How do you ascribe a market value to a lifelong business venture? Selling a company involves a complex process where emotions can run high because of the owner’s investment into building the business for several years. Business owners looking to sell their company seek the highest possible price to achieve their exit goals.
Don’t accept a low valuation of your business when you can boost the value of your company before you sell and receive the price you know the business is worth. Here are five tips for increasing the value of the business before it goes to market.
Receive an Expert Appraisal
An experienced M&A adviser can help you ready your business for sale by first conducting an expert appraisal for the current marketplace. Selling your company marks one of the most important transition periods in your career and life.
Professional advice will ensure you secure the best value with the help of a team of advisers experienced in business ownership, sales, marketing, business development, consultation, finance and accounting.
Differentiate Your Services or Products
How does your business dominate the market? What offerings make it stand out among the competition?
Differentiation matters for both small and large businesses but especially for the survival and continued success of small business owners. What services or products uniquely position your business to dominate in its particular niche?
Work with a professional to help develop and promote unique services and products that offer an edge over your competitors, securing the necessary patents if you haven’t already done so.
Generate Seamless Routines and Processes
When selling, you will need to ensure the buyer that their investment will continue to be successful after purchase. Develop airtight routines and process that allow the business to function seamlessly and effectively without direct involvement. Document these processes, so the new owner has a guide to maintaining and growing the success of the company.
Which processes and routines are not necessary? Eliminating extraneous processes will save the company more money. You will more strongly position your business for sale at a higher value if you can control your inventory and cut your costs without adversely affecting your operation.
Increase and Diversify Profits
Buyers will pay more for a company that shows they can create a profit quickly. When you show your buyer your profits are on the rise, they are more likely to offer you a higher price to reflect the value of the business. Look for ways to give your business an extra boost in profit.
Diversifying your revenue also adds value to the business. When you increase the revenue streams of the business, you can also diversify the type and number of buyers. Tap into your customer metrics and their measured experiences to uncover a new product, service or audience. Knowing your customer means you, and thus your buyer, will continue to grow with customer needs and demands while innovating in the industry.
Develop a Strategic Plan
Work with your adviser team, M&A expert, account and attorney to develop a strategic plan with milestones and measurable goals that build the credibility and marketability of your company’s potential down the line.
Buyers may expect a particular return within five years, and a roadmap helps assure the buyer they are making an informed and secure purchase. Your adviser team can help prepare a qualitative and quantitative financial forecast that indicates promising future results.
Before you put your company on the market, you should receive an expert appraisal to develop a plan to increase the value of your business before you sell. You can do this by working with your adviser on differentiating your services and products, generating seamless routines and processes, increasing and diversifying profits and developing a strategic plan that showcases the growth potential of the business.
Sun Acquisitions offers a confidential and complimentary consultation to discuss the ins and outs of selling your business. We will help you appraise your business and develop a plan of action to achieve the best purchase value.