As a business owner, it’s easy to get bogged down with the detail of day to day business life and forget the overall picture.
Yes, you’re running a business to make a profit and make a living for you, but you’re also building a business that is one day going to be sold or passed on to the next generation. You want to maximise the value of your business so that when it gets to that point, your business is worth some serious money and you can really get rewarded for the many hours of hard work you’ve put in.
It’s easy to forget that pretty much everything you do as a business owner has an impact on the future value of your business, positive or negative.
Here are the 4 keys to maximising the value of your business:
Boost your net profit
It may be an obvious point to make, but buyers will be happy to pay a higher price for a business that is making a good and growing true net profit, so it’s vitally important that you can demonstrate this, to give the buyer the confidence that they’re going to get a return on their investment. Look at ways to cut costs and become more efficient, and look at ways to increase your gross profit margin. 4 ways to increase Gross Profit margin
Build recurring revenue
Sales is the engine that drives any business, and a big concern of a potential buyer will be whether the sales will leave when you leave! Stable, recurring revenue is far more valuable to a potential buyer than a business built on one off sales, because it gives the buyer more confidence that the sales are going to continue when you’ve left the scene.
Create a strategic plan for growth
You need to demonstrate to your buyer that there’s potential in your business - potential for future growth in sales and profitability. Setting this out with a clear strategic plan is essential to be able to demonstrate the potential.
Reduce dependence on you
A potential buyer needs to have confidence that the business can run without the current owners – you need to look at ways to reduce dependence on you as business owners by delegating and building a management team.
While these are only some of the key things you need to think about in view of maximising the value of your business, these 4 tips will have a big impact!
Think about what you’re doing today, and how it will affect the future value of your business.
Remember that you deserve to be rewarded with the best possible sale price.
Please note – This report is provided for information only. No action should be taken without consulting detailed legislation or seeking independent professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material contained in this report can be accepted.