Posted on June 13, 2013August 12, 2013 by Kim Brown — Leave a comment

3 reasons why you want to retain key staff during business sale

The Benefits of Retaining Key Staff

A business can be only as good as the people it employs. When taking care of your business, it takes a lot of effort and time to establish it on firm ground and along the way you build up a number of assets. These assets can be tangible, like computers, furniture or stocks. But, it’s the intangible assets that are usually the most important. These intangible assets are your goodwill and your human resource. When you decide to exit your business and are planning to sell it, it is vital that you retain key staff right until the key moment.

The Importance of Key Staff

Unlike fixed and tangible assets that you can buy and sell on the market anytime, key staff is usually an irreplaceable asset. This is because you have invested a great deal of time and money in recruiting, hiring, training, and grooming the key staff in your organisation. Your business, like all other businesses, has a particular culture and environment. Your employees have developed into being productive assets of your business over a long period of time. The performance and productivity of your business depends upon your key staff. Therefore, it is vital that you retain key staff for as long as you want your business to keep performing at an optimum level.

Who Are Your Key Staff Members?

Before you decide to retain key staff prior to selling your business, you’ll need to determine who the key staff members actually are. Usually, the people occupying the top slots in sales, marketing, operations and finance are the employees that you should retain right until after your business has been sold. You may also have a couple of key people in other areas depending on the type of business. For example product designers, engineers or software programmers. There would be one or two people in sales and marketing who know everything about the product, the customers, and the selling process. Similarly, the people in finance know about your current financial standing, your liabilities, accounting methods, business revenue and cost models, and assets.

Reasons to Retain Key Staff

There are at least three reasons to retain key staff during a business sale:

Your business performance depends upon your key staffers. With key staff gone, your sales and profits may dwindle. Your business can even come to a complete halt. Such a situation would seriously jeopardise your business sale. In order to sell your business for profit, it is elementary that you maintain your level of sales and profits. Ideally speaking, your business should be doing “business as usual”. Any impression that your business is slowing down or losing money will make the sale difficult and bring down the expected sale price. Therefore, it is extremely important to retain key staff.
Retaining key staff is not only important for you, it may also be important for the people who will be buying your business. It could aid smooth transition of ownership and unaffected business performance during and after the sale.
Your employees have also invested their blood, sweat and tears in your business. Your key staff members are those people who, apart from being competent, are also motivated and loyal to your business. This loyalty should be rewarded.

To Tell or Not to Tell

Another important decision that you need to make while selling your business is whether or not you should inform your key staff members about your plans to sell the business. You may consider it morally wrong to keep your team in the dark and surprise them when the sale goes through. On the other hand, knowing that the business is going to be sold can make your employees lose interest and motivation. Naturally, they will be looking for another job and might even desert you before you’d like them to. There is no fixed answer, as every situation is different. The best course of action is to make arrangements where your key staff continues to perform the business functions right through to sale completion.
Your sale plan should give due consideration to your key staff. You could make provisions, subject to the buyer agreeing, in the Sale Purchase Agreement (SPA) to retain key staff —the people without whom the business profitability is likely to be affected. You can also motivate your key staff by offering a financial incentive from a successful business sale completion (even if you couch it in different terms if they are not to be privy to the sale process).

In all cases, be mindful that parting with your key staff at a critical time can cause unwanted problems and complications during the sale process. It is important to retain key staff if you want the sale to proceed smoothly and earn a good return on your investment.

Kim Brown, Co-Founder of Business Wand, helps business owners navigate their way through the start to finish process of selling a business. Her specialty is to help owners cut costs and increase profits prior to sale. To understand how you can sell your business quickly for the highest sales price, purchase the book, “How To Sell A Business: The #1 guide to maximising your company value and achieving a quick business sale”

Posted on June 6, 2013August 12, 2013 by Kim Brown — 3 Comments

How Could My Company Be Valued £500k By One Broker and £3.6m By Another?

How could my company be valued 7x more than another valuation?

While attending the Business Growth Program (BGP) at Cranfield University in 2011 I had a life changing experience. So you know – the BGP is the UK’s longest running and most successful programme for the development of owner-managers. The whole course is built around a core process whereby each participant develops their own growth strategy for their business and a plan to implement that strategy. Throughout the course I learned about money and measures, markets, management and me.

