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Increasing your Business Valuation - 6 more tips

Posted by Richard Ludlow

Wed, Feb 09, 2011 @10:27 AM

FIRST LOOK AT YOUR BUSINESS THE WAY AN OUTSIDER WOULD LOOK AT IT

As usual, to do this you will need to spend time working ON the business, not just IN the business.

 

1.     Do you have procedures in place that would allow a new owner to quickly understand and run your business?

  • Employee payroll, accounts receivable, accounts payable – how clear are the records, are they computerized? etc.
  • What is the Sales and Marketing plan for the year, how does it compare to the prior year?
  • Are all legal documents, well organized and accessible, contracts, leases, maintenance schedules, warranties etc.
  • Who are the major clients, where are their contact details, when do they buy?

2.   Do you have an unhealthy reliance on one customer [20% of business]?

  • This makes new owners VERY worried. Difficult to fix, but needs to become a priority for the seller.

3.     What are your key products and/or services? Who and where is your competition?

  • Make a list with descriptions. Identify competition and map them so the buyer can come quickly up to speed. All this provides confidence in you and your processes.

4.     Who are your major suppliers, what are their business terms?

  • Again, make a list, keep all the information organised.

5.   And finally, spend some time thinking about the risks and weak spots in the business? Take steps to address them and be prepared to discuss them with a potential buyer.

 

Often buyers are looking for “turn-key” operations, with well documented procedures for handling all aspects of running the business. Spend some time to document your business, prepare binders, make it look simple and straight-forward.

 

You only get one chance to make a first impression. Make that first meeting at your business location a good one.

 

6.     What does the physical plant / location look like? Consider,

  • Steam Clean carpets?
  • Remove garbage?
  • Fresh coat of paint?
  • Outside signage well lit?
  • Office / workspace well lit and clean?

Simple ideas are often the best. Don't overlook the obvious.

By Richard Ludlow, Partner.

Topics: Selling your business, business valuations