5 Tips to Increase the Value of Your Business
Whether you want to sell your business now or just be ready for when that day comes, you want the maximum possible value for your business. You can’t just sit back and hope for the best. That could be a costly mistake. Instead, take a proactive approach and put the work into increasing its value.
1. Show Profitability
Potential buyers are not only interested in the profitability of your business, but, perhaps even more important is the potential for increased profitability that will almost certainly drive up any asking price. Along with the documents you provide showing profitability, have a plan to drive future growth —whether that’s through creating efficiencies, cutting costs, acquiring new customers or expanding a product/service.
2. Offer Seller Financing
No one is going to come to you with a pile of cash to buy your business outright. Any potential buyer is going to need some sort of financial assistance and the best bet for both parties is for you to offer seller financing. Nothing shows your confidence in the future of the business more than you being part of that investment.
3. Plan Your Exit
One of the biggest fears of any potential buyer is the dependence of the business on you, the owner, and what will happen in your absence. Will there be a noticeable difference, or will things continue to run smoothly, like a well-oiled machine? Train key employees on everything crucial to the business until you’re as hands off as possible. This will help assure any buyer of a smooth transition, increasing its overall value.
4. Highlight Its Strengths
Part of the business for sale process that sellers take often overlook is marketing. It’s your job to highlight your business’ strengths and show how it is a solid investment. In what areas does your business excel? How does it differentiate itself from the competition? If you succeed at doing this, you’ll be able to command a premium asking price.
5. Upgrade Your Assets
For maximum value, the condition of your facilities and equipment should be top-notch. Also think about their condition in terms of growth. Are both sufficient to accommodate growth? Answer this one honestly. Put yourself in the buyer’s shoes. No buyer wants to have to take repairs or replacements into consideration when making an offer, and neither do you.