The Top 10 Ways to Increase Your Business’ Value

Everything you must do to prepare to sell your business is important, so it’s difficult to boil this article down to only 10 things.  But following are 10 things most owners have not accomplished and that are critical to having a sell-able business and increasing the value of your business.

1)   Start planning your business exit NOW.  The number one reason businesses don’t sell is owners don’t realize the need to plan for the sale of their business.  Before you can work on increasing the value of your business, you need to start the exit planning process so you understand all aspects and determine what’s necessary to even have a salable business.

2)   Get the realistic value of your business. Your business value can be determined by calling a business broker / consultant and asking for a Broker Opinion of Value (BOV) of your business.

3)   Develop a plan to begin overcoming the obstacles you face.  

4)   Replace tax minimization accounting policies with profitability maximization policies.

5)   Increase your gross margin to increase your profitability, and thus the value of the business.

6)   Increase your sales and marketing efforts.   Many businesses have significant opportunities for improvement in this area.

7)   Implement marketing automation.  The opportunities for significant revenue growth through marketing automation are very real and the cost is inexpensive when weighed against the benefits (which are amazing!).  Although there are numerous marketing automation service companies, consider reviewing the free resources (webinars, reports, videos and articles)

8)   Systematize, perfect and document your business operations.

9)   Steer away from a Flat organization and develop second-level management to minimize your importance to the success of the business.

flat organization refers to an organization structure with few or no levels of management between management and staff level employees. The flat organization supervises employees less while promoting their increased involvement in the decision-making process. This means that employees can bypass middle management and communicate directly with higher management or the Owners. Though this may be touted by giants like Google, for the small business intent on scaling building value and then perhaps selling or getting acquired, it is BAD!

10)  Write your buyer’s “general” business plan and 90 Day road map.

Im not a big fan of Business Plans but having something is better than nothing and it show good will towards a buyer if you invested that little time to help the succeed. At Max Business Profits, we use Road MAPs (Massive Action Plans) which can be corrected and revised on a dime if necessary, based on changing market conditions or internal planning.

CAUTION!  Although these ten suggestions will set you on a great path to successfully selling your business, do not ignore the rest of our blogs containing much more information, suggestions and details to help you successfully and profitably sell your business. These are just the obvious! Well, obvious to me, at least!

Can You Afford To Sell Your Business?

One of the primary reasons business owners sell is to enter the retirement phase of their lives.  Especially when that is your motivation, you need to determine if you can afford to sell the business.

If you don’t try to ascertain affordability up-front and put your business on the market without that information, you may be surprised and it’s not unheard of for sellers to back out of an agreement just before closing.  That can be emotionally painful while also creating potential legal issues.  In addition, if a confidentiality breach occurs as a result of such a scenario, you run the risk of damaging future sale-ability of your business.

Obtain a realistic QUALIFIED estimate of the value of the business

The first step to determining if you can afford to sell a business is to obtain a realistic estimate of the current fair-market value.  Many business brokers are not interested in developing long-term relationships with prospective sellers unless they feel it is going to end in a commission.

In fact, recently, while listening to a well know broker teaching a class on MLS membership, he mentioned that brokering hasn’t changed in decades and decades. It’s basically selling J-O-B-S to whoever wants to buy one! Incredible attitude if not perspective!  As a former multiple business owner and consultant for business owners, not only did I find it offensive but cemented in my mind that differentiating your business from another is CRITICAL to building value. That’s what I have been doing for my clients for years.

Find a professional adviser / broker with business exit planning experience

Once you have a realistic idea of the current value of your business, determine if your existing professional advisers have business exit planning experience.  Exit planning can be a sub-specialty for other licensed professionals such as CPAs, attorneys, financial planners, investment consultants, etc.  Another alternative is working with a certified exit planner, a relatively new profession that specializes in helping small business owners through the business exit planning process.

