Whether you want to sell your business in one year or five, it makes sense to want to sell it on for as much as possible – after all, you built the business from the ground up and put countless hours into it.
You don’t want to leave this planning to the last minute and hope for an unrealistic amount of money – you need to start planning for this today in order to reap the benefits. Here are seven valuable tips to getting on your way to increasing the value of your business.
Understand your current value and set a goal
There’s no point in saying you want to increase the value of your business without knowing your current value and setting tangible goals. If you aren’t already aware, there are plenty of free tools online that can help you value your business. You might be surprised at how much you could get, or how far you have to go to hit your goals!
Doing this will help you to see where your current value lies. It allows you to focus on key growth areas, sales performance, and financial projections to more accurately and effectively plan your strategies to increase value over time.
Attract more customers for a diverse client base
A diverse customer base means that you can successfully cater to a wide range of people – e.g. if you own a cafe, you might want to add vegetarian and vegan options to your menu for a broader market appeal. Doing so, while not alienating your main customers, will provide more chances of securing customers who have different requirements.
This will also reduce the chance of a buyer’s potential concern that you are relying too heavily on a small number of customers for a majority of your income, especially if the customers are loyal because of you as a person and may disappear once a new owner takes over.
3. Keep staff turnover as low as possible
There are a variety of schemes you can put in place in order to retain staff. Keeping skilled team members automatically helps to increase business value.
If you can easily leave your team to run day-to-day operations whilst you spend time on more complex matters, you’ll already seem valuable to future buyers as they won’t need to be as involved when taking over. It also means that they won’t need to spend a lot of money hiring and training new staff.
Some schemes/rewards you could implement are:
- An increase in holiday allowance per year worked
- Sincere appreciation and regular positive feedback
- Regular 1-2-1s with employees
- Genuine opportunities for progression
- Being a flexible employer
- Discounts for local cafes and shops, or gym memberships
Great staff also equals great service, which pleases customers/clients and in turn, generates positive word of mouth and therefore potentially more customers. Which brings us on to…
4. Improve your cash flow
Improving your cash flow will not only benefit you in both the short and long term, but will also help to strengthen your business for the benefit of future investors or buyers. By preparing early, you limit the chances of struggling with profit in years to come.
A buyer will want to see that a business has positive cash flow that is predicted to increase year on year. If you are experiencing a steady improvement and can document this clearly on your financial records, you increase your chances of attracting great buyers who can take the business to the next level.
Some areas to consider that may improve cash flow are as follows:
- Cutting down on non-essential expenses, e.g. software you don’t really use or could get cheaper elsewhere
- Making sure invoices are paid on time and having clear steps in place to chase those that haven’t been
- Use a savings account with high interest rates
- Regularly conduct inventory checks
- Lease equipment, machines and furniture initially rather than buying in full
5. Have a clear progression plan
Before putting anything into practice, it is important to make a clear plan that details the steps you plan to take in order to grow your business and consistently increase revenue. In your plan, be sure to include sections such as next steps for products/services, target market/customer profiles, how you plan to reach your audience, and details of your top competitors.
You may go off track a little as time goes on and circumstances change, but having this in place will mean you are on the right track and have something to refer back to.
6. Define your USP and hone in on it
What can you offer your customers that your competitors can’t? It’s extremely important to emphasise this in all of your marketing efforts in order to stand out in competitive industries. If you don’t currently have a unique selling point, what could you introduce in order to create one?
It’s worth speaking to your current client base and asking them why they chose you over another business – was it the service they received, the personal touch you offer, your unique products, the convenience of the location, your marketing efforts, or something different? Perhaps you could offer a discount or the chance to win a prize for letting you know their answer.
7. Get to know your customers and clients on a personal level
Who are your target customers? What makes your brand stand out to them? How can you capitalise on their interests and needs? You’ll get all this information by interacting with your customers regularly, both face-to-face, over the phone, or online, and as we mentioned, through offering potential discounts and prizes for engaging.
Be sure to ask for and value their opinion and make genuine changes based on it in order to gain their respect and trust. Relationships are so valuable to maintain – not only are they the reasons your customers keep coming back, they’re likely to recommend you to others as well. Word of mouth is extremely powerful and can account for many new customers.