerce. Observing the success of the then-burgeoning Amazon.com, he wondered if he could replicate that success in the niche market of blinds. Thus, Blinds.com was born.
From its inception, Blinds.com was distinguished by Steinfeld’s commitment to running it like a public company. He assembled an experienced management team and took the uncommon step of establishing an outside board of directors, even though Blinds.com was privately owned, with Steinfeld holding all the stock. This board met quarterly, providing a structured platform for discussions and decisions that mimicked the practices of publicly traded companies.
Moreover, Steinfeld went the extra mile by hiring a prestigious Big Four accounting firm to conduct a comprehensive annual audit of Blinds.com’s financials, despite the minimal requirements imposed by tax authorities. These measures not only ensured financial transparency but also demonstrated his commitment to maintaining impeccable records.
The Power of Financial Control
By 2014, Blinds.com had grown into a thriving business with 175 employees and revenue exceeding $100 million. Remarkably, in its niche market, it had outperformed even industry giants like Home Depot, with nearly $90 billion in annual sales. This remarkable feat was in no small part attributed to Blinds.com’s meticulous bookkeeping and stringent financial controls.
The Irresistible Attraction of Rigor
Home Depot, the retail giant, recognized the immense value in Steinfeld’s meticulous approach to business. On January 23, 2014, Home Depot announced its acquisition of Blinds.com, a testament to the allure of a well-run private company.
Running Your Private Company Like It’s Public: A Path to Success
In conclusion, the tale of Blinds.com and Jay Steinfeld underscores the transformative power of running a private company with the rigor and discipline of a public entity. By formalizing your operations, assembling an experienced team, establishing an outside board of directors, and investing in regular financial audits, you can make your business more predictable and appealing to potential acquirers.
Remember, even if you’re years away from contemplating a sale, the proactive steps you take now to enhance your business’s financial rigor will ultimately yield substantial dividends in the future. When that moment arrives, and you decide to sell, your meticulous approach to running your private company will maximize its attractiveness, potentially resulting in a more significant return on your investment. The lesson is clear: run your private company like it’s public, and watch your business flourish.