Although the course was designed to help me grow my business empire, it actually caused the opposite effect. During the ‘me’ section of the course I was challenged about what I wanted, why I wanted it and how I wanted to go forward into the future.

For over eight years I built my business from nothing to a 500 million GBP turnover operation, yet during that time I failed to think much about ‘me’. I got up day after day, pushing, struggling, celebrating, and then pushing some more. I worked and worked and worked yet failed to consider why I was working and for what ends.

During a dinner meeting with my Cranfield counsellor he asked me, ‘What does Kim really want’? I had a few wines by then and out came the words, ‘I want to get out. I want to be free. I want to leave my company but since I own it I’m stuck forever.’ I also felt a sense of guilt that I wanted to leave a very successful organisation that I created. What was wrong with me?

Thankfully, my counsellor told me that I wasn’t stuck and there were many options available. He also explained that I was a typical entrepreneur – I like to start things but sticking around wasn’t my cup of tea. Suddenly, I saw a light at the end of the tunnel. Perhaps I could exit my company?! Perhaps I didn’t have to feel guilty? Maybe there wasn’t anything wrong with me?

Let me back up and explain my situation – I owned 50% of a Limited company and my business partner owned the other 50%. My partner wasn’t interested in selling so I assumed I had to stick around. I suppose I was sheltered for 8 years – my head was down and I didn’t really understand where I was or how I could change my situation. I didn’t have many friends I could talk to so I just kept quiet and lived each day as it came. I often told my business partner that I wasn’t happy but he kept telling me to stick it out. When I asked how long he wanted me to ‘stick it out,’ an answer never came.

After the discussion with my counsellor and realising I had options, I told my business partner that I officially wanted to leave. We spent a few months discussing various options where I took time off or tried working in other parts of the business. My partner wasn’t happy with my decision and truth be told, it felt as if we were going through a divorce. It was a very difficult time in my life – I felt scared, alone and vulnerable. Owning and running a company with another person is very similar to marriage.

Anyway, things took their course – my business partner found a solicitor and then I asked around for an accountant and/or lawyer. The first recommendation I received was to visit a London accountancy firm to get to grips with some sort of company valuation. A friend of mine successfully sold his company for £11 million through the recommended firm so I thought it was a good place to start.

The meeting with the accountant was heart-wrenching. After an hour of showing me all sorts of figures, calculations, discussing tax and throwing some big words around she declared that I’d be lucky to get £250,000 for my shares and that was before tax. When I saw the figure I almost cried. I was expecting a bit more than that!

The accountant went on to explain that the same situation happened to her in a previous company and that if I wanted to leave I need to take what I could get and make the best of it. She explained I was in a position of weakness and it was me that wanted to leave. All I could think was that I spent 8 years giving my life for £250,000. In my mind, the pain I endured wasn’t worth that amount of money.

Fortunately, I met up with some business friends after my meeting and explained the situation. They all said there was something wrong with the valuation and I needed to seek better advice. If it wasn’t for them, I could have carried on with that accountant and received a fraction of what I ultimately achieved.

A few weeks later, and after a visit to a fantastic lawyer, the new valuation figure for 50% of the company was around £1.8 million. Big difference – eh? Needless to say, the heart-wrenching feeling I had at the accountant’s office was not replicated. Instead I felt a tingle of freedom – a possibility that I might be able to exit and have a pay-out that fell more in line with my expectations.

Fast-forward several months and the deal was completed. I was able to exit my company, get a very nice pay-out and finally take the time to understand who I was, what I wanted and how I wanted to go about getting it!

So, my key point is this: make sure you talk to several people about potential valuation figures and definitely complete a beauty parade when sourcing your business sale team. Professional advisors can help you lose or gain loads of money – take the time to shop around and find the best fit for you.

In our store we have an excellent pack that can help you select the best advisors for your particular requirements. Check ‘The Seller’s Professional Advisors Beauty Parade Pack’ out here.

Posted on June 4, 2013December 25, 2018 by Joanna Miller — Leave a comment

Sell your business equals entrepreneurship?

Sell your business = entrepreneurship, really?

