If you are a business owner who has considered selling, there are a few things you can do to boost the value of your business long before (or even shortly before) putting your business on the market. Any exit strategy needs to include an element for building value if you are going to get the biggest bang for your buck when your business sells. Here are a few things you can do as part of your exit plan to boost your value on the market:
There are essentially three categories of value-building: generating growth, improving cash flow, and reducing risk.
When you generate growth, you create future projections for your company that will mean future rewards for a buyer, rewards they will pay for by paying more for your business. Look for new products, new opportunities, and new markets. Revamp your marketing and sales approaches for what you currently offer. The price your business sells for is not just based on what you earned in the past; it will also be tied to future cash flow.
Improving Cash Flow
To improve your cash flow, you will need to efficiently manage your working capital. Make sure you are managing your finances properly, and constantly look for ways to cut costs. Also look for content within your business that could be proprietary elements.
One of the best ways to reduce risk is to diversify. Make sure you build a diverse list of customers. You also want to have multiple suppliers, eliminating depending on just one place to acquire what you need to keep your business running. Look within your operations for places to diversify as well. Do you have “indispensable” employees? Perhaps a diverse management team, each member of which only has partial responsibility, will protect your business value better than one all-important employee whose loss would be a big detriment to your bottom line.
Are you ready to consider selling, but want to boost the value of your business? Leave us a comment or question here, and we will be happy to assist you with business building techniques.
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