Key takeaways for “7 Ways To Improve The Value Of Your Business For Resale”:
- Give potential buyers assurances by maintaining high revenue and giving quality financial records
- Hire and develop skilled employees that will ensure the growth and success of the company
- Have a projection plan for further growth and be willing to stay on during the transition
- Seek the advice of a professional
7 Ways To Improve The Value Of Your Business For Resale
Owning a business is a long-term dream that many people have. When you own your own business, it will give you an opportunity to be your own boss and control your own destiny. For those that are able to successfully build a strong company, they will have also created an asset that has a lot of value. At some point, it will likely make sense for a business owner to sell their company. For those that are looking to sell their company at some point, there are seven important tips and steps that should be followed that could help to improve the value of your business.
Improve Profitability and Revenue
The most direct and important way that you can improve the value of your business for resale is by improving your revenue and profitability. When an investor or other company is looking to make an acquisition, they will base their offer price on your current sales and income history. The higher your revenue has been historically, the more you can expect to earn. If you are able to improve growth and revenue year over year, it will directly improve your company’s value. The best ways to do this is by becoming more efficient, finding new valuable customers and relationships, and expanding offerings into similar products and services.
Invest in Better Financial Records
Another way that you can improve the value of your business for resale is to invest in better financial records. Filing some form of a tax return and financial statement is a responsibility that all businesses have. However, there is a dramatic difference in cost that comes with how these statements are prepared. While it may be far more expensive, hiring a third-party firm to prepare, review, and audit your financials on an annual basis could be well worth the investment. This will give a certain level of assurances from a potential buyer that your financials are accurate and can be relied upon. This could allow your business to sell at a higher multiple.
Hire and Develop Good People
The most important asset that any business can have is the company’s employees. While you may want to avoid hiring people that are more expensive, you are often receiving great value that can help to make your company more profitable and valuable. Not only will they help you to organize your company and achieve your financial goals, but a team of skilled professionals with valuable experience will be attractive to anyone that is looking to purchase a company.
Be Willing to Stay On
After selling a business, one challenge that a lot of business buyers can have is trying to transition operations. Much of this risk can be avoided if they are able to get the prior owner of the company to stay on in some capacity. If you are willing to stay with the company for a relatively short period of time, you can give the buyer comfort that the transition will be smooth. This can then add value to the sale of the company and will also allow you to earn some form of income or consulting fee in the future as well.
Have a Plan
While you will want to have a good history of sales and income, you should also be able to show a projection for further growth. During any sales process, you should have a well-prepared projection for at least the next few years. This will give any company buyer some visibility into the future direction of your company. This process will also have to include data and other information to support your projections.
In most cases, any company that is profitable and has had stable revenue will attract interest from potential company buyers. However, the organizations that garner the most attention and earn the highest sales multiples will stand out from the competition. You can do this by being innovative and having a unique approach towards business, both of which will help you to develop a strong company reputation.
Hire a Professional
If you are serious about selling your company, it never hurts to get the support and advice from a professional. A company that is experienced and brokering the sale of businesses can provide you with a lot of value. While they can charge a fee, the marketing services, assistance with sales package preparation, and access to a wide variety of connections could prove to be very valuable and could help to improve your company sales price.
Selling a business at any time is a big decision. If you are trying to sell your company, you could find that it is a big process and competitive. Following these seven tips and steps will help you to sell your business for the highest price possible.