8 Tricks to Help You Get a Treat: Maximum Business Value
We all know this Halloween stands to look a little different than years past, but we can still count on some amount of kids in costumes lurking door to door, demanding treats through the threat of tricks. In the spirit of the season, I have a few tricks of my own. As strange as 2020 has been, apply these timeless tricks to your business to achieve the real treat: a higher valuation!
Maximize Profitability & Earnings: The number one component in business valuation is profitability. Whether looking for a salary to support their lifestyle, or a precise level of return on their investment, a buyer will need to identify what they can expect to earn if they buy your business. The more profitable your business is, the more its worth.
Ensure your Financials Are Clean and Organized: If profitability is the most important factor in business valuation, clearly stating and demonstrating that profitability is a close second. Nothing builds the confidence of your buyer like clean and well maintained books and records.
Show Positive Trends and Consistency: A buyer will be buying your future profitability, and their willingness to pay you top dollar will be built on growth trends and consistency in expense management. You want them to know what to expect as they move forward with your company.
Document your Infrastructure: A well-documented organization chart can go a long way. Make sure your buyer knows exactly who in your company is responsible for what. When they show up the first day after taking over the reins, they need to know how all those people function.
Build and Document Strong Internal Processes: When it’s time to sell, you want to be rewarded for all you have built. You may have your processes, your “way of doing things,” well defined in your head, but unless it is written down in a binder somewhere, a buyer won’t have the confidence that they can make it their own.
Identify Intellectual Property and Maximize: Make sure those items that are unique to your company (products, services, processes, etc.) are fully utilized to set yourself apart from the competition.
Position Your Brand: Brand is another way you set yourself above the competition, and another area to compel a buyer to pay a premium price for your business. Make sure your brand is well recognized and has a great reputation in your industry and community. A buyer wants to be proud of their new company.
Maintain your Assets and Facility: Clean and well-functioning tools, vehicles, machines, and office space not only increases buyer confidence, but relieves any fears that they might have immediate cash outlays to replace old, broken parts of your business
- The number one component in business valuation is profitability
- Document your infrastructure and internal processes
- Focus on positioning your brand to show positive trends and consistency