One thing I ask most business owners is if they had to sell their business tomorrow, would they get its true worth? Almost always, the answer is no. When pressed, the reasons aren’t particularly apparent. More often than not, I’m speaking to someone who has put a lot of emotion and hours into the business. Its not that the business isn’t doing very well. Its not that the product or the service is terrible. The problem is not even that there isn’t any money in the bank, usually there is a healthy profit. So why is there little or no value in the business?
Even if you don’t intend to sell the business for years to come – every decision you make should be geared towards the fact you might have to at some point. So how do you build value into your business?
A commercial profitable enterprise
Firstly, you need to sell what the market wants. People have told me before that if you do what you enjoy, you’ll never work a day in your life. Which is completely untrue; sell what the market wants and you’ll never work a day in your life. A healthy income stream is obvious in most cases. Building a marketing plan that produces consistent new and repeat customers is key. For every pound you put into marketing, what do you get out of it? In other words, how much do you ‘buy’ your customers for?
That works
Secondly, a well organized and systemized business points to one that is well run. Employees that have relevant KPI’s and job manuals that are well used and reviewed regularly help the business to run on rails. Measure everything and pick out the numbers that would have a detrimental effect on the business. Those numbers then go onto your business dashboard so that a problem can be proactively managed.
Without YOU!
Thirdly, and MOST importantly, the business must be able to run without YOU, the business owner. What if you left the business now for six months, would you come back to one that is more profitable than when you left it. If the answer is no, then that’s where you need focus right now. No investor will buy a business where the current business owner has to be there in order to make it work.
In short, potential buyers want to see a ‘commercial, profitable enterprise that works WITHOUT you!’. If you do these things, but still don’t want or need to sell, at least you’ll have a business that works, so that you don’t have to!
ISN’T THAT INTERESTING?
