How to boost the value of your business
Invest Time Now to Sell Your Business for Top Dollars Later. The day when you’ll be ready to sell your business may soon arrive. You may even have a price in mind, based on similar businesses that have sold recently in your area. Yet, after taking a close examination of their business in its current condition, many business owners become disappointed when they find out its true market value. That’s why it’s so important to plan ahead now and prepare your business before listing it for sale in the future. Here are seven important steps you can take now to boost the value of your business and sell it for a maximum return.
1. Increase your profitability
Potential investors will need proof that the business is profitable, but if you can show them that these profits will continue to trend upward, you can fetch a higher price. Finding opportunities to reduce costs and create efficiencies leading up to a sale will demonstrate an extra profit boost and impress buyers.
2. Create streams of recurring revenue
Find ways to increase sales and revenue, especially recurring revenue, that will generate income for the new owner – right from the ‘get go’. This may include shoring up any pending customer or vendor contracts, giving the new business owner peace of mind that they will have consistent revenue flow as they get accustomed to running their new business.
3. Establish processes
Instituting and documenting regimented processes which enable the company to function effectively without your involvement will make buyers feel at ease. Potential investors need to be convinced that the business will continue to thrive and run smoothly long after you’ve made your exit.
4. Cultivate a high-quality workforce
New owners don’t want to deal with employee turnover, especially when they’re new to the business. Experienced workers bring balance and stability and help generate profit. You can increase your company’s worth by actively cultivating a high-quality workforce.
5. Stand out and differentiate your products or services
Businesses with differentiated products and services are uniquely positioned to dominate a part of the market. They have an advantage over their competitors and therefore can command a higher price. You can do this by developing and promoting any intellectual property, patents, or other unique features of your products or services.
6. Identify and highlight tangible and intangible assets
It is essential to list and price all physical assets of your business, including furnishings, fixtures, equipment, and inventory. But also consider the value of your intangible assets—things like contracts and agreements, customer relationships, brand recognition, and more. Every non-material asset that contributes to your company’s profit line has the potential to boost its price.
7. Mitigate your risks
Put yourself in the buyer’s shoes. Do whatever is possible to enhance your company’s value. Are your financial records accurate and up to date? Is your facility looking its best? Are there any loose ends that you need to tie up before you list your business? Buyers prefer businesses that come with low risks and high rewards.
Taking these key steps will not only enhance your company’s value, it will also grow its sales, improve its profit margins, and make it stand out from its competitors. When the time to sell comes, your business will be more attractive to buyers and command a higher price.