When looking to sell a company, an owner will naturally want to secure the highest price possible. In many cases, like when selling a home, renovations can really help with the price point.
Obviously, a stable, good-looking, well-equipped building is appealing, but looks can only go so far.
If you are looking to add value to your company before selling, you better be willing to put in the work well in advance.
While the results of small business valuations are often predicted or determined based on the recent sale of similar businesses, there are so many things — including risk assessment and earning power — that should go into the calculation.
This is not a quick turnaround project, either. It takes diligence and determination in order to see real, measurable results in small business valuations. Here are a few suggestions to help you add value to your business as you get ready to sell.
1. Build a strong relationship with your customers
Especially when it comes to small businesses, community support goes a long way. Being well-established and reputable among your clientele is key. However, this does not mean that you have to have been in business for a long time, just long enough to make your mark and attract well-received attention.
2. Grow your financial track record
Any company can recognize a business method that works, but it takes skill to grow your company and not remain complacent. If you have a rowing business that obviously has some real potential, then more investors may be interested in purchasing your operation.
3. Secure your intangible assets
While inventory is taken into account for all company valuations, intangible assets, like patents, can be more complicated to appraise. Selling the rights to a patented product or service can be complicated, and involves legal counsel. If you are not willing to sell the rights to your trademarked products, your business valuation appraisal will likely be much lower. After all, your product or service may have been the driving force of your company in the first place.
4. Maintain clean records
If you are looking to sell in the very near future, this may not be possible. In many cases, business owners want to retire and simply hope for the best when it comes to the possibility of being bought by an investor or other company. While a company may be thriving on the outside, sometimes audits or a simple look into company or employee records can uncover something potentially damning.
It is always important to prepare for the future, especially in business. When it comes to conducting small business valuations, too many people end up disappointed with their company’s value.
To prime your business for future prospects, be sure to keep all four of these tips in mind.