When it comes to selling your small business, preparation is key to maximizing its value. While many business owners focus on day-to-day operations, taking strategic steps to increase your business’s value before considering a sale significantly impacts your final selling price. In this article, we’ll explore 4 ways to make your small business more valuable and make it more attractive to potential buyers.
4 Ways To Make Your Small Business More Valuable
1. Show current growth
It’s possible that a buyer may be happy buying a business that shows a steady but safe income, but many are looking for growth. Showing that your business has grown consistently over the course of a few years is a great indicator that further growth could follow, and thus increase business value.
2. Share any growth plans you have
Before deciding to sell, you probably looked at different strategies that would grow your business. Depending on how up-to-date and viable these plans are, such growth strategies could be of great interest to any potential buyers. By sharing these plans with interested buyers, you’re providing them with extra value. They could look at your strategies and use them to inform their own strategy moving forward. If you can show how your business can grow even stronger, this increases business value further.
3. Create strong sales projections
Even small price increases can positively impact your sales projections. These projections have strong negotiation power when selling your business, so it’s worth spending time on getting them clear. While it can be tempting to inflate your projections somewhat, experienced buyers will be far happier to receive realistic and accurate projections. These provide them with room to think about how they could possibly improve upon it, rather than dealing with unrealistic figures that are difficult to get near.
4. Check that your business isn’t overexposed
Businesses that rely on the business of just one or two clients can undoubtedly generate good revenues, but they’re also incredibly vulnerable. Should that client leave, your business will suddenly find itself without its main source of income. If this sounds similar to your situation, the acquisition of more clients will dramatically increase business value.
Same goes for businesses that are reliant on one major supplier. You’re powerless if they decide to increase prices, or worse, stop working with you. While strong working relationships are useful with your supplier, it’s worth having a similar relationship with any rivals they may have, just in case. Scope out other potential suppliers before any trouble arises and share this information with interested buyers to put their mind at ease.
Conclusion
Building business value requires a methodical approach that focuses on demonstrating growth potential, having clear future strategies, maintaining realistic financial projections, and ensuring a diversified client and supplier base. By implementing these 4 ways to make your small business more valuable, you position yourself for stronger negotiations when the time comes to sell. Remember, a well-prepared business that shows stability and growth potential will always command a better price in the market.
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