If you’re planning on selling your business, what should you work on to maximize the dollars you realize? Of course your current and historical financials, market potential and forecasts will be key factors in determining your company’s value, but here are three important areas to focus on that will — almost always — increase your business’s value.
First, a caveat: significantly moving the needle on any of these is going to take at least a couple of years. However if you’re willing to spend your energy, time and money, a focus on these three areas will over time have the potential to significantly increase the value you receive when you sell your business. I recommend that you approach addressing each area with the full buy-in of your senior leadership team.
1. Build Your Company’s Brand
What does your ‘brand’ really mean? What does your company stand for? Does it embody a unique selling proposition? Do existing customers have a clear idea regarding the value that your company brings to the table? How about prospective customers? If your answers to any of these were equivocal, there is work to be done.
2. Build the Culture of Your Organization
How would your people describe the culture of your organization? What are the values that guide how decisions are made? What is the purpose or ‘why’ of your organization? What are the stories that communicate to new people what it’s like to be part of your company? Is the senior leadership team completely aligned on purpose and values? If there’s a lack of clarity here, your company has work to do.
3. Build Your Management and Leadership Capability
Businesses that have strength and depth in terms of management and leadership are often seen as significantly more valuable than companies that are dependent on the owner or one or two key leaders. It might also mean that you can demonstrate you’ve invested in developing the next generation of leaders and that some are ready to take on greater responsibility. Valuable infrastructure also means you can demonstrate that you have systems in place and the capacity to grow or scale up without significant increases in investment.
Finally, remember the old Chinese proverb: the best time to plant a tree was 20 years ago, the second best time is today. If you think that you might want to sell your business sometime, you might as well start doing the things that have the potential to increase its value. If you’re not already thinking about it, you might want to start today.