I finally stopped being a pig. My peers are tired of me pulling out the old saw: “The chicken is involved in a bacon and egg breakfast, the pig is committed,” but for a long time I thought I...Read more »
Increasing the value of a company before selling it.
We all know it’s necessary, right? Well, we’re not just talking about building up your billings or sales. What we’re talking about here are a few strategies you can implement to make your buyer happy when he or she examines your company’s financial health. The best overall strategy is to look for financial and performance indicators that point toward things you can do to improve the performance and profitability of your company. Specific approaches, however, include:
- If it’s not making you money, get rid of it
If you’re going to sell your business for the maximum value, you’ve got to be willing to look at it like a buyer will. Sometimes that means making hard decisions or just doing the things you’ve known you needed too. Get rid of outdated inventory. Fix whatever may be wrong with your product or service. Write off receivables that you know you have no chance of collecting.
- Broaden your customer base, suppliers too
This is clearly not a strategy you come into work one day and implement. This one takes time, but it’s worth it. Relying on only a few customers or seasonal customers can cripple the value of your company, as will a dependence on only a few suppliers given the impact that could have on your pricing.
- Reduce your expenses
You have a budget at home, right? It’s a good idea to have one for your company too. Treat it just like you do at home. Look for ways to cut our unnecessary expenses. Further if you lease your office space, check into purchasing it if possible.
- Ok, building your sales and revenues is important, too
Are there sales channels outside your business? Is your main salesperson doing all the work to keep the company pace? Can you expand the boundaries within which you do business? Do you have a new product you can launch? Are there a few people on staff who aren’t pulling their weight? Trim the fat!
These are questions a buyer will ask. You may as well go ahead ask them of yourself, but just make sure you give yourself the time to truly carry through with a few of these ideas. If you have other thoughts on what we’ve brought up here or other things you’d like to add, please let us know.