The other day a business owner told me that he would only consider himself a successful entrepreneur only after he has successfully sold his business. Needless to say my response was one of amazement and I was a little incredulous because I disagree. You don’t have to sell your business to call yourself an entrepreneur. It’s only a label and given the challenges of starting a new business, surviving to break even and growing it to turn a profit, I would say that’s entrepreneurship in its own right and everyone who’s done that deserves to wear the badge of entrepreneur with pride. In fact, in my book, anyone who’s started a new business and had to wrap it up is also an entrepreneur, that includes Kim and myself.

Selling your business could be seen to many as icing on the cake that is ‘business’. Just another goal/achievement to be ticked off a long ‘to do’ list (‘Sold business? Check.). But to link entrepreneurship to selling a business seems to only be acknowledging part of the journey instead of the whole and certainly misses out the startup phase.

Not everyone wants to sell their business, especially if they’ve used our ‘Calculate Your Walkaway Price Pack‘ and discovered that they are better off keeping the business to suit their lifestyle (whether that’s desired or current!) and indeed some have deliberate plans not to. And that’s perfectly alright even though this website is targeted at those that do want to sell their business! I wouldn’t exclude them from being entrepreneurs because of that decision that they’ve made.

But as we know everyone has their own definition of entrepreneurship. Some define is as having more than one business startup (which may lead to a successful business sale), others say its depends on the size of the company (be it number of employees, revenue, profits, number of offices, international presence?). Would you give yourself the ‘entrepreneurship’ label only after you have successfully sold your business?

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”

Posted on May 30, 2013December 25, 2018 by Joanna Miller — Leave a comment

Value your business using the discounted cash flow technique

Business valuation using DCF

This article will focus on how to use Discounted Cash Flow (DCF) to value your business. If you’re looking for details on valuing your business using a valuation multiple, I’ve covered that here and both business valuation techniques are also part of our ‘Calculate Your Walkaway Price Pack’.

Discounted Cash Flow is where you look at how much cash the business generates each year, project it into the future and then calculate the worth of that cash flow stream “discounted” using an interest rate. This kind of calculation can be easily done by using a software package like Microsoft Excel and its Net Present Value (NPV) function if you’re familiar with using software.

Otherwise, without using a software package, one quick-and-dirty technique is to divide the current yearly earnings by the Bank of England base rate or a banks’ instant access savings account interest rate. For example, if your business makes a profit of £10,000/year and the savings account rate is returning 3% interest, the business is equivalent to £333,333.

Here’s how we calculated that: £10,000 / 3% = £333,333

£333,333 invested in a 3% savings account would return £10,000 income.

Looking at the figures, if you had £333,333, you could earn your £10,000/year by investing in the bank’s savings account with a lot less effort than running a business but be aware that this quick-and-dirty Discounted Cash Flow technique puts an upper limit on your business valuation. After all, why would you spend more than £333,333 on a business when you could earn more by spending the same money in the savings account? A possible answer could be that you want to diversify your investment portfolio. The other is that perhaps one around risk and also savings interest rates could drop.

Of course, using this DFC quick-and-dirty technique assumes that your business will have the same earnings year after year, and assumes that only monetary return matters and we all know that in reality earnings will go up and down and there are more intangible benefits other than hard cash to take into consideration.

So there you have it, DCF in a nutshell. You can now compare the Discounted Cash Flow technique against using a valuation multiple to value your business.

Please remember that at the end of the day, just like art lovers, it’s all in the eyes of the beholder (the buyer) and what they are willing to pay for it.

Posted on May 23, 2013April 2, 2016 by Kim Brown — Leave a comment

How You Sell Your Business Will Determine Its Selling Price

How You Sell Your Business…

When you decide to sell your business you could make 50% more or 50% less depending on how you sell your business. When it comes to the how’s, here’s a list starting from the worst way to sell (lower value) to the best way to sell (higher value):

Liquidation
Book value
Unsolicited offer to buy from a competitor
Professional contact introduction
Private Equity Group
Strategic Buyer through a Broker
Strategic Buyers in a Bidding Process

The Liquidation value of a company is often used if a business owner dies or becomes ill. The value does not include goodwill, company earning potential or client lists. By selling your company this way, you’ll get the least value possible. On the flip side, getting Strategic Buyers in a bidding process is the ‘holy grail,’ of selling. This allows for competition and has the potential to increase value through demand.

