Improving the Value of Your Business
Small business owners often face a quandary when deciding the best way to improve the value of their business. This is an important step to consider before starting the process of selling a business. Many business owners have a price in mind yet, after taking a closer look at their business discover that its worth less than they had hoped. With this in mind, here are several key things to do to increase the value of your business and make it more appealing to buyers
A good first step is to show buyers that the business’ profits are continuing to increase. This demonstrated trend upwards will drive up the price a buyer is willing to pay. Find opportunities to reduce costs and create efficiencies that will give the business an extra profit boost leading up to the sale. This will impress potential buyers and make the business more attractive.
Build a Recurring Revenue Stream
Consider ways the business can increase sales and revenue, with an emphasis on recurring revenue sources, that will immediately generate income for the new owner. Building recurring revenue streams along with shoring up pending customer or vendor contracts give potential buyers peace of mind that the business will have a consistent revenue flow as they transition to the new business.
Retain a Skilled Workforce
Potential buyers don’t want to be concerned with the possibility of employee turnover. Hiring a quality workforce can increase the business’ worth, especially if employees are committed to remaining with the company after it is sold. Experienced workers bring stability to the business and help to generate revenue. Consider building incentives for key employees, such as bonus plans that are tied to profits that motivate employees to stay on after the business is sold.
Spruce up the Business
Prior to listing a business, ensure it looks its best. Oftentimes, a potential buyer’s first impression of the business is the physical structure. Completing renovations, purchasing new furniture or adding a fresh coat of paint can make a difference and business more appealing.
Timing of the Sale
The best time to sell is when a business is thriving. Business owners generally do not plan early enough to sell their businesses. Many owners have never sold a business before and they fail to realize the timing it takes and the careful planning to optimize the business value in order to maximize the selling price. This results in the business owner selling the business at a lower price or not selling the business at all. Prior to beginning the sales process, obtain a valuation from a certified business broker to ensure you are getting the most value from your business. A business broker can help navigate the complicated selling process, and help to pinpoint the value drivers and ultimately increase your business’ value.
Corporate Investment Business Brokers has the experience and expertise to help you. Please contact us for a free consultation. Call (239) 936-1718. Online at CIBB.com.