In this article we will discuss ways that you can increase the value of your company. The best time to consider selling your business is when it is running profitably.
All employees should have a solid benefits plan. Top management should have non-complete and/or confidentiality agreements. A company’s greatest asset and biggest value-increaser is its employees. Loyal and happy employees make for a strong company.
Having a solid management team removes the stigma of “the one man band”. This will build a stronger company and will increase the value of your company to a possible buyer.
Building a strong growth rate also builds value. Developing new products or services, building market share, expanding markets or opening new ones is critical. This generally requires a financial investment, but it will add value to your company.
Understand Your Market
The value of a company may be reliant on its industry. It may be dependent on its place in the industry and the direction of the industry itself. How big is the industry, is it headed up or down? Who is the competition and how big is the company’s market share? Is it time to change direction or diversify?
Companies may need to change course and implement changes. They have to be able to change and move quickly to take advantage of new markets. A company may need to fill voids in existing markets. They may need to add or change products or services.
Documentation such as business plans, financial plans and personnel plans should all be in writing. Keep this documentation current. Spell out the terms of employment agreements and have them in writing. Review contracts and maintain them on a current basis.This will help increase the value of your company.
Preferably, no customer or client should represent more than 10 percent of sales. Consider expanding to new markets or introducing new products. Consider finding new customers without deviating too far from the company’s core business.
Take Advantage Of Proprietary and Other Assets
Brand names, patents, copyrights, and joint ventures are all examples of not only proprietary assets, but valuable ones. Even equipment can be used in several different ways. For example, landscape companies can put snowplows on their trucks in cold climates, utilize their existing workforce and become a snow removal company for their regular landscape customers.
Many companies lease their real estate needs, outsource their payroll, or have UPS handle all of their logistical needs. This allows the company to focus its efforts on what they do best and helps increase the value of your company.
Do It Now
Many companies have the attitude that says, “I don’t have time now, I’ll do it tomorrow.” The real challenges of building the business, and value, get put off indefinitely. Creating value is critical to the success of the business.
The above “value-adders” will help increase the value of your company. Explore which of the above will add the most value to your business so it will be ready to sell when you are.