How you sell your business is a fundamental aspect regarding the value you ultimately achieve. While trawling through YouTube, I found an excellent video that outlines the various ways to sell a business in addition to explaining why. To get a full description on each of these methods, watch the following video created by MidMarketCaptialInc.

How You Sell Your Business Video

Posted on May 20, 2013December 25, 2018 by Joanna Miller — Leave a comment

How to find the best broker to sell your business

The best broker to sell your business

A lot of work goes into making a business successful. But nothing lasts forever, even if your business is something you love and watched grow from a tiny baby start up into a fully grown adult money making machine. There comes a time when you want to sell that business.

It may be that you want to work in another sector or want to retire. Whatever the reason you need to ensure the process runs as smoothly as possible and the most effective way of making sure this happens is by finding the right broker company.

Consider your Exit Strategy

A lot of people who run seminars or give talks on running a business will talk about having an “exit strategy.” This is when people decide when they want to leave a company and how they intend to do it. However people are only human and the odds are when you work every day on your business you may not have thought of the practical steps needed when you need to sell up with a vague “some time in the future” in your head.

The temptation then is that when you finally do decide enough is enough you may decide to go it alone. After all you’ve set it up and made money for yourself why can’t you sell it yourself?

The reason this approach is not as effective is quite simply the law of averages! If you try and sell a company on your own then it is likely you will only be able to deal with one potential buyer at a time. The danger of this is that if a deal falls through it can mean going back to square one all over again each time, adding further stress and work that you don’t need when someone else can handle it for you!

A broker can deal with a number of clients at once because…well it’s their job. Even if you are robot level efficient there’s only so many meetings you can go to. Depending on who you go with they can also assist on the marketing and finance side as well, all things that could potentially screw up a sale.

Hold A Talent Contest or Beauty Parade

All of these aspects need to be considered when comparing the various types of company broker available to you. In some respects it is like a talent contest and you are the judge- therefore it is up to you to ask the right questions!

The most important question of all is- can you give us references? They ought to be willing to give proof of any claim and be able to supply you with convincing evidence that they can do what they claim to do. Trust your instincts- if the reference seems dodgy, look elsewhere!

Another aspect is the valuation- if they offer a figure that is too high or low then it is best to avoid them. In both cases there is a danger that they have an ulterior motive so it is best to do a little detective work to see the facts behind the figures.

Also get them competing! Don’t be afraid to get ruthless – get a couple of quotes and then call them back saying what the other one offered.

(Note: In the Sell Your Business Store, we offer a beauty parade pack to help you ask the right questions to obtain the best broker, solicitor and financial people!)

The Small Print

ALWAYS READ THE SMALL PRINT!

The odds are they will have various fees that they charge for their work. Do not take what they say at face value.

Part of the problem is finding people you know are reliable, rather than hoping that the people you are contacting are real. Anyone can create an official looking website and anyone can dress up their service with fancy sounding jargon.

Business networking groups are ideal places to go for this- someone usually knows someone else and if they genuinely like the service they offer then they will tell you!

Stay in touch

Even the surest of deals can go down due to unnecessary delays. One of the most frustrating things is to find your perfect deal went wrong because someone didn’t check their email or didn’t respond quickly enough to a phone call.

If the broker is in your local area, pop into their office unannounced before you do the deal. See how they handle the day to day running of a business. Look at the way they arrange their desks, the way they talk with each other. If your business sense starts tingling the odds are something is amiss- in some respects it’s like courting and it is up to you to read the signals to see whether your potential broker is the perfect date or the perfect dud!

Checklist for choosing a broker

In short there are a few things to check over before you choose a broker-

Know your exit strategy
Set a time frame
Do your research
Is their approach appropriate for your business?
Can they offer assistance with marketing and financing?
Ask for testimonials
Ask about fees upfront
Is their valuation realistic?
Compare at least three different company brokers.
Ask around at local business networking groups.
Make sure they stay in touch with you and keep in contact during the selling process.

Another thing to remember is that there are no guarantees and no broker can promise you definite sales. But like any investment in your business doing your homework and comparing all your options will give you the best possible chance. While it may be hard waving goodbye to your grown up company you can do so knowing it’ll find a good home!

