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How to Maximise Business Value

Preparing Your Business For Sale – How to Maximise Business Value

Retirement should be the best years of your life. 

It is the time where you step back from the business that has demanded all your energy – and reap the rewards after years of labour. 

But there is a key question that needs to be answered, long before retirement is considered.

Can you afford to sell your business?

The answer will depend on your business value gap. This is the difference between the value of your business today and what you need it to be at time of sale. 

A shortfall can have a significant impact on your retirement plans and may force you to reassess your desired standard of living in retirement. If you have a shortfall, you will need to implement business strategies to improve your profit before you sell. 

Here are some of the things you should consider, when looking to grow and maximise business value. 

Succession

Research suggests up to 70% of small, particularly family owned businesses in Australia, will be looking to change ownership in the next 5 years. 

This is as a result of the “Baby Boomer” generation of business owners looking to retire in that period, all of whom will be seeking successors for their business ownership. 

Consider whether you fit into this category. Had you always considered that the sale of your business would fund your retirement? 

Have you identified a successor? Will this person come from within the business or will you be looking to sell on the open market? 

Do you know all of the exit options that are available to you?

Having a strong succession plan is essential for protecting, growing and realising the maximum value for your business. The price of your business will be impacted by the availability of a suitable buyer.

Workplace culture

It is important to introduce a sense of value in your employees, to encourage them to grow the business. 

This may include instilling the idea of them emerging as potential successors. 

Your staff will also thrive from incentives and rewards as performance encouragement. 

An effective way of addressing both rewards and succession is through the introduction of a Staff Incentive Scheme.

If your potential buyer can see the employees are invested in the businesses success, this makes it more attractive. 

Business Processes

A business that runs on systems and processes, therefore reducing owner reliance, is intrinsically more valuable than one that places a significant operational reliance on owners. 

We can help you to build a business that will allow a future successor to work “on the business” rather than “in the business.” 

This will ensure you own an operation that is strategically focussed and systemised – and this will make it more attractive.

Competition

Do you regularly compare your business performance with that of your competitors? 

Can you use this information to grow your business and provide a competitive advantage to potential successors? 

Will you also potentially be competing for successors in the same market? 

All these things need to be taken into consideration.

Cost Structure

The ability to analyse and control cost structures will prove to be a valuable resource when preparing your business for sale. 

By analysing the cost of providing a service or producing a product enables you to identify underperforming goods or services. 

This will prompt owners to ask why this is occurring and enables them to make well informed decisions as to whether continuing to offer a particular product or service is worthwhile. 

A service based business can analyse unprofitable clients and either sell these or identify ways to improve their net contribution to the business.

Service Delivery

How does your business currently measure the service you are currently providing customers? 

Have you ever undertaken a customer survey to report on feedback directly from the customers? 

This information can be used in performance reports, improvement programs, even benchmarking against competitors. 

Maximising Business Value

These are only a number of highlighted issues that will affect your business in the future. 

If you can address the issues above you will ensure that the business is in the best state to sell. 

If you want expert help to determine essential changes you should implement to increase the value of your business – get in touch. 

 

Our business advisory services cover Business Planning and Strategy as well as a Profit Improvement Plan

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