If you’re a business owner with the long-term goal of eventually selling the company, you’ll want to maximize its value. Buyers who are looking to acquire a business want an investment that accomplishes two goals:
- Maximizes their return by showing a likelihood of future growth
- Minimizes the risk of ownership
By improving the value drivers that make these achievements possible, you’ll set the stage for premium offers when you’re finally ready to sell. Here are five ways that you can optimize your business’s value now.
- Keep profits healthy
If your company is only breaking even, you’re not going to attract top offers. When the balance sheet shows a healthy amount of retained earnings, it shows buyers that the business is profitable.
- Lower expenses and increase sales
Take a close and critical look at your daily processes and identify ways to reduce costs, improve operational efficiency, and manage inventory without negatively impacting your operations. You should also revisit your marketing plan and see if you can increase sales by offering new products or services and/or moving into new markets.
- Develop a strategic plan
When your company has a strategic plan that includes ambitious yet realistic goals for the coming months, buyers will have the impression that it is a dynamic enterprise with plenty of long-term growth potential.
- Create repeatable processes and an empowered workforce
Your company may be your brainchild, but if it can’t function or grow without you, no one else will want to take it on, at least not at the price it deserves. Develop operational processes that are repeatable and can be taught to a new owner so that they don’t have to worry about the business losing momentum due to a learning curve.
You should also empower your workforce, starting with the management team. Reduce the risk of high employee turnover by keeping everyone motivated and engaged. A strong team adds value to any business, especially if the buyer is new to your industry.
- Stand out in your field
Selling your company to the right buyer for the right price calls for strategic marketing. You need to show potential buyers how and why your product or service stands out from the competition. Ways to accomplish this include favorable news coverage, reviews, and testimonials from regular clients.
One of the biggest mistakes that a business owner can make is stepping back and letting momentum dwindle once they decide to sell the company. The moment you stop improving operations, investing in new processes and equipment, and actively building sales is the moment that the value of your company starts to slip. Keep your foot on the accelerator until you hand over the keys.
While you focus on maximizing the value of your business, let the business and real estate attorneys at Rosen Law LLC take care of the legal formalities that accompany high-value real estate transactions. We can assist you in vetting potential buyers, preparing the paperwork for the sale, and even preparing for your next venture in the same or a different industry. For more information or to schedule a consultation with one of our attorneys, please call (516) 437-3400.