How to Get Top Dollar for Your Business

money keyBuilding value in a business is very much like building equity in your home. Just as we are constantly maintaining and updating our homes to retain its value and saleability it is equally important to maintain and update our business. When it comes time to sell, you want top dollar for your business. As you create value in your business, your equity continues to grow and provide the maximum payoff when you are ready to cash out.

Similar to a home, when a buyer looks at a business they will determine if your business falls into one of three categories: (1) Fixer Upper (2) Fair Market Value (3) Strategic Buy.

Fixer Upper

Businesses in this category are not necessarily losing money. They may be showing modest profits but the new owner would have to make significant investments in time & money to update systems to improve sustainability and profitability. This business is often sold for much less than Fair Market Value.

Fair Market Value

These businesses are generally well run and producing acceptable profits. It would provide a “turnkey” opportunity for the new owner. They would have to make minimal investments in time and money to improve the business.

Strategic Buy

The business actually sells for more than Fair Market Value. We have often seen it in real estate. There is that home with such great features, location and livability that new owners will line up to buy it and pay a premium to get it. This can also happen with businesses. A business may have a strong brand, proprietary information or access to a specific market that make it extremely attractive to a direct or indirect competitor to buy it.

So how do you recognize if your business is a “fixer upper”? Here are 8 Signs to get your started:

  1. Profits margins are below the industry average
  2. Sales growth is behind the industry average
  3. You & your staff are always fighting fires
  4. It’s impossible to take a day off or a vacation for fear that the “wheels will fall”
  5. You have such a strong personal relationship with your customers that they would leave if you were not there
  6. You haven’t improved or updated any process in the last year
  7. Talented people keep leaving
  8. You are the intellectual property for the business. (the one with all the knowledge)

There are specific steps you can take to improve the value and saleability of your business. To help identify the steps your business needs to take either call me at 604.374.5934 or email tony@empoweredbusiness.ca and I will be happy to send you a my mini 100 Point Self Diagnostic Tool to help get you started.

Tony Malyk, Vancouver Business Performance Coach

Tony Malyk
 

Tony Malyk is a Certified Professional Business Coach and Business Value Accelerator specializing in improving profitability and increasing business value in the manufacturing, distribution, trades and technology sectors.