How to increase your Business Value

Depending on what industry you are in, the value of your company will undoubtedly vary. With this in mind, we have compiled a list of the key areas you should be concentrating on as a business owner to ensure that your company is reaching its peak value within your industry.

The first area you should be focusing on is looking at what service you are providing and how it differs from that of your competitors.

When it comes to consumers, buyers want a service or product that is unique to your company. This could be a unique market position (think Coca-Cola). Through having this you will be able to surpass your industry peers and consequently increase your overall company value.

Adapting your business model so that you are able to have recurring revenue is one of the best ways to add value. Not all companies necessarily have subscriptions or automatic contracts in place, but finding a way to maintain some form of regularly scheduled revenue will benefit your business. Having this edge over your competitors will help add substantial value, particularly if you are in an industry where recurring contracts are not the norm.

Growth is important within any business, but when looking to sell you will want to ensure that your growth overall surpasses that of your industry. More often than not, acquirers will be much more willing to pay a premium for a business with projected sustainable growth. Is your business scalable? Do your people deliver the systems that run the business to ensure the consistent delivery of sales?

Location can play a big part in company value. Depending on which industry you are in your location can be one of the biggest selling factors to those looking to acquire your business. In large cities such as London, space is extremely limited. Are licenses to operate difficult to obtain making your business not only desirable for its industry but for its location.

A clean bill of financial health is key for your company’s value, this means that everything needs to be accounted for on paper. Whilst Audited statements might be an expense you would rather avoid, they are undisputable evidence of how trustworthy your business is. This, in turn, increases your business value- even if having audited statements aren’t a usual requirement for a business of your size.

Whilst being a boss that is in charge of every aspect of the business can be good, having a second in command with equal knowledge is much more valuable. It’s not often that acquirers want to take on a business where the owner was the only person in the know about how it is run. By having someone else in your chain of command, who is happy to stay on working for the company post-sale, your overall value increases in the minds of buyers.

Keeping your business up to date and on trend can be equally as important when looking to sell.

You will often find that older and better-established companies will want to expand through the acquisition of younger companies who meet these criteria. If your reputation within your industry is as a market or thought leader you will attract buyers. Do you have a PR strategy?

Companies that are able to suffer the loss of any single customer without breaking stride are much more desirable. Acquirers will more often than not be willing to pay a premium for companies that are unaffected by losses. Generally, this is done by ensuring that no customer’s revenue will amount to more than 10 percent. In doing so your company will be valued higher than others and certainly higher than those in the industry who only maintain a handful of large customers.

Lastly, and arguably the most important areas that will ensure company value is customer satisfaction. By having a system in place that consistently and effectively tracks your customers you will be at an advantage to your industry competitors. This evidence that customers would happily repurchase from you or use your service again helps secure your business value.

Your industry only has a limited effect on the value of your company. The truth is that it is not what you do, but the way that you do it that get results. Where your business’ value falls is up to you.

If you wish to set up your business up for the best value then start with one of our Value Builder Scores on our website.

Menu