How to Increase the Value of Your Business

Ask yourself, “What is the value of my business?”

If you know what that number is, congratulations! You’ve already done a lot of homework and preparation should you ever decide to sell.

If it’s not worth as much as you think it should be, you can increase its value before you sell so that you’ll truly get a fair price, one that represents all of your years of hard work and sacrifice.

Stand Out From Your Competitors: The “Monopoly” Control

Do you have an established (and respected) brand? If not, start developing one now. It doesn’t matter how small your business is. You still have the opportunity to set yourself apart from your competitors and become a true market leader.

When you develop your brand, you gain market credibility and improve your reputation. The more recognisable you are, the better, assuming you also develop a solid product or service that customers will truly want and respect.

Consider these questions:

  • How are my products or services better than my competitors’?
  • How can I take these advantages and incorporate them into a unique selling proposition (USP) that will clearly set me apart from my competitors?

This should clarify what you need to do to establish and solidify your brand.

Demonstrate Your Growth Potential

Even if you’re not ready to sell, it’s useful to approach “how to sell my business” in a systematic fashion and have a plan in place. Therefore, make sure that you can show prospective buyers both your business’s past growth AND its potential for future growth, as well.

Your current financial performance is one factor. Focus on showing prospective buyers how your client or customer base, revenues and profits have grown over the preceding years. If applicable, detail past competitor acquisitions and expansion into other geographic locations as well.

Showcase Your “Hierarchy of Recurring Turnover”

Do you have quality investments and/or annuities that generate passive cash flow each month? If not, develop them now. Focus on high quality, solid vehicles that will stand the test of time.

The “Switzerland Structure” 

If your business is too reliant on one customer, vendor, or employee, what happens if that employee, customer, or vendor is suddenly not available? Will your business come grinding to a halt? And what about you as the owner? You impede your business’ healthy function in similar fashion if you micromanage your business.

The ultimate result is that it will not be an attractive acquisition when the time comes; a potential buyer will devalue your business if you haven’t set things up so that business will keep running smoothly even if your favourite vendor goes out of business, your most trusted employee leaves or you decide it’s time for you to retire.

Therefore, diversify. Build relationships with multiple vendors and customers, and “cross train” employees in other roles besides those they were hired for; this will give them the ability to step into another role at a moment’s notice.

To prepare for your own departure, begin to step away from the day-to-day operations once in a while; it will give you much needed respite, and the ultimate ability to show prospective buyers that your business will run smoothly during the transition to new ownership – and after.

These tips will help you boost the value of your business, but if you need help assessing its current value, take our Sellability Score today and get a useful assessment of where you currently stand, and what work you need to do to boost sellability.

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