Looking to get top dollar for your business? Increasing its value does more than just give you the leverage to demand a higher asking price, it also helps make it more appealing to potential buyers. Prospective buyers will be looking for a business that is not only profitable, but one that is well run, stable, and something they can see themselves managing. Here are some things you can start doing today to make your company more desirable.
Increase Profits and Reduce Expenses
When it comes to making your business more valuable, this first tip may be common sense, but it cannot be ignored. Buyers don’t just want to see a profit, they want to see that profits are growing. Make sure you’re not taking too much money out of the business, so that you can show higher net profits. Look for ways to cut costs to help increase operational efficiency, without negatively affecting day-to-day operations. You can also work to increase profits by modifying your marketing and advertising plans and working to attract a more diversified customer base and focus on building recurring revenue streams, which will help give buyers more confidence by showing them that they will have consistent revenue they can rely upon.
Document the Market
Being able to communicate your business’s place in the market is one of the easiest methods to increase its value. Performing this market analysis involves evaluating your customers, competition and company. With regards to customers, it’s important to identify their demographics and what kind of market exists for your product or service. Research your competition so that you can show that there is a place for your business in the marketplace. Focus on differentiating your products or services from the rest of the market by figuring out your competitive advantage, unique position in the market and protecting your intellectual property. This task is kind of like writing a business plan, so it can be a valuable tool for potential buyers. It can help give them a vision of the future of the company that they may fail to see otherwise.
Develop and Document Processes and Routines
You may be the most valuable asset to your business, because of the methods and procedures you use to run it. Unfortunately, in most business sales the seller does not stay on to run the company and if your business can’t function without you, finding a buyer will be very tough. As an owner trying to sell a business, you will need to convince buyers that they will be capable of running it when you are out of the picture. To do this you must not only develop repeatable and teachable routines and processes, but you must make sure they are well documented. This will help prospective buyers visualize a path to running the business. Consider putting together a well-organized operational manual to make your methods communicable and easy to learn.
Keep a Skilled Staff
Skilled employees help a business running smoothly and keeping a high quality staff can help boost the value of your company. Make sure any employee conflicts are resolved and work to keep the turnover rate low. The last thing a new owner wants to be burdened with is hiring a new staff. Empower them with the knowledge and confidence to run the business in your absence. It may also help to add incentives to motivate employees to stay on, even after the sale.
Keep Moving Forward
Don’t change the way you run your business or stop making improvements just because you are selling it, or plan on selling in the near future. In fact you should do the opposite and look for ways to improve it. Think of your business as a house. Would a house sell easier with a newly remodeled kitchen, or a severely outdated one? If there’s a way to improve your process, a need to invest in new equipment, or parts of your facility that can be renovated, you should consider doing it in order to put your best foot forward when buyers start looking at your business. The improvements will pay for themselves.
Consulting With a Professional Business Broker
Business Brokers are expert business valuators. In determining the market value of your business, they can see areas for improvement that you may not, and can find value in aspects of the business that you may overlook. A broker serves as a barrier between you and potential buyers and can help communicate what buyers are looking for and give you buyer feedback that you may not get when dealing with the buyer directly. They also have the tools to help market your business to qualified buyers. After all, if you’ve invested a ton of time in improving your business and adding value to it, you want to make sure it can be seen by as potential buyers as possible.
If you are planning on selling your business, or even just considering a sale, it’s a good idea to know where you stand. The company may be worth much more than you expect, or much less. In either case, there’s always room to improve and add value. Contact Corporate Investment Business Brokers today for a free business valuation.