how to run a private company like it's public  

Small businesses often operate as if their sole purpose is to fund the owner’s lifestyle, but the most valuable companies are run with financial rigor. You may be years from wanting to sell your business, but starting to formalize the operations now will help you build the future value of your business. Then, when it comes time to approach the market and put your business up for sale, you’ll fetch more for what you’ve built.

How to Get Top Dollar When Selling Your Business

Acquirers will pay top dollar for companies that are less risky. There is nothing that gives a business buyer more confidence than clean books and proper record keeping

Jay Steinfeld is a great example of how to run a business like a public company. Steinfeld studied accounting at the University of Texas and joined KPMG after college. His wife owned a small retail store selling blinds and window treatments. The store was successful, but by 1994, Steinfeld had noticed a little Seattle-based outfit that was trying to sell books online.  This company with the peculiar name “Amazon.com” started to succeed and Steinfeld wondered if he could get consumers to buy blinds online.  Soon after, Blinds.com was born. 

Unlike many of the first-generation online companies that were run with little financial controls, Steinfeld grew Blinds.com like an accountant. He was determined to run his business with the same rigor as a publicly listed company. He built an experienced management team and took the unusual step of assembling an outside board of directors even though Blinds.com was private and Steinfeld owned all of the stock. 

The board met quarterly and each of Steinfeld’s senior managers were asked to prepare and deliver formal presentations to his board. Steinfeld hired a big four firm to complete a full audit of his financials each year even though all he needed to satisfy Uncle Sam was a simple tax return.

How Steinfeld Runs a Private Company Like It's Public

  • Hire an Experienced Management Team
  • Assemble an Outside Board of Directors
  • Hold Quarterly Board Meetings with Formal Presentations from Senior Management

By 2014, Blinds.com had grown to 175 employees and, at more than $100 million in revenue, was the largest online retailer of blinds in America. Even though Home Depot had close to $90 billion in sales at the time, Blinds.com was outperforming them in its tiny niche, which – coupled with their fastidious bookkeeping — made Blinds.com absolutely irresistible to Home Depot. On January 23, 2014, Home Depot announced its acquisition of Blinds.com.

If you are thinking about selling your business one day, CBB (Certified Business Brokers) can help you maximize your exit using our proven methodology for valuing and selling businesses. Find out what your business is worth now with a free business valuation. There is no obligation and you can get on the right track to building value as your business grows. 

Republished with permission from Built to Sell Inc.