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Don’t Lose Out on an Offer- How to Improve Charlotte, NC Business Value Before Selling
When it comes time to sell, entrepreneurs often struggle to attribute a fair asking price due to their emotional investment in the business. After spending so much time growing a business, it’s difficult to brand the asset with a dollar value. So, when it’s valuation time, owners are stunned to find their organization isn’t worth as much as they expected it to be. Many make the mistake of arranging last-minute cosmetic changes in hopes of drastically spiking their listing price. But, this is highly unrecommended; if you want to procure the most value from your business, you must be more strategic in your exit planning. To receive the best asking price for your business, VR Business Brokers of Charlotte recommends our clients improve Charlotte, NC business value before selling.
How to Improve Charlotte, NC Business Value
Although it can take several years to prepare a business for a successful ownership transition, 88 percent of owners have no plan in place for when that time comes. VR Business Brokers breaks down how to improve Charlotte, NC business value with these three strategies.
1. Improve Your Balance Sheet
You can’t expect to receive lofty offers for your business if you’re barely skating by each month. Try to make adjustments where it’s possible to improve your financial situation. Cut additional spending where you can (e.g., reducing overhead or investing in more efficient processes) and develop a better system for managing inventory. You could also investigate whether there is room for you to tap into a new market or product offering that could boost sales.
No matter what strategy you implement, you must be able to prove it wasn’t a one-off tactic to temporarily increase your valuation. You have to find a secure and consistent means of increasing your profits. If you’re maintaining steady gross margins and retained earnings, you’re in a better situation than many entrepreneurs looking to sell. Before presenting to a buyer, garner your financial information into a cohesive, easy-to-digest balance sheet.
2. Develop a Business That Runs Independent of its Owner
Most buyers aren’t interested in having to spend more time than is necessary to get a business up to speed. Before you sell, you need strategic processes in place for maintaining efficiency levels in your (or another owner’s) absence. Your successor should be able to repeat your operations with ease. For example, buyers are often interested in the employees a business can retain. If you have a well-adept team of professionals on your side, you have a tremendous added value over other sellers. Hiring and training the right employees is a grueling process, and it’s important to eliminate the need for the next owner to need to do so. During this strategy, you should also negotiate employment agreements to maintain key personnel after the sale.
3. Diversify Your Customer Base
The potential of dropping 10 percent to 20 percent in sales through the loss of a significant customer is a red flag to any buyer. In some cases, major client accounts are loyal to a specific owner rather than a company or its employees. It’s a bad sign when customers don’t plan to stick around for new management, and you’ll want to minimize customer concentration as much as possible before adding your business to a listing board.
If you’ve struggled to acquire new customers in the past, consider expanding your product or service offerings. Meet with existing customers to see what you’re doing right and what areas you could improve upon. Customers could even offer insight into what additional offerings they’d like to see.
When you stop investing in your business’ future, you start reducing its value to potential buyers. Remember, there is always room for improvement when it comes to equipment, maintenance, employee training, etc. You’ve already worked hard to build your business to what it is, so don’t give up when it comes time to sell. During the selling process, keep in mind VR Business Brokers of Charlotte conducts fair business valuations for a magnitude of clients. Contact our team of brokers today if you’re interested in selling or valuing your Charlotte, NC business.