Naturally, any business owner looking to sell their company will want to get the highest possible price for their venture. When it comes to selling, many entrepreneurs are surprised to learn that their business isn’t always worth as much as they may think, though they also tend to overvalue their business due to their personal attachment to it.
While some business owners might be willing to accept a lower valuation, there are many more that would prefer to make their company a more attractive investment for potential buyers. If you fall into the latter camp, here are a few good ideas on how to increase the value of your business before it comes time to sell:
Think Long Term
Buyers tend to be more willing to pay a higher price for a business if there is a blueprint for achieving higher returns in the future. Business owners need to have a clear understanding of what potential buyers expect and approach the sale in the right way. You need to be able to show a buyer how soon they can expect to make money on their investment. If possible, improve the business to a point where any buyer can clearly see the potential for sustained growth.
Diversify Your Offering
Another way to make the business more attractive to buyers is to show them the scope for expanding revenues through broader product offerings. The more ways a business can make money, the better. For instance, if you are looking to sell an accounting firm that focuses solely on providing services to the retail sector, you could increase the CPA practice valuation by looking to other industry sectors that may require your financial management skills. The broader your target market, the more appealing the business becomes to a buyer.
Lower the Risk Profile
While you may have become accustomed to accepting some of the risks associated with your business or the industry in general, not everyone will have the same experience. If you think about people who have never worked in the field, you’ll find they will be less open to risk, as they might be uncertain about managing the business. You need to be sensitive to this when selling and try to find a way to lower the risk profile.
Present Your Key Staff Well
When you sell your business, you aren’t just selling the entity, but the people that are responsible for its success. Despite the fact that the entrepreneur may be the brains behind the venture, they usually employ a team of highly-skilled and motivated individuals. These people will be central to the business’ success even after it’s sold. It is important to present buyers with the strongest team possible. Otherwise, the buyer will need to factor in the costs and efforts involved in hiring a new team to run the business. Presenting them with a solid team means that they can hit the ground running which should also translate into a higher asking price from your side.
Ultimately, selling a business that you’ve built from the ground up is no simple task, and requires a lot of hard work and careful negotiation. It is important for entrepreneurs to spend some time presenting the business in the best possible light to ensure that it is attractive to potential buyers.