4 Reasons To Increase The Value Of Your Business

Want to make your business worth more money? Let’s explore 4 reasons to increase the value of your business and a simple framework to optimize your business so its worth more by the time you want to sell it.

The Step-By-Step Process of Selling A Small Business

1. Know how much to sell a business for (→ Read More)
2. Know how to increase the value of your business, before selling (that’s what THIS article is all about)
3. Build your exit deal team, list the business for sale, meet with buyers and negotiate the deal

Step 1 – How To Calculate Your Business Value

Business owners typically invest years of their lives and make many personal sacrifices to build their companies. If you’re planning to sell your business, knowing the amount you want to sell it for will help reduce uncertainty and also helps you understand what makes a good offer when potential buyers come along.

Knowing how much to sell a business for is not easy. Business value depends on your financials, potential for growth, customer relations, and how solid your operations are.

Here’s Content Going Into Much More Detail About Business Value: Want to know how much your business is worth and why? Understand How Much To Sell A Business For

The most common way to calculate the value of a ‘smaller’ business (defined as

Related Content: Top 6 Online Businesses With The Highest Value In 2024 |

Is My Business ‘Too Small’ To Sell?

No, no business is too small to sell. It’s a common misconception that businesses under a certain revenue threshold aren’t valuable from a buyer’s perspective.

I love to debunk this, highlighting that businesses HERE.

Why It’s Important To Increase The Value Of A Business

When I work with clients, one of the first things I ask is how much money they want in their pocket at the end of the sale. Many don’t know, which means there’s work to do.

For those who have a number in mind, we look into what it will take to get to that, given the current state of their business. That helps determine whether they need to spend a few more years working to increase valuation or are ready to go for an exit now.

Related Content: How to come to terms with a low business valuation?

4 Reasons To Increase The Value Of Your Business

It’s important to increase the value of your business for 4 reasons:

1. It measures your success and potential for growth.
2. It results in a bigger payout when selling your business.
3. It can help you raise more capital in exchange for less equity.
4. It can reassure employees of job security and give their work meaning.

Step 2: How To Increase The Value Of A Business

You can use a simple yet effective acronym called Four EXIT Habits™. Here’s a quick overview:

E for External Habits:

Your business needs to have a strong company brand and market itself effectively to be worth a premium price when you sell it. If your business is built on your personal brand, it is time to switch to building a company brand.

X for Expansion Habits:

Growth potential is what makes a business attractive to a potential buyer. Make sure you created a ‘blue ocean’ strategy to stand out from the crowd and demand pricing control.

I for Internal Habits:

The backbone of your business needs to be build in a solid way. Tidy up your organizational structure: from team building, to decision-making processes and the implementation of SOPs (Standard Operating Procedures).

T for Tangible Habits:

The quantifiable metrics of success and business value are: revenue, recurring revenue, profit and cash flow. Make sure these parameters are shining bright to be able to demand a premium price.

Getting these Four EXIT Habits™ right can mean the difference between a lackluster exit and a 7-figure exit.

Related Content: HOW TO INCREASE The Value Of My Business, Before Selling It?

Conclusion: Why Increase The Value Of A Business, Before Selling

The value of your business is a straightforward measure of your success and potential for growth. Increasing its value results in a bigger payout when selling your business. These are all great reasons to increase the value of your business, before selling.