8 Essential Steps To Maximize Your Business’s Value

If you’re thinking about selling your small business, here’s a sobering statistic: less than 10% of businesses listed for sale actually find buyers. The vast majority end up simply closing their doors, leaving years or decades of hard work with little to show for it. The key difference? Preparation. Businesses that actively work to increase their value before going to market are far more likely to attract serious buyers and command better prices. Let’s explore 8 essential steps to maximize your business’s value and can transform your business from just another listing to a compelling acquisition target.

8 Essential Steps To Maximize Your Business’s Value

Step 1. Automate everything

Automating boring, repetitive tasks frees your time for hitting revenue and profit goals, which in turn, increases the value of your business. Many buyers don’t have the time or desire to run your business. Those who do, want to spend it on meaningful activities such as growing revenue and profit, delighting customers, and developing products or services. What can you automate? Almost anything – calendars, emails, contract renewals, payment reminders, customer management, order fulfilment, and lots more. Compile a list of tasks you do each day and then pick those that a software would do better. The more you automate simple, repetitive tasks, the more time you’ll have for growing your business and boosting its valuation.

Step 2. Develop repeatable processes

Analyze your processes and look for ways to increase operational efficiency, cut costs and control inventory without affecting your operations. The processes in your business need to be repeatable (and teachable), advises John Warrilow in his book Built to Sell.

And “if your business can’t function without you, you will have a hard time finding a buyer,” Warrillow says. So…

Step 3. Build a team & delegate all else

Train, motivate and empower your people. Pay particular attention to your second-tier management team. Work to solve any internal conflicts and strive to keep employee turnover rate low. A strong, professional team adds value to the business. Especially in companies with few tangible assets, like service businesses, agencies or SaaS companies. Buyers hope an acquisition will be as smooth as possible, and being able to keep key employees is crucial to this. Some sectors find it difficult to hire skilled people, so any qualified or skilled employees should be treated as an asset that your business can use as a selling point. One of the last things that a new owner wants to handle is the sourcing and hiring of new talent, so having great staff already in place is a simple way to increase business value.

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Step 4. Show owner independence

We cannot stretch this enough… Potential buyers want to see that your business can run efficiently without your involvement. Most small businesses are dependent on their owners to the point that they become unviable when they leave. If your business struggles without you, potential buyers will find themselves overexposed to the risk of you leaving after the sale.

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Step 5. Organize your finances

Your business could be doing amazingly well, but if your financial records are difficult to navigate, your successes can get lost in a maze of confusion. Worse still, if your books are disorganized, it casts a poor light on your company. It can appear to outsiders that you maybe have something to hide, and that any obfuscation is deliberate. Beyond this, it simply begs the question, “If they’ve handled something as crucial as their books so badly, how has the rest of the business been run?”.

Step 6. Have formal contracts in place

Any buyer of your business will usually take on all your contracts alongside it. This includes any contracts you have in place with suppliers, employees, and clients. If any of these are informal or merely verbal agreements however, they become far less valuable. In fact, the lack of any formal contract will be a concern to any potential buyer. This is especially true if a supplier’s rates are based on a strong relationship you personally have with them. Without any written documentation, a buyer will have no idea how much they will be charged in the future. This applies to staff and clients too. While you may enjoy a good relationship with them that provides you with some assurance, the buyer of your business will not have that. They can quickly find themselves vulnerable to changes.

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Step 7. Develop and register your IP

If you sell something proprietary, such as a product you designed or invented, you can boost the value of your business by securing your intellectual property (IP). After all, if you don’t own the patents, trademarks and copyrights for the product or services you’ve built your business around, what’s stopping somebody else simply copying it and stealing your market share? Similarly, geographical restrictions or exclusive rights can have a bearing on how attractive a buyer finds your business. While not having a patent or particular rights can hurt the value of your business, obtaining them can seriously increase business value. Make sure that any IP documentation is secured before you start the exiting process.

Step 8. Have your clients leave reviews

A recent survey found that 93% of customers look for reviews before buying a product or service. A strong review rating online can be one of the strongest marketing tools a business can have. If you don’t have many reviews online yet, you should start asking your customers now. A simple link to TrustPilot or Google Reviews is all you need to send over in order to start building potential clients’ and buyer’s confidence in your business.

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Conclusion

Remember, implementing these 8 essential steps to maximize your business’s value isn’t just about preparing for a sale – it’s about building a stronger, more valuable business that will attract serious buyers when you’re ready to exit. Start working on these improvements well before you consider selling. The more systematic and professional your business appears, the more likely you are to be among the successful 10% that find a buyer and achieve a big exit. Don’t wait until you’re ready to sell to start making these improvements – by then, it might be too late.