Increase The Value Of Your Company
Listed below are 5 ways to increase the value of your company.
Number 1: Make your business more efficient
You don’t need an expert to tell you that if you cut costs and increase productivity you’ll get more sales and you can increase your company value. As with so many things this statement is all well and good in theory but a bit harder in practise. A recent advert used the slogan “Don’t work harder, work smarter” While working hard is good sometimes a bit of extra effort and investment in the short term means fewer late nights and stress in the long term!
Ways you can increase the value of your company by making your business more efficient –
- Customer relationship management software – In effect this helps you to gauge who specifically amongst your customers is the one handing over the most of their hard earned and therefore is most worthy of your selling efforts.
- Chase up payments – One problem may be that you are not claiming your money fast enough. A way to get the sloth-like non payers going is by introducing late fee charges for unpaid bills and invoices!
- Spend less time emailing – Focus more on the tasks you have to achieve. Yes the numbers may look scary but you will often be more productive if you focus on selling then dealing with enquiries. If you are worried about it piling up you may want to consider hiring a virtual PA.
- SEO – Make sure that people can find you. Studies show people tend to give up looking after the third page, so you want to make sure you are as close to the top as possible to get that extra traffic (and those potential extra sales!)
For more information this topic, read our article on ‘How to Maximise Business Value‘ here.
Number 2: Shop around suppliers
Cutting costs will help you to increase the value of your company. Shopping around is crucial for everything from buying pens to getting a cheaper deal on travel. While people in the UK are getting better at this there is still a certain degree of reticence about asking for a deal.
Also don’t be afraid to be a bit sneaky and pit suppliers against each other. Tell them what their competitor told you and see if they can match it. Even if they can’t lower prices they may be able to throw in some extras. For example, a travel company may not reduce the cost of a flight but may bump you to first class!
Number 3: 10% staff churn
The rate at which you turnover staff also has an effect on how your company is valued. In an ideal world you would replace the ones who are not pulling their weight with angelic superstars who do everything you tell them and will appear instantly to babysit your children at a second’s notice.
Life unfortunately is not that simple. For a start don’t get fixated purely on the 10% – if one tenth of your employees leaving are the ones that get you the most sales then things are not going well!
You need to handle this carefully by ensuring that anybody coming in is suitably trained and equally that you handle people leaving as delicately as possible. While you want to get those healthy profit figures it can look bad if you are seen as someone who is a hard and unfair taskmaster. Give your leaving staff a positive exit interview can ironically be a good thing, as you can give them feedback and allow them to find a job more suited to their needs (sounds weird but its worth it!)
In short, while you want to get the figures working make sure you keep the human beings behind those figures on side too!
Number 4: Intellectual Property Rights (IPR)
Intellectual property rights (IPR) cover copyrights, trademarks, patents and so forth. These are factors that could help boost your company valuation. The reason that these increase company value is because it is something that you can in effect sell on again a second time.
The best way to illustrate it is with a certain famous branded coffee house. Said famous branded coffee house sells coffee, a drink that is enjoyed throughout the world and has helped Kim (my business partner) get through the day. However, while said famous branded coffee house has made its money by selling coffee, they have also further spread out by franchising across the world, in effect selling themselves as well as the item.
So when you are looking for ways to increase company value don’t be afraid to get someone in to have a look around and see what potential IPR goldmines you could have in your business.
Number 5: Different financial calculations
Finally we go back to how people calculate what a business is worth. This is where it gets tricky. You do not want to be like one of those sweaty Dragon’s Den entrepreneurs trying to bluff an unrealistic set of figures!
There are numerous factors that can affect a value:
- Type of cash flow – Ideally with as few costs as possible for higher profit margins.
- Reduced risk – What can you do to reduce risk in your business? This will help to increase its value.
- Timing – Is there a gap in the market for you? For example whoever thought of designer handbags or shoes with comic book designs on them must be raking in it at the moment!
(More on Business Valuation here).
What you have are five ways to increase the value of your company. However, they are also worth looking at in terms of making your business more efficient and allowing it to grow more in the long term, something that should not be forgotten!
Joanna Miller helps business owners navigate their way through the start to finish process of selling a business. Her specialty is helping owners understand how to prepare and make the most of their business sale process to maximise their company’s value. To understand how you can sell your business quickly for the highest sales price, purchase her book, “How To Sell A Business: The #1 guide to maximising your company value and achieving a quick business sale”