I once worked with a company that helped troubled businesses turn around or successful businesses prepare for sale. A recurring theme when they reviewed such businesses was that they rarely had complete documentation that could explain to a prospective buyer what they did, who was responsible, how everything worked, etc. The end result was often a lowering of the final valuation and ultimately a loss to those exiting the organisation.
The lesson to be learned here is that the time to document everything is as it happens. Most startups operate with such velocity that you will likely never get the chance to go back and do it later - unless your startup venture is to build a time machine of course!
Documenting as you go adds value to the business, it adds credibility to the operation, and it helps the management team to satisfy the information demands from lawyers, accountants, potential investors, banks, suppliers and so on.
One of the key areas that is often overlooked is around decisions made about the business and how it operates. Im most cases, your business is of course a legal entity and as such there are certain decisions that must be documented and recorded for legal reasons. (Noting of course that I am not a lawyer and this does not constitue legal advice). The lack of proper documentation in this area is usually only considered when for example the tax inspector shows up and asks why your Directors are all traveling in business class. You of course repsond that it is company policy. To which the inspector asks to see the policy... Ooops!
You get the idea. So, stop reading this, think about what you are doing today to run your business, and then write it down. Even documenting the smallest aspect of your operation could one day make you money...
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