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Maximising the Value of Your Business

10 June 2013
 

Business owners now have to work even smarter to make their businesses as attractive as possible in the current economic climate in order to generate interest from a buyer and to maximise the value on sale.   The key to success is beginning the process early as decisions you make during the natural life cycle of the business will affect the future value of your business.

So what is the business equivalent of the common sense tips you learn from the various house doctor programmes on television, which teach us how we can increase the value of our homes and ensure that they sell in the future for the optimum price? In these programmes, we learn about the selling advantages of creating  ‘neutral colour schemes’ and ‘versatile living space’ in our homes –  so what sales triggers can we build into our businesses to ensure the maximum value on exit?

Well, there is a lot of non-financial stuff you can do which can increase the value of your business. For example:

  • Building up an up to date list of customers and prospects which can be used for future marketing initiatives of new products or services
  • Locating your business in the right place
  • Ensuring you have a properly planned organisational structure in place with the right staff  in strategic positions such that the business will still work without you
  • Making sure that you have signed contracts in place with any major customers so a potential buyer will be able to rely on a future income stream post acquisition
  • Keeping your staff training up to date for key people in the business means your staff will be a valuable asset in any sale as they have current knowledge of the latest thinking/techniques
  • Having a unique patent or licence which allows only your business to manufacture or sell a particular product
  • Creating clean, tidy and well presented business premises – first impressions count!
  • Having your equipment maintained and looked after

However, the real fundamental is to make sure you have the financials sorted - having a profitable well controlled business is always an attraction.  So, for example, you need to:

  • Ensure you have management information which is up to date and accurate and that you are able to properly understand the figures contained in the reports to help you make the right decisions to increase profitability
  • Check that you have good systems in place to control costs so there is no unnecessary expenditure
  • Make use of forward projections and always ensure you have a business plan to help you focus on the future and to compare your actual performance against

As you can see from the above short list of examples, it’s very worthwhile to keep the end game in sight as you make decisions over the lifetime of your business because, once you have all the above ‘DIY’ bases covered, then your business should be looking very attractive and have the optimum chance of securing the best value on exit.

For more information and advice, contact Carol Wright, at cwright@springfords.com

 

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