Three Key Steps to Increase the Value of Your Business.
Stuart Silverman’s recent article in Financial Advisor highlights three things to maximize the value of a financial services business before a sale. The concepts can apply to many businesses.
Make yourself replaceable.A business is worth more when it is not dependent on one person. Ensure the business is “systematized” to ensure consistency and effectiveness. Build a team that is sustainable and would continue under new ownership.
Diversify your client base. When someone buys a business, they want to ensure the assets being purchased are not concentrated. Take a long, hard look at your client roster. What would happen to your revenue stream if you lost your largest client? Would it significantly change your business’ valuation? If the answer is yes, it is time to work on diversifying your revenues. Consider everything from the type and size of your clients to their age and geographic location. Buyers want businesses that are both stable and poised for growth, and your client base needs to reflect that.
Make sure your performance is up to par.When it comes to performance, there are two things to keep in mind: profitability and growth. Businesses are purchased based on profits, not revenue. Review your margins—do they line up with your ideal sale price?
Link to the full article on Financial Advisor (fa-mag.com)
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Steve Niehaus, MBA, CBI