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A small business blog featuring tips to help entrepreneurs succeed in the small business world. Topics include family business, human resources, marketing, money, networking, operations, ownership, startup, taxes and technology.
Adding Value to Your Business
I believe that there are two types of entrepreneurs:
1) The owner who plans to keep their company in the family, often passing it down to children or a trusted protege.
2) The owner who envisions selling the business for a large profit to another entrepreneur or to a larger corporation.
I will focus on entrepreneur #2, the seller.
In order to sell your company at maximum profit, you have to provide a maximum value to the buyer. After all, who wants to spend a ton of money on a company with financial woes offering shady products labeled with a terrible brand?
While there may be a few rogue investors out there who might jump on board, chances are you won’t get even close to the offer you hope for.
What can you do now to add value to your business?
1) Take care of the finances. Hire a professional to audit your books for three years worth of accuracy. Audited financials are golden and can bring a quicker close to the sale with limited investigation.
2) Reposition your reputation as the owner to emphasize the reputation of the company. A brand can be worth more than the business itself! (See #18, Louis Vuitton – bottler of MoÃ«t champagne and Hennessy cognac, producer of designer fashion and luxury cosmetics… a brand worth more than giants like Honda, Ford, Dell, Pepsi, Sony, Nike, etc.)
3) Brainstorm new proprietary products or services that fulfill a need of your customers. Even if they are not released, the raw data for these new ideas could serve as extra incentive for a buyer.
4) Build extensive customer lists and operation manuals if you do not already. Customer data can be a goldmine for someone buying your company. Operation manuals ensure the next person will have an idea of how everything works.
5) If you contract anything, make sure that it is short-term and does not require your involvement once the sale is complete. If long-term contracts are already in place, make sure they are fully transferable to the next owner.
These steps take time to execute which is why a decision to sell should be made long before the actual sale takes place.
Bottom line: prospective buyers want to see profit and value. With a strong combination of both, you will get closer to selling for what you really think your business is worth.
• Entreprenuer.com – Growing a Business to Sell
• Powerhomebiz.com – Selling Your Small Business
• About.com Small Business – Selling Your Business Nest Egg
• Business Info Zone – Adding Value to Your Business Before You Sell It
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Starting a Successful eBay Business (Part 3)
Elements of a Winning Brand
Starting a Successful eBay Business (Part 1)
Starting a Successful eBay Business (Part 2)
6 Steps to Successful Sales