One of the main reasons people look to get a business valuation, is that they are preparing for sale. It goes without saying that you really want that value to be as high as possible. But here’s the thing: the valuation you receive isn’t final. There is so much you can do to drive it higher before you sell if you just put in a little effort and time with a business advisor.
One way to improve on the valuation number is to demonstrate good internal structures. In other words, is your business in order? Does it have good, strong, concrete processes that will go on well into the future. Even after you, the business owner, have left? You need to document these processes. This is very important for acquisitions: you will likely have new people coming in to your departments and working within them. These processes should be documented, so that the business that acquires you can continue with them without hours and hours of training. It’s also just a sign of a well-run business, and a flag to potential buyers that you run a tight ship.
Another way is to diversify your offering. Operating in a single marketplace can be risky– imagine if that marketplace were to go into decline. Operating in many markets is a great long-term strategy, when properly researched and executed. And it can have immense rewards on your business’ sale value. A strong, singular core value proposition is excellent, and it doesn’t necessarily mean you only work in one marketplace. It can be a serious boon to your sales pitch, so start exploring your options.
Another factor that really increases sales price is your staff. They are important assets for maximising your valuation. If they are skilled, trained, and unique in their field, they are worth buying in the eyes of a purchaser. People may also want to purchase them based on the networks they have. This is especially true of foreign businesses looking to expand into new fields: it’s much easier to purchase an existing business than to open a branch of in a new country. So don’t forget that building these networks and business relationships– internally and externally– is important and a part of your value.
Remember, getting a valuation of your business before a sale should be part of your strategy, and it should occur early. This gives you time to drive up that value, through the above factors or in conjunction with a trusted financial advisor. This could be the sum of your life’s work: make sure you make the right choices.