Selling a successful company can be among the most satisfying achievements of a business owner’s career. At the very least, a company sale is one of the most consequential decisions an owner makes.
But selling a business can be complex and your outcomes, including net proceeds, can be influenced by many factors — both within and outside your control.
Along your journey, you may have recently had a professional business valuation and discovered room for improvement before moving forward toward a sale.
On the other hand, you might be starting with a look at your company value to decide what type of exit strategy is best aligned with your goals and the company’s ongoing best interests.
Regardless of your path to sale, it makes sense to do all you can to increase business value — and a strong, healthy, growing company stands to benefit every stakeholder involved.
Focus Efforts Where You Can Increase Business Value
Before you lean into the work of identifying opportunities and improving company performance, it’s important to acknowledge the influences beyond your control. Broader economic factors, unforeseen events, sale timing, and even the past performance of the company are out of your hands.
But here’s the bright side: as you take your time moving forward with plans for your sale, there’s plenty you can do, starting today, to strengthen the company and grow your business value. And the value you start adding today can impact your bottom line when you find your buyer.
- Manage cash flow assertively.
- Standardize operational processes.
- Address imbalances to stay diversified.
- Shore up contracts and agreements.
- Push for slow, steady, sustainable growth.
- Innovate to lead.
- Build your brand.
- Strengthen your company culture.
1. Manage cash flow assertively.
Cash flow is a significant factor in business valuation, and it’s easy to see why. Demonstrating disciplined spending and expense management shows potential buyers that management — including employees who may remain after the sale — are conscientious and thoughtful with company funds.
In the meantime, shrewd cash management puts the business in a strong, agile position to take advantage of opportunities that could arise.
2. Standardize operational processes.
Standardizing and documenting company best practices not only puts them in all employees’ hands to support their success; it also creates management assets that make onboarding, training, and scaling easier and faster. It reduces the likelihood of errors and oversights, improves efficiency, and helps ensure dependably high-quality customer experiences for everyone you serve.
3. Address imbalances to stay diversified.
Identify areas of over-reliance on a single key customer or client, on just one industry vertical, or on a remarkably capable employee within a department. Correcting these imbalances can take time and a great deal of work, but it’s a vital step in creating a strong, stable, sustainable business with an attractive future.
4. Shore up contracts and agreements.
Businesses often rely on close relationships with trusted vendors, customers, and employees — and in fact, sometimes those relationships have gone a long time without any commitment on paper. Articulating those agreements is another way to show that you prioritize company security and stability. Protect your supply chain and value chain so they can add value to your business as a whole.
5. Push for slow, steady, sustainable growth.
A consistent upward trend is more compelling than a zigzag of big ups and downs, and it can also help show that employees are committed and capable — and that the strategic plan is sound.
6. Innovate to lead.
If you’re envisioning an exit strategy, it may be tempting to rest on your laurels. But have you given proper consideration to the wealth of knowledge, experience, and perspective you’ve amassed as the leader of your company? Innovation looks different in different contexts: equipment upgrades, flexible work arrangements, new technologies, and strategic partnerships are just a few areas where innovation can have a major impact on value.
Innovating within your category demonstrates industry knowledge and brand leadership, and shows how well you understand the needs of your customers. It also demonstrates future-focused business thinking—the opposite of a languishing company up for sale.
7. Build your brand.
A strong brand has its own value. An effective brand communicates quality. It doesn’t just differentiate your company from competitors; it inspires loyalty and trust. If that’s not what yours is doing, it may be time to invest in the work to strengthen and refine your brand identity. And once you have it, be sure your branding is properly implemented across all communications, internally and externally.
8. Strengthen your company culture.
All companies have a culture — so what’s yours?
If you’ve cultivated a company from scratch, the culture you have is a result of choices you’ve made along the way. If yours was a family business, your culture probably has roots that go back generations. That can be a source of pride, but it can also get in the way of achieving your company’s full potential — especially in times of transition.
Welcome employees to “think like an owner” by taking an open-book approach to sharing progress toward company goals. Open-book management helps employees make connections between the work they do and company results. That can be a great motivator, and it can also help get more employees on board in support of the value-driving changes and initiatives you pursue.
RELATED: How Does an Employee Stock Ownership Plan Work? [VIDEO]
Whether or not your employees come to own your business after you, a culture of ownership thinking is one that fosters many of the characteristics buyers look for in a company, such as innovation, integrity, collaboration and dependability. Employees who think like owners look out for waste, inefficiencies, or quality problems that could negatively impact your business.
Find out how to support an employee ownership culture in five key areas of your business with our free guide. Click the link below to download your copy today.
