Selling your business is a major milestone that most entrepreneurs will undertake at some stage in their business lifecycle. Besides the complexity of the process and emotions involved, entrepreneurs need to ensure they maximise the value of the business they’ve put so much time and effort into building.
Planning and implementing changes in the 12-24 months pre-sale can ensure that you get the maximum sale price possible for your business.
Below we outline 4 steps that you can undertake to improve the value of your business when planning to sell your business.
1. Work to Boost Your Profits
Your business is generally worth a multiple of the profit that it is making. If your business is not profitable then the value is heavily discounted. Working to boost your profits is something all business owners want to achieve but there are some basic things you can do to help achieve increased profits:
• Increase your prices;
• Negotiate with suppliers;
• Focus on selling higher margin goods or services;
• Reduce fixed costs, and;
• Increase your sales.
2. Continue to Invest and Improve
One of the biggest mistakes business owners make is that when they decide that an exit is on the cards they stop working on investing and improving their business, when in fact this is the time that they should put additional effort into ensuring the business is growing and operating as efficiently as possible. You should continue to:
• Invest in new equipment;
• Ensure maintenance is being undertaken;
• Ensure any process improvements are made, and;
• Ensure relationships with suppliers, customers and employees are documented.
3. Develop Processes, Procedures and Empower Employees
The processes in your business need to be repeatable and teachable with minimal effort from owners, ensuring all processes and procedures are streamlined and documented may take a lot of time to implement but will save extensive time in the long run. Employees should be empowered to work independently and be actively working to improve your business and be incentivised to do so. Having a strong management team in place who can operate the business with minimal, if any participation from the owners is advantageous as this will increase the value and the likelihood of selling your business.
4. Seek Advice
When undertaking the sale of your business or even when considering selling your business you should work with an experienced independent advisor who can help prepare the business for sale and guide you through the process of undertaking the sale of your business. Just as you are an expert in your business there are independent advisors who are experts in the sale of businesses and undertake business sales on a day to day basis. Obtaining professional advice will help ensure you complete the sale of your business that you have spent many years building as smoothly and efficiently as possible.
Contact Us Today
At Quinn M&A we have significant experience in analysing business values, understanding the key value drivers that affect the value of your business and selling businesses. We have experience working with a range of different industries and business types. Phone us on 02 9223 9166 or submit an online enquiry for a confidential discussion regarding your individual situation.