Ten Steps to a More Valuable Business
Take a real vacation. Offload customers. Make more friends.
When you think and act like an investor you’ll have a more valuable business.
While most business owners set revenue or profit goals, the savvy ones also have specific targets for having a more valuable business.
Value is defined by investors. You need to have great answers to their difficult questions such as “how well does your business really run when the owner isn’t there?”
The big question is: How can I make my company more valuable?
These Ten Steps will help you build a more valuable business now by seeing your company as a potential investor would.
- Take a real vacation. Let the business run without you and don’t check in with the office. When you return, you’ll see how well (or not) the business performed and where you need to make changes. Then answer the question: can your company run without you being there?
- Solidify work processes. You know you need to document your systems. When you do, your operations will work smoother and you will have a more sellable company.
- Offload customers. Even if you are the best salesperson, assign a few customers to your account manager. Your customers may want to deal only with you, but this is a big liability to a buyer of your company.
- Make more friends. Over-reliance on one or two suppliers is risky. By spreading some of your business to others you keep everyone sharp and have other sources when required.
- Develop a recurring revenue stream. Annual service contracts, preferred supplier status and joint ventures provide recurring revenues. Valuable companies have predictable revenues.
- Conduct due diligence. Check your financial statements, customer lists, and key agreements such as leases and contracts. A potential buyer of your company will want to see your obligations to the landlord, customers and suppliers. Complete a due diligence checklist to save time and surprises when selling your company.
- Perform a Strategic Planning Session. The planning process gets everyone on the same page, identifies the best opportunities to pursue, sets objectives and provides action plans. Valuable companies have a clear direction and focus.
- Conduct an Assessment. Assess your firm with the aim of singular aim of enhancing its value. The assessment compares your actual practices versus best practices and identifies improvements you can make. It also relies on the smarts of your people, the most underutilized asset in many companies.
- Improve your cost structure. Even if you increase sales this year, will this make a significant improvement to the value of your company? If your margins are low, maybe not. Valuable companies continually find ways to improve gross margins and reduce costs.
- Increase your multiple. A buyer will pay a premium for a company for several reasons, such as a great strategic fit, having a strong management team, and consistent financial performance.
Why not find ways to increase the value of your business now, rather than waiting until an investor or buyer calls? It may be too late then to make the changes that makes the business attractive and sellable for a premium price.
Follow these ten steps and you’ll be on your way to a more valuable business and more real vacations.
Take the Next Step
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