If you’re a business owner, you likely want to receive the most value for your business when you decide to exit. And rightly so. You’ve poured your time, money, and energy into it and deserve the best possible outcome.
Almost all business owners aim to receive the highest amount when selling. However, much of that depends on how much transferable value your business has rather than how much of a profit your company brings in each year.
Transferable value is what your business is worth to someone else without you running it. Value drivers enable business owners to transfer the company to the next owner with little to no disruption in the profitability and its ongoing success. These value drivers include your management team, a diversified customer base, good and improving cash flow, competitive advantage, and demonstrated scalability.
So, how can you boost your business value?
First and foremost, having a proper strategic plan in place that addresses your short and long-term business goals as a leader is imperative. By partnering with an advising team, you can create a holistic strategy that identifies how you will continue growth and success both in the near future and when you are ready to leave.
This plan should focus on building those value drivers for your business, enabling you to showcase a business that is easy to run and has sustainable, foreseeable growth.
The most critical value driver is your management team. Building a team that is dedicated to the current growth of your organization and has the skill set to lead is vital, but even more important is whether those individuals will have that same drive to continue driving the business forward after you leave. Establishing a team that fills in any weaknesses of your organization and is on board with your strategic plan is imperative to have in place long before you’re ready to exit.
Often, buyers see a direct connection between a management team and the business’s future cash flow. Suppose a great management team is in place and is motivated to grow the business, and historically, you can prove that this management team has contributed to the success of your organization. In that case, a buyer is likely to offer a higher price.
Planning is a team task and should include several types of professionals and advisors to ensure that your business can reach your current and long-term goals and is prepared to meet your selling goals when the time comes. An advising team like Aberdeen Advisors can help you prioritize your business, employees, and family goals. Reach out to The Aberdeen Team to learn more about how we can support your planning efforts and future initiatives.