Valuing your business as highly as possible is one of the most important steps that you can take should you be ready to sell your business. Buyers are interested in more than revenue, they seek good systems, growth possibilities and mitigated risk. Understanding how you can add business value prior to market will have great implications to the amount you will list on selling your business as well as increase your serious buyers.
At Haseeb Sheikh we vest our experience in helping entrepreneurs ride the journey of maximizing the worth of their company and making the selling process easier. The following are 10 strategies that have been used to add value to your business prior to selling.
1. Improve Your Bookkeeping
Clear, transparent, and well-documented financials are one of the best ways to increase value of business operations. Inspectors desire clean accounting, steady cash flow and proper revenue flows. Spare some cash on professional book keeping and audited websites to develop confidence in the buyer.
2. Making Your Revenue Streams Diverse
Being overly dependent upon an item or customer or market puts it at a higher risk. Diversification of offerings, customer bases or regions demonstrates to the potential buyers that your business will stand a strong chance of survival. This is a direct way to answer the question: “How can a business increase added value?”
3. Develop a good team of management.
Businesses which are dependent only on the person are difficult to become saleable. It is in your best interest to develop an effective management team that not only facilitates the smooth running of day-to-day affairs but also gives confidence to the buyers that the company will continue to prosper even when you have exited.
4. Increase Operational Efficiency
Automation of tasks, streamlining processes and eliminating unwanted expenses make your business more profitable. Greater profitability prompts an automatic increase in valuation and helps buyers know that they can grow without significant challenges.
5. Customer Loyalty
Patrons can secure a base of loyal customers thus cutting down on risk to increasing recurrent sales revenue. Strengthening contracts, loyalty programs, and customer service systems is one of the best ways to increase the value of business sustainability.
6. Guard Intellectual Property
The Patents, Trademarks, copyrights and proprietary technology all contribute towards physical value to a business. Try to register and record your intellectual property in case you have not done so before you offer your company to sale.
7. Minimize Owner Reliance
In the event you are the primary channel of clients, vendors and decision-making, buyers might have concerns over the transition problems. Streamline your systems, outsource and make your business run on autopilot.
8. Gain market strength
Make show buyers see your company as having a competitive edge. Being the market leaders in terms of a unique product, exclusive contracts or brand reputation all of these will give a perception of higher value.
9. Invest in Growth Properties
A company that indicates top future performance is an attractive company more than one that indicates that it is on hold. Opportunities to document expansion-either by new markets, digital transformation or product line-in a way which will leave the buyer with a sense of untapped potential.
10. Decrease Business Risks
Mitigating risks, such as legal disputes, outdated technology, or weak supplier contracts, is critical when planning how to increase the value of a business. Consumers will penalize a firm that has excessive debts. The active risk management strategy will give them confidence that they are investing in secure risk.
Final Thoughts
The process of understanding how to add value to business is not necessarily increasing your current profits short term but it is ensuring that what you have is a sustainable, scalable business that is attractive to purchasers. Adhering to these 10 strategies will enable you not only to increase the profitability of your business today, but will also help you prepare your business to be worth even more when you decide to sell it.
We are Haseeb Sheikh and we assist entrepreneurs to prepare them towards good exits. It doesn’t matter whether you are considering selling next year or five years to come, the time to begin adding value is now.
