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Boosting the value of your business before you sell

All business owners, whether still in the early days of their venture or running an established organisation, will likely have considered a time when they may not be at the helm anymore.

In fact, selling your business, or at the very least passing it on to family, is an inevitability for most; whether motivated by retirement, an attractive offer, lack of access to funding or just the fact that you no longer see a future for the business.

When the time comes to take the plunge, you’ll probably find yourself wondering how much your business is worth and what you should be doing to get it in tip-top shape for potential buyers.

Often, a priority for business owners is wanting to know how they can maximise the value of the business before they sell. Understandable, as this may well be one of, if not the, most valuable asset they own.

Here we identify just a few of the proactive steps you can take to boost your business’s value:

Sound, strategic advice can help you sell well

When it comes to selling your business, pursuing strategic advice can be key to achieving the best possible sale price.

Think of us as an independent, objective and professional ‘sounding-board’, helping you to make good business decisions, to refine your plans, to drive your business forward and to realise your goals, no matter what stage you’re at.

To navigate the sales process successfully, you need to understand what it entails. Seeking advice sooner, rather than later, is vital if you are to achieve the outcome you’ve been imagining. Even if it’s only to confirm that you are doing everything right, you cannot put a price on peace of mind.

The future is closer than you think, so plan for it

Don’t get so caught up in the day-to-day that you endanger your long-term aspirations. Having a well-thought-out plan in place can be beneficial for all parties involved in the sale process; sellers, buyers and advisers alike.

A plan not only gives you something to work towards, but it improves your business’ credibility and shows any potential buyers that you know exactly where your business is headed.

Cash flow, company earnings and recurring revenue

To maximise the value of your business, you need it to appear attractive to those on the outside looking in. Company earnings, cash flow and recurring revenue all have an important role to play in achieving this:

• Company earnings – should be of a high quality. Your earnings should be attributable to your own efforts to either increase sales or reduce costs.

• Cash flow – should be consistent. Consistent cash flow shows potential buyers that your business is not only credible, but sustainable.

• Recurring revenue – is a big thumbs up. This in itself represents consistent cashflow and will do wonders for your buyer’s confidence.

Due diligence 

Due diligence is arguably the most important part of the process, when it comes to selling your business.

This is where the buyer (and their adviser) will delve deeper into your company’s finances, reports and accounts, identify any issues or anomalies and assess the value of your business based on what they find.

Making sure everything is in order, up-to-date, filed correctly and easily accessible is imperative if you want the sale to proceed smoothly and to get the return you are expecting.

Don’t take your eye off the ball

Irrespective of the sale, you still have a business to run in the interim. It is vital that you don’t take your eye off the ball.

If you don’t have the time to dedicate to the running of your operation whilst the sale goes through, nominate someone who does – your buyer needs to see the business looking its best at all times and you want to be able to step down from something you’re proud of.

Timing is everything

Markets change, people change, and circumstances change. This is why it’s important for you to always be poised and ready to react. As a business owner, you are in the best position when you don’t necessarily ‘need’ to sell.

A successful exit is inherently dependent on near-perfect timing. Sometimes this involves being tactical – but other times, it’s simply about knowing your business is primed and ready for sale.

Whether you’re thinking of selling, or whether you’re just starting out, there is no time like the present to put the right plans in place. Contact us today to discuss your circumstances in more detail.

You can also read more in our latest ‘What happens if…’ feature: ‘What happens if…I want to sell my business?’

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© 2017 George Hay