Business owners may be surprised to discover, that what they believe their business is worth and what buyers think, are two different figures.
Here are some value drivers that can be implemented, to make a business run better today and be more attractive to buyers some day in the future.
Develop Key Employees:
Buyers won’t be interested in paying full premium for the business, if it relies on the owner for success. The more the business is able to operate without them, the better! Delegate responsibilities to key employees, and involve key staff members in the decision process.
Ensure there are written management and operations manuals. Document job descriptions, operation processes, and strategic plans. These give buyers greater comfort that he/she will be able to emulate successful growth. It will also help the buyer obtain finance if required.
A company without many ‘hard assets’ will need to build key relationships, with suppliers and customers.
In addition, name recognition, customer and reputation are all part of the business value.
Improve Cash Flows:
A potential buyer will want to see ‘true cash flow’, it is important to make sure all income is being driven to the bottom line. Ultimately, all value drivers contribute to good and increasing cash flow, and buyers look for companies whose cash flow is increasing year over year.
Review your assets:
Take a stocktake of what the business owns, and arrange to sell or dispose of unproductive assets or unsalable inventory. Remove or buy of assets that are used for personal use. Aim for good and saleable stock at efficient levels.
Remodel, clean and organise:
A well maintained facility will get the best price. Ensure a thorough clean and a review of organisational systems, to convey a feeling of quality and efficiency. Make sure that plant and equipment is in good condition.
You may be interested in downloading our 8 Value Drivers Brochure. This gives a quick snap shop of top considerations that future prospect buyers make, when considering a business.