Question: What can I do to increase business value before I sell?
There are many ways to increase business value. In fact, it’s often difficult to know where to start. But in most cases, the first step is to make your business less reliant on you—the business owner. You can read a few strategies for achieving this goal in Part 1 of this blog.
Once you have good systems in place to help the business run itself, you can begin to focus on other ways of increasing business value.
Everything should come together in a well-formulated strategic plan, with measurable business objectives and plans for meeting these objectives. Here are a few options to consider, when you begin working on your plan.
Ensure your business has consistent growth and strong EBITDA. Compare how your company is performing from year to year. A month’s dip might not be an anomaly, but if your numbers don’t indicate positive growth in the long-term then you have a problem.
EBITDA stands for ‘Earnings Before Interest, Taxes, Depreciation and Amortization’. It is essentially your business’s net income with the above expenses added back to it. Your EBITDA can be used to show your company’s growth and profitability more accurately, as it brackets the effects of financing and accounting decisions.
Make sure your business assets and facilities are well-maintained. If these are not in good working order, then it may indicate a need to re-invest further down the road. A smart buyer will notice this—and your business will devalue in their eyes as a result.
Build a diverse customer base. When your business is entirely dependent on one specific market, you are in a vulnerable position. Find ways to ensure customer diversification, if you want to eliminate this risk factor.
Offer products and/or services that are relevant and desired by your customers. Conduct regular surveys to see what your customers are saying about your offerings. Are they asking for something that you’re not providing? Find a way to give it to them!
In your strategic plan, design tactical initiatives to help you meet the above objectives—or whatever other goals you may select for yourself. Figure out who is responsible for meeting these goals and objectives. Then make it happen!
If you are looking for expert advice when formulating your own strategic plan, contact our team today to learn more about increasing business value in western Canada.