Tax season is always a time to pause and think about what happened in our business, and what we expect for the next year or two. With its end, we thought it would be timely to share some thoughts about gauging not just where you're going or where you've been, but exactly where you are.
We tuned into a workshop hosted by the Exit Planning Institute recently. The content was a discussion about how entrepreneurs can take inventory of their business value, and take productive steps towards increasing the value of the company, and the likelihood that it will sell for what you think it’s worth.
You’ve heard us describe our thoughts on how owners can Protect, Grow, and Exit their business. We we’d like to share another perspective that is very similar to ours, with a focus on a few key areas and checkpoints, along with a list of things you might consider when trying to enhance business value:
SALES
- Institute a few sales management processes to create accountability.
- Hire key sales leaders to drive revenue.
- Seek geographic and industry diversification to reduce risk.
- Pursue long-term, multi-year agreements with customers (another risk-reduction strategy).
TRANSFERABILITY
- Ensure repeatable process and sales are in place; make it turnkey.
- Take steps to institutionalize relationships with key suppliers and customers; create customer “stickiness”.
OPERATIONS
- Upgrade sales, finance, and operations tracking and data collection; know where your resources are best spent.
- Set up Key Performance Indicators for project management and financial management to ensure consistent profit margin.
- Institute a strong culture; this cannot be bought.
PEOPLE
- Focus on Key employee retention; these folks will help you increase revenue and value.
- Refine your culture to be a collaborative and inclusive environment.
- Institute incentive and retention programs for key management, both pre- and post-transaction; buyers who know that the critical people are going to stay after the sale are more likely to offer a higher purchase price.
Of course, these are just some of the important steps to take and items to consider. We hope that it helps to get your thoughts moving in the right direction. Of course, if we ever can be a resource for you in these areas, please feel welcome to reach out…