20 “Must Do” things to make your business worth much much more

growandsellyourbusiness.com

Would you buy your own business?

❖ Have a good and honest look at the strengths and weaknesses of your business. What is good and bad about your business? What can you fix?

❖ Where are the opportunities and threats? Can someone take advantage of the opportunities or minimise the threats?

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History of Ownership

❖ If you don’t have a long trading history, you will need to be prepared to assure the buyer of strong future income by some other means.

❖ The longer you have been in business, the safer your business looks. But remember it is all about the future and that is what you have to look to. Get out your crystal ball.

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Image brand and reputation add value

Always be conscious of the image you project. A good brand says to the

market “Trust me and I will look after you. Build your personal brand as well

as that of your company

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Client and Supplier Contracts

❖ Contracts make buyers feel safe and secure. A business with contracts is worth more than a business without them. If suppliers will give you contracts, then take them, subject to you not being unnecessarily locked in. Contracts with suppliers can secure supply as well as price. Again, don’t be locked in if it is not to your advantage.

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Intellectual Property

❖ Protect your intellectual property by appropriate registration of patents, designs and trademarks.

❖ Your creations, including software, are your assets due to the law of copyright anyway.

❖ Keep registrations up to date by regular reference to an intellectual property register

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Premises

❖ If your premises are important to you they could contribute to the value of your business.

❖ Ensure you have enough term left on your lease to ensure continuity of the business into the future.

❖ Discuss possible extension of term of lease with your landlord if you only have a short period left.

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Reason for sale

❖ Don’t invent a reason for sale. The best reason for sale from a buyer’s point of view is usually owner retirement.

❖ If the reason is business failure, the owner wants to know that the failure is due to owner’s fault rather than something inherently being wrong with the business

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Employees

Your staff are your greatest asset. Prepare job descriptions and profiles for all members of staff. Tell them that the business is for sale and that you hope to secure their future with the

new owner if that opportunity arises.

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Owner’s Influence

❖ If your business is heavily reliant on you, then it is a weak business.

❖ Reduce your importance with clients, staff and suppliers.

❖ Reduce the hours you spend in the business and give more responsibility to key staff.

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Credit Rating

❖ Good credit rating is not just a good sign to suppliers and clients but also for a buyer.

❖ Good credit rating suggest a mature business that can deal with people it chooses to rather than people it has to.

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Smooth Trends

❖ Buyers like to see financial figures that are consistent over time, otherwise you have explaining to do.

❖ Sales, gross margin and profit should show consistency. Consistent history points to consistent future

❖ If there are good reasons for fluctuation make sure you give them.

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Clean up your asset register

❖ Get rid of surplus old stock. ❖ Keep equipment up to date ❖ You won’t get paid for old superseded assets so

clear the decks ❖ It will make your life easier now anyway

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Spread of clients

❖ Don’t have your business reliant on a few major clients

❖ Having a wider spread reduces risk and increases value in your business

❖ Broaden your client base

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Competition

❖ List your competitors ❖ Assess the strengths and weaknesses of your

competition ❖ Understand your own competitive advantage and

be able to explain and promote it

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Business Plan

❖ Produce your one-page business plan. Keep it simple

❖ It answers three simple questions ❖ Where are we now, where are we going and how

are we going to get there ❖ Review your plan regularly

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Systems

❖ Systemise you business as much as possible ❖ Detail your business processes ❖ Create an operations manual ❖ Systemise the sales process too

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Plan your sale

❖ Time your sale so that you sell it at the right in the ❖ Economic, industry, regulatory, economic and your

lifetime cycle.

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Keep up

❖ You need to be thinking where your business will be in five years time

❖ What are the threats to your industry, from the economy or the competition?

❖ Keep improving systems and staff skills

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Form your team

❖ A lawyer with experience in small business law ❖ An accountant who goes beyond the figures ❖ A wealth adviser with good knowledge of the

options available to you ❖ A coach who can teach you something

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Your team should include

Provable, transferable, maintainable

❖ If your business has income which is provable, transferable and maintainable then you will get top dollar for your business.

❖ Look at your business from the buyer’s point of view.

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