What’s your business’ value?
Do you want to know how to drastically increase the amount a buyer will pay you?
Here are 7 things your company can work on so that you can do exactly that!
Create a Predictable Cash Flow
Think of revenue and cash flow as the starting point for any buyer. A steady stream of predictable, recurring revenue is ideal. Buyers will pay more for companies with a projected cash flow.
According to Colorado Biz, these are three ways you can effectively improve cash flow predictability:
- Automating cash flow by automating accounts receivable software
- Improve forecasting of income and expenses
- Implementing flexible installment plans for your customers
Make it Scalable
Setup systems that easily help scale without needing more people will definitely increase the value of your company. For a valuable, successful business, efficiency is key.
The easier you can add new customers (like with setup systems that help scale), the more attractive your company will look to a buyer.
Improve Your Company’s Goodwill
Name recognition, customer awareness, and good PR go a long way when attracting a high-paying buyer to your company. Launch a good PR campaign a year out from when the sales process begins to boost goodwill within the marketplace. You won’t regret it!
High Net Promoter Score customer ratings also help drive increased purchase prices of businesses, so make sure you are taking the time to get reviews and ratings from clients/customers.
Learn Its Value
Knowledge has power! Get several independent valuations by reputable firms so that you have a rough idea of what your company might sell for. This is the knowledge that you need to have if you want to sell your company for a lot of money.
Consider additional parts of the company that evaluators may not see and what actions you might be able to take ahead of time to increase the company’s value in 12 months. Small acquisitions and drastic overhead cuts are a great place to start.
Make Things Transparent
Buyers don’t like surprises, so make sure that you operate above board and be prepared to show the value that they might not see right away and explain information that they might question.
“Except for the very occasional surprise party, nobody likes feeling blindsided. In the corporate world, surprises can have especially unfortunate consequences. Sharing information within the organization makes for more stable operations.” – Forbes
Show Your Growth Potential
Documented growth shows that the company’s future is solid, if not predictable. Show your buyers that your company has a ton of upside! Consider acquisition opportunities, additional product lines, untapped markets, sales funnel projections, PR that’s about to come, etc. Basically, anything you can share about your company’s growth potential will add value.
Find a Trustworthy and Fantastic M&A Firm
M&A Firms are a dime a dozen. However, finding one that can create a multiple-bid buyer market for you is what drives up your company’s selling price.
Take the time to research good M&A firms and invest in the best! It’s worth it if you want to sell your company for its highest value.
Your company can be sold for more than you think, but only if you put the work into it!
Have you had any experiences with buying or selling a company? How was it? Let us know in the comments below!
If you have questions or would like more information, I’d be happy to help. Please send an email, and my team will get in touch with you!
Editor’s Note: This post was originally published in February 2016 and has been edited for accuracy and comprehensiveness.