What are you doing to build value in your business?
Do you delegate authority to key employees?
Is your business scalable?
Is your business sustainable without you?
If your answers are not much, no, no, and no respectively then your business may have very little if any resale value beyond liquidation of its assets. However, with a little foresight and by adhering to a few simple good business practices you can easily build equity and value in your business.
Building value – make sure your products, inventory, services, timeliness in filling orders, record keeping, and technology meet the changing and evolving needs of your customers and clients and keep up with the current trends in your industry. Maintain proper margins, production, and output in order to assure profitability. As technology evolves, changes, and dazzles us, it is important to implement the software, hardware, websites, databases, and customer relationship management systems that will enable you expedite the delivery of your products and services. This will also create the perception that your business is at the forefront of its industry regardless of the size of the business.
Delegating authority to key employees is a must. Whether a strategic (company) buyer or an individual buyer considers purchasing your business they will immediately look at and quickly determine if other employees have the necessary personal relationships with your key customers and clients in order to assure the continuation of these accounts once the owner is gone. Critical functions such as the delegating of job costing, estimating, customer and client relationship building all play an important part in the buying decision of a qualified purchaser when considering an acquisition of your business.
Is your business scalable? Can the scope of your products and services expand with your existing personnel, space, systems, and technology? If not, develop a written plan as to what improvements, upgrades, and personnel expansion are necessary to grow your business. This will minimize the guess work and ease the concerns of prospective buyers who will likely think more of you and of your business if such a plan is presented in writing.
Is your business sustainable without you? If you are a sole practitioner – lawyer, doctor, dentist, consultant, etc. this is a particularly difficult issue. If you have a retail, service, or distribution business employing others, it is imperative that you delegate as much responsibility to as many different subordinates as you can.
Following these tips as you grow and operate your business will dramatically increase your chances of eventually selling your business and obtaining the best possible value for it.