Business Value Drivers
Improve the Value of Your Business
Identify the drivers of business value and what makes one business more saleable than another with the help of Smart Exit business advisors.
Past performance is used to put a present value on earnings. Additionally, demonstrating steps have been taken to improve future performance can significantly affect future value.
With the help of Smart Exit business advisors, you can increase the number of positive value drivers that buyers consider to determine what your business is worth.
Here's an overview of some of these business value drivers:
Financial Performance and Audits
As you’d expect, businesses that perform well financially are valued higher than businesses that don’t. Financial performance as a value driver becomes even more powerful when a third party auditor backs up your numbers.
Is your business scalable to new products or markets? Are there untapped opportunities to cross sell? Any potential growth areas can positively impact your value and business sell price.
Does your business rely heavily on you personally or do you have a strong management team in place? Do things operate smoothly when you’re on vacation? Or do you need to work remotely and/or clean up problems when you return?
Also, is your management team likely to stay if ownership changes? Incentives, such as salary increases and performance bonuses, may be needed to keep your team in place during a business sell transition.
Processes and Systems
Are your processes documented? Or do they exist only in your head and the heads of key employees? The more you’ve documented and incorporated processes into reliable business systems, the higher your value and eventual sale price.
Is your business overly reliant on any one customer, employee or supplier (or segment thereof)? A diversified customer, employee and supplier base is considered a valuable hedge against future changes and will positively impact your business value.
It’s easy to neglect the appearance of physical facilities, especially if the public doesn’t visit them. But once your business is for sale, everything is open to scrutiny.
Often, it doesn’t take much to improve the appearance of warehouses, offices and manufacturing facilities so they synch with your selling price. You don’t want buyers to think you’ve delayed investing in capital improvements, leaving them to pick up costs.
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