Guan-Lun is a Berkeley Haas MBA, Founding Partner of ID Water and an incoming Investment Principal at Venturerock.
A CEO at a local networking event recently shared with me that three of their friends who own small businesses are considering retirement. One is trying to make the business employee-owned but lacks funds, another is considering selling to a big corporation despite cultural mismatches and the last one is putting their head down and deciding not to face reality until it hits.
The backbone of the American economy is comprised of 33.2 million small businesses; historically, small businesses have generated 62% of new jobs annually in the U.S. and employ 46.4% of total workers. As the Baby Boomer generation gradually approaches retirement, their 2.9 million small businesses, employing over 32 million people, face an uncertain future. Unfortunately, despite the importance of these businesses, less than 20% of their owners can complete transactions (only 9,054 transactions were completed in 2022 out of BizBuySell’s 65,000 total listings), and others may face difficulties selling or transitioning their businesses.
How can small-business owners turn their businesses into more attractive targets? Having spoken with over 50 diverse stakeholders, encompassing business owners, nonprofit organizations, search funds, impact investors and technology entrepreneurs, here are some valuable insights to consider when using technologies that will potentially have a substantial positive influence on small businesses.
Implement new technologies.
Identify and determine which technology upgrades will significantly impact the business’s efficiency and productivity. Customer relationship management (CRM) tools like HubSpot CRM often have a free tier with essential features and can integrate seamlessly with other HubSpot applications, including Marketing Hub, Sales Hub and Service Hub, providing a unified platform for managing different aspects of customer relationships at no cost. On the other hand, cloud-based business suites like Zoho have different pricing plans tailored to small businesses, making it cost-effective to access tools such as CRM, project management, finance and human resources. However, make sure you introduce new solutions one at a time to minimize the friction of workflows, as the learning curve could be steep and overwhelming with the comprehensive features.
Document and systematize processes.
Standardizing processes can help small-business owners ensure consistency and efficiency in their operations. Using tools like Notion, Evernote and Google Docs to document and store all critical processes in one place can establish consistent procedures for each task, making it easier to onboard new employees or future owners. In addition, leveraging digital scanner apps such as Adobe Scan or SwiftScan can keep copies of paper documents, and the optical character recognition (OCR) capabilities of both apps can enable businesses to extract text from scanned documents for future edits and searches. However, the documentation takes time and effort to create and maintain, and busy small-business owners might find themselves piling up tasks until they give up. One possible mitigation could be leveraging AI assistants to support these processes. There are a few solutions designed for clinical documentation, but more innovations are needed to build a tailored tool for broader small businesses.
Streamline business processes.
Small-business owners can optimize their limited resources by automating key repetitive tasks to save time and reduce manual work. Platforms like Zapier or IFTTT can connect and automate tasks between different software applications and eliminate redundant steps. Zapier, for example, supports more than 5,000 applications, including the ones mentioned above, and its no-code interface allows non-tech-savvy business owners to create automation (Zaps) without any programming knowledge.
Nevertheless, high automation can lead to oversights and unnoticed issues if the configurations are not set up properly. In addition, using automation tools to transfer sensitive information between applications may lead to concerns about data privacy and security. Thus, a thorough evaluation of building the workflow is essential.
Improve your online presence.
More than one-third of small businesses don’t have a website, while digital native companies are enjoying eight times more revenue benefits than those with immature digital strategies. Owners can utilize cost-effective website-building platforms such as Wix, Weebly or WordPress to create a professional-looking website. Once the website is up and running, it’s also important to claim a Google Business Profile and have an SEO strategy to optimize the online presence for local search.
In addition, free social media platforms like Facebook, Instagram and LinkedIn can help you engage with customers and make businesses more visible to interested stakeholders. Still, cross-platform review management is crucial because reviews can be double-edged swords that make or break a business’ reputation. For example, I’ve seen a service business owner express frustration at dealing with ungrounded accusations from users who were not even customers. By monitoring and addressing customer feedback promptly and professionally on social media, Google and Yelp, businesses can demonstrate their commitment to providing quality products and services.
Consider these final thoughts.
Small businesses are crucial to the American economy, as they create jobs and drive innovation. Yet, as the Baby Boomer generation approaches retirement, many of these businesses struggle with the uncertainty of selling or transferring ownership. By adopting modern technologies, optimizing and standardizing processes and boosting their online presence, small-business owners can increase their businesses’ appeal to potential buyers and improve their chances of achieving successful transactions.
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