If you’re a new business owner, you might not have really thought about this yet. If you’re a seasoned one, you might not have considered it for a very long time. The truth is it doesn’t matter how long you’ve been in business, you should always be thinking about how much your business is worth, and how to increase that worth as much as possible. After all, your business is potentially the single biggest asset you’ll ever have to sell. But only if you’ve actually created an asset to sell, as opposed to a collection of debts or a perfectly balanced see-saw that breaks even every year. So, why not take a few moments to work out just how much your business is really worth. http://conta.cc/2FXB9ag
Top 4 Reasons Your Business Isn’t Worth As Much As You Think
The bad news is, most businesses aren’t worth as much as the owner would like to think. This is often because the owner (you) has an attachment to the business, a deep knowledge of what goes on, and a detailed understanding of your profits. But the problem is, profits are only one part of the consideration when you’re looking to buy a business. In general, when you take profit out of the equation, there are 4 main reasons the value of a business might get knocked down.
Lack Of Mastery Levels
This is a big one, and unfortunately, it’s all too common. You see, most owner managed businesses are far too reliant on the founder. They are the person with all of the knowledge, and in some businesses they are still the person doing 100% of the client facing work, with other employees there as support. This leads to an absence of what I call ‘mastery levels’ being present in the business. In these cases, you might see a business with no business plan, poor time management, an erratic delivery process or no real handle on the financial drivers behind the business. A lack of these basic processes means a lot more work will need to go into your business upon sale to bring them in, decreasing its value.
No Marketing (Or Sales) Efforts
In owner managed business, I often see a lack of a distinct marketing ‘machine’. In other words, a defined process that is followed by everyone. Something that is used consistently and works effectively. That covers every aspect from how you market your business (social media, networking, Google AdWords), through to how enquiries from those activities are handled and converted. By having this process defined, refined and working smoothly, you will not only be able to keep the business running if you’re out of commission, but command a higher price should you decide to sell, as the new owners would be able to pick up with an active pipeline right away.
Basic Systems Not In Place
All businesses, large or small, are like machines. All of the pieces and parts need to be working together towards the same goal in order to achieve anything. But often, what I see is businesses with no formal processes in place. This could be anything from that sales process to complaints procedures, invoicing processes, delivery practices and more. This is one of the things I focus on with my clients – helping them get those routine tasks systemised so that the business can spend more time interacting with prospects and customers at a human level.
Lack Of Balance
Finally, in many businesses there is a lack of a truly balanced team. When looked at objectively, do the roles in your business make sense? Are there any overlaps, or 3 roles that could really be done by 1 person instead of 3? Beyond that, who is actually doing those roles, and are they the right fit for them? A common example is a member of sales staff who would actually be much more efficient working in marketing, or as an account manager, instead of direct sales. There are often the wrong people on your ‘business bus’, and they’re often in the wrong seats!
So Is My Business Saleable Today?
Taking all of that into account, how saleable is your business today? And more to the point, how much is it really worth? Is your business optimised for sale, or is it running at half power. If you saw your own business in any of the 4 points above, it’s a fairly good sign that there’s some work to be done first if you want to make the most out of your sale. But when considering these points and assessing your business value, the most important thing to remember is that you need to be realistic. If you really want to optimise your sales price, you will need to have certain criteria in place first.
That’s where I can help you. With Action Coach, I help business owners understand the process of optimising and then selling their business, helping them get the maximum return on their long term investment. With years of experience as a business coach, I can work with you to create a commercial, profitable enterprise that can work without you having to be there, and eventually sold when you chose to retire. The truth is that most businesses are saleable, but they won’t fetch the kind of price the owner wants because so many other factors are either missing or underdeveloped. If you would like to find out what these things are and learn more about building your business for sale, you can attend my introductory workshop by clicking on this link. If you can’t attend the workshop, then click this link to have a complimentary businesses assessment and strategy session with me. And if you have any questions, or just want to find out more about what I do, just get in touch.