Estimate your future income

Although it is not unusual for the company to be a business owner’s largest asset, there are usually other types of income and assets that should be taken into account when planning for retirement.  These may include spousal income, Social Security income, other retirement income and plans, IRAs, annuities, other types of investment securities and savings, real estate holdings, life insurance cash values, etc.  In addition to the net proceeds from a business sale, those other assets and income should also be factored into the retirement calculations.

Estimate the net proceeds of a business sale after taxes and debt repayment

In the previous sentence, note the phrase “net proceeds” from the business sale. The selling price of a business is often far more than the net proceeds ultimately retained by the seller. There will be tax implications of selling your business, and in many instances they are very significant.  In addition, out of the gross proceeds of a sale, you may have to pay off outstanding liabilities of the business, which can include accounts payable, working capital loans and other types of loans for items such as equipment, automobiles, real estate, etc. that were carried on the company’s books.

Consider your post-exit lifestyle

The type of lifestyle you want to live in retirement is also a major consideration.  If you want to travel around the world or maintain a second home, you need to determine the affordability.  Depending on individual circumstances, lifestyle and expectations, some may need $3,000/month to retire comfortably, others may need $15,000/month.  It is important to estimate your retirement living expenses and it’s best to work with a professional to get through that process.

Determine if you can afford to sell the business

Working with professionals to help gather all the data necessary to project the affordability of your desired retirement lifestyle is a critical step in the exit planning process.  In many instances, business owners need to adjust their lifestyle expectations to the reality of their personal financial situation.  It is far better to accomplish that early in the process of making the decision to sell your business.

The biggest issue I have found is not so much the Post-Sale lifestyle and expectations but the present market value and what the owner THOUGHT it was worth vs. reality!  The majority of the time we have to build or scale the company upward and increase revenues and value to try and intersect what the owner may require with what it is worth on the market.

One last fact many brokers won’t bring up is, the fact you, as the seller, may need to hold 10% or 20% or more in a Note from the Buyer. It’s a fact of the industry that 60% of businesses that sell, require seller financing to some degree. That percentage may even be higher than that, in my experience. A Note is not always a bad thing; you can earn an extra 8-12% on that outstanding money for a short period (1-5 years) but the down side is, you don’t have it at closing.

So, what’s your next move?

Obtain a realistic QUALIFIED estimate of the value for the business! Call us at 888-504-1105 to arrange for one or advice on getting one.

Why It’s Important to Plan the Future of your Business

 There are several important reasons that can and will affect your future:


  • Approximately 80% of businesses never sell.  Startling, but true!
  • The primary reason businesses do not sell is that business owners fail to realize the need to plan for the sale of a business. When the majority of owners finally decide to sell, their businesses are not sale-able.
  • Typically, the business represents 50-90% of a business owner’s net worth. If you are unable to sell a business, it can be devastating.
  • It takes time to implement changes in your business to prepare for an exit strategy –  at least a couple of years.  But, it is never too early to start planning for the future of the business and your finances.
  • 98% of all owner I work with, have no idea what the present market value of their business is today.
  • Once they do, almost all realize they are no where near where they need to be to extract the appropriate or expected sales price to support their Post Ownership Lifestyle.
  • Having a strategy early, allows for revenues to be grown, systems perfected and value instilled.

In theory, you should have started to plan your exit the day you started or acquired the business.  Realistically, a very small percentage of business owners do that.  In fact, based on my experience as a business broker, most small business owners never plan for their exit, and many miss the opportunity to maximize the process of “cashing out” to collect the funds they should have earned from their sweat equity investment.

One of the first and best steps you can take positive control, is to call me for a free consultation regarding the sale your business.  Many business brokers offer market evaluations of small businesses, but we can provide a business growth strategy and an Exit Plan based on maximized business value & revenues.

  • Provide a broker opinion of market value
  • Help identify your specific obstacles to a successful sale of your  business
  • Help identify opportunities for improvement to increase the value of your business.

That is a great way to start planning for a successful and profitable sale of your business.

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