By: Aspen Grams, Marketing Strategist

The baby boomer generation continues to age. As a result, we’re seeing a steady increase in the number of business owners choosing to exit their business and enter retirement. If you’re planning to sell your business, knowing the value of your business is key. It ensures you receive top dollar for the company you’ve put your heart and soul into over the years. If you aren’t sure where you stand, keep reading to learn how to add value to your business!

Over-valuing the business results in a stagnant listing. Buyers pass by your listing in favor of an option with higher-perceived ROI. Under-valuing results in a sale that leaves you with less money than you deserve. Therefore, it’s important to have a valuation completed by a professional. Working with a business intermediary, such as the ones at CBI TEAM, ensures the valuation is accurate and timely. In addition to valuations, these intermediaries work on your behalf to secure qualified buyers.

If the valuation presented is less than desirable, you can enhance your growth track and reduce risks to your business before you list it. In this article, we identify three key value drivers for both growth and risk reduction. These will position your business as a sound investment to a qualified buyer.

Risk Reduction

1. Stable, reliable financial information

Buyers look for cash flow that’s predictable and on a growth track; therefore, keeping comprehensive books is crucial. Buyers look at your financial statements to decide if their investment is solid. If you have recurring contracts and solid sales reports, it reassures buyers that they will receive stable return.

2. Diversity

Buyers want to know their investment is safe, so diversity among products, customers and suppliers is a great way to deliver assurance. Firstly, diversified products reduce competition within the market and provide barriers to entry. Secondly, a diversified customer base provides proof of company satisfaction as well as a cushion for any surprise account losses. Lastly, a diverse range of suppliers provides more stability in the face of potential market disruption, changes in quality or availability, and supply catastrophes.

3. Reliable operations

Buyers want to know the business can succeed without you. Having well-documented and functioning operating systems ensures the ship won’t capsize once you leave. Similarly, a company dependent on you will not succeed under new ownership. A quality workforce and a loyal management team are vital to a smooth transition and continued operation.

Growth

1. Documented growth strategy

A solid strategy shows buyers that the seller has a vision for the company and has implemented efforts throughout the years. In addition, it shows the buyer the value of future opportunities within the market.

2. Scalable business model

Buyers look for companies with strong growth potential. They want to see a sustainable product that can increase profits over time. In other words, a model that can multiply revenue with minimal incremental costs.

3. Unique fulfillment

If the way your company meets customers’ needs differentiates you from the competition, buyers will recognize the potential for higher profit margins and market domination. As a result, they’ll be more likely to invest.

In conclusion, your business is an investment. A buyer’s willingness to pay top dollar is dependent on their view of its potential. You can shape that view by presenting values that drive growth and reduce risk. If you want to transition into a new life phase in the near future, a valuation is the first step in the selling process. Contact CBI TEAM to connect with a confidential business intermediary and start securing your financial future today.  

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Until the sale of your business is finalized, your focus as a business owner should be sustainable sales growth. Not only is it a good feeling to have a thriving bank account, but a business with steady sales growth is extremely appealing to potential buyers. It’s much easier to convince a buyer that your company is worth investing in if your business review shows healthy financials than if it’s showing stagnant or declining revenue trends. Whether you’re in the early stages of business ownership or heading toward the final stretch, utilize the following tips to keep your business healthy and appealing to future buyers. 

DIFFERENTIATE YOUR BUSINESS

You can’t be everything to everyone, so stop trying! In a world of mass consumption, it can seem like the best course of action is to spin your business to fit into as many different-shaped holes as possible. Recent data across various industries is showing otherwise, highlighting the importance of brand differentiation.

One great example is Trader Joe’s, a quirky grocery store that carved out a niche market with private-label products, low price points instead of coupons, and a small, rotating number of offerings (think 3,000 SKUs vs 35,000 that fill the shelves of standard supermarkets). Trader Joe’s decided early on who it wanted its target market to be, and then dove into pulling those people in. Do they appeal to the masses? No. However, they generate industry-leading sales per square foot, beating out Costco, Whole Foods, Walmart and the like. They are proof that bigger doesn’t always mean better.

BUILD A NETWORK

When you think about your network, segment it into three areas: support, mentors, and referral partners. Each area plays a key role in the overall growth of your business.

Your support group consists of people who will both motivate you and talk you down from the ledge. They are your confidants- the ones you share company visions, milestones, and failures with. This segment has your back regardless, and that’s extremely important to keep you on track when things get hard.

Your mentors are people you want to learn from- people who have gotten to where you want to be and are willing to help you get there too. Find leaders in your field and then take inspiration from their keynote speeches, listen to their podcasts, read their books, and sign up for their business development courses. 

Your referral partners are trusted individuals who know you, trust you, and speak on your behalf to potential clients. These partners can be people in the same industry or people in your business community. 

STAY CONSISTENT

Consistency is key in all aspects of your business. Customer service, product quality, and marketing efforts are ineffective if they aren’t done well on a regular basis. You’ve invested your livelihood in your business, so take time to ensure your operations, finances, and marketing are zipped up. Staying consistent across the board (and holding your employees accountable to the standard you’ve set) makes for happy customers, and happy customers are loyal, repeat customers.

FOCUS ON 1%

When you think about growing sales, customers, traffic, etc., it can get overwhelming thinking about how to stay on track. Instead of staring at the large growth percentage you want and panicking, break down that number into manageable, bite-sized pieces.

Let’s say you want to see a 12% increase in sales this year. Divvy up that 12% by month- all you need to focus on is being 1% better than you were the month prior. 1% seems insignificant when you look at it by itself, but by that number compounding upon itself throughout the year, you will see significant growth!

BUILD A SOLID PLAN

The four prior points are great tips, but they don’t fully come to fruition until you create an action plan. Many a business have failed, not because the idea wasn’t good, but because there wasn’t a plan that pointed the owner in the right direction and laid out the steps to success.

Take points #3 and #4 as an example. If your goal is to grow your business by 1% each month and consistently gain new customers, what steps are you taking to make that a reality? A goal without a plan is just a dream! Create solid action items, implementation strategies, and then FOLLOW THROUGH to achieve your goals.

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