How to grow your business value before selling

How to grow your business value before selling
October 22, 2018 Toohey Reid

Finding a buyer for a stagnant business is much like trying to find a needle in a haystack. No one wants to invest in something which doesn’t have potential.

The value optimisation process aims to increase your business’s worth so that you can attain the price that you’re looking for when you finally sell. Fail to take these steps, and you could fall short of critical retirement funds, or the money to begin your next business venture. Just like when selling a house, you need to make your business look as attractive as possible to potential buyers. And that means a complete review of your business’s growth, performance and succession plans.

What’s working? What’s not working? What do you need to improve on before reaching out to buyers? We take you through the value optimisation process so that you can steer your business in the right direction to increase its value before selling.

Implementing business growth strategies

Do you set annual goals? Goal-setting is an integral part of business growth. Having realistic goals, and clear strategies to assist you to reach them can vastly improve the position of your business. It gives your staff the drive to work towards something, challenges them to develop their work further and become invested in the company. Consider extending your business by pursuing joint ventures and network agreements. Be sure to construct a well-documented plan for your long-term business growth. A company that is steadily growing is a practical investment.

Proactively undergo succession planning

Can your staff, clients and systems function without you there? If not, it’s time to make some changes. Excellent succession planning begins with figuring out how to make your business less reliant on YOU. It may also involve choosing and training a successor, which needs to be carried out well before you sell. Succession planning requires commitment. You’ll need to document everything that’s ‘in your head’ and turn it into systems or pass it on to another individual so that the business can continue smoothly operating once you have left.

Embracing innovation

Don’t be scared to get innovative! Adaptation is an important aspect of any business. It may be adapting to changes in the market, new software or different, more efficient systems. You need to show that your business is at the forefront; that it isn’t frightened of what the future holds. Excite buyers by positioning your business as an early adopter, not a company stuck in the past.

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Evaluating performance

Performance evaluation is something that you should be doing on an annual basis. But the performance evaluation required to sell your business may be a little more in depth. It’s time to improve your WIP (work in progress) and debtors recovery. You should be focusing on implementing progressive fee funding and billing arrangements. You also need to be having discussions with your accountant and team about how you can enhance your net worth by concentrating on KPI’s.

Analysing & upgrading systems

This value optimisation strategy often comes hand in hand with embracing innovation. If you analyse your systems and find that particular software or document processes aren’t working as efficiently as they should, it’s time to ditch them for something better. Look for upgrades, ask staff for recommendations (perhaps they have used very effective systems in the past) and investigate new technological solutions. Always consider user-friendly, time enhancing solutions that can be integrated with your existing systems, which are already working effectively.

Providing staff incentives

A company with a high turnover of staff does not look good. Businesses with loyal employees and excellent staff retention will attract more buyers. When describing your team, you should be using words like ‘stable, committed and united.’ You can work on your staff retention by introducing performance-based incentives and providing personal development programs. Give your staff a reason to want to stick around, strive to work harder and be better at their jobs.

Reviewing your client’s needs

Clients can become a little uneasy when they know that the top boss is flying the coop. It’s critical that you manage their concerns sensitively, and prepare for any issues that may arise. The best way to retain and reassure your clients is to build relationships between your successor and your customers as early on as possible. Relationship management is a critical aspect of all client dealings and should be proactively addressed when undertaking the process of selling your business.

Need more tips on how to maximise your business’s value? Toohey Reid carry out business valuation services to prepare companies to achieve the ideal sale price. Contact us today to find out more.

General Advice Disclaimer

General advice warning: The advice provided is general advice only as, in preparing it we did not take into account your investment objectives, financial situation or particular needs. Before making an investment decision on the basis of this advice, you should consider how appropriate the advice is to your particular investment needs, and objectives. You should also consider the relevant Product Disclosure Statement before making any decision relating to a financial product.

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