Posted on May 17, 2013August 12, 2013 by Kim Brown — Leave a comment

Top 10 Negotiation Techniques to Use When Selling Your Business

Negotiation Techniques to Use When Selling Your Business

Imagine having to explain to an alien the concept of money. There was a time when this meant that bits of paper and little metal discs equated to a value of so many items of food, clothes, vehicles and so forth. Now with credit cards, electronic transfers etc figures on a screen equate to value.

The point is that someone somewhere along the line decided these things had value and had to explain that. Likewise when selling your business it is up to you to find a way to show why your personal pride and joy that you spent years working on is worth someone taking off their hands. With these Top 10 Negotiation Techniques you can get the maximum amount when you want to move on to pastures new.

1. It’s Not All About The Money, Money, Money

It may seem counter intuitive but dropping prices is not always the best way to get people on side in a negotiation. Indeed sometimes pitching a lower price can devalue what you have.

Here’s a real life example:

A film maker goes to a potential backer with an idea for a film. He says that he can make this film for around £50,000. In his mind because this idea is brilliant and relatively low cost surely a business savvy investor will cough up, right?

Except in this case they didn’t. Film investments are notoriously risky and the people putting the money in want something that they think will make money.

So the film maker went to another meeting. This time the project was pitched at £2 million. And sure enough at this meeting his idea was taken a lot more seriously.

The point of this story is to look at the value of what you are offering to a potential buyer. Explain to them why you have set the price and only drop the price if you need to!

2. Aim high

“You should always aim high. What if you have low aspirations and goals in life and you don’t meet them?” Ricky Gervais

It is important that you do not misunderstand this one. Yes you want the best possible price. This is not the same as giving them a wildly unrealistic value just the highest possible calculations to give you the best deal.

You want to be able to start off high so you can move further down if you need to!

3. Do your research

When negotiating it helps to be prepared for the questions they are likely to throw at you. However this is not just about finding out what they will ask about you it is also about finding which of their buttons are the right ones to push!

For example, say you go on their website and it says they are looking to “expand into the Asian market.” If your business is particularly popular in that area you could say “Well if you buy our business this will benefit you more in this market because…” Take note of anything that could give you the upper hand!

4. Don’t split the difference!

It is the easiest option and the simplest of negotiation techniques- they have their figure, you have yours, meet in the middle. The problem is that meeting in the middle is not really what you are going for. Hold out for a little bit more!

5. KISS (Keep It Short And Simple!)

Deals can often get complicated and it is this that often causes those annoying frustrations and delays that end up hijacking negotiations and slam you straight back to square one!

Whoever you are dealing with try to spell out what you want and do your best to talk about minor niggles and worries as soon as possible so you can focus on the “This is the business, this is how much I want for it” part!

6. “Don’t give me problems, tell me solutions”

It is easy to define a negotiation as “us and them” If someone has concerns be proactive and find someone who can deal with an issue. For example if they give you a technical question you don’t know the answer to, find the tech guy and get them to answer it as soon as possible.

It may be a cliché but when it comes to selling a business time really is money, especially wasted time!

7. Give and take

While you want to get the best deal you also need to have a few tricks up your sleeve in order to make sure it goes through. If you are too tough with your negotiations people may end up walking away and then you have to start all over again!

For example, someone may want to buy your business but do not want to purchase your stock that is more than a couple of years old. You could say “Alright that’s fine then but in which case we’ll have a clearout sale and make money from that to fund our next venture.”

As ever in life it’s a question of balance- get the best price you can but don’t be afraid to throw in the odd freebie too!

8. Make the first offer

Common wisdom suggests that you ought to wait for your buyer to give you a figure and make the first move. However sometimes it is better to take the initiative and tell them what you want first. If they go for it then you could potentially save yourself a lot of time!

9. Know when to walk away

If you have done your sums right then you will know the most you would like to sell your business for and the lowest amount you are prepared to sell it for. Do not be afraid of walking away if a deal isn’t right. Trust your instincts! (Check out the ‘Calculate Your Walkaway Price’ Pack at our Store)

10. No table thumping!

There is a difference between being assertive and aggressive. Do not say that any terms are “non-negotiable” or insist on a deadline. Most deals go through when both parties are prepared to work together and come up with the right agreement. Subtle persuasion works better than tea cup hurling!

In short these negotiation techniques will help you to maintain the right atmosphere when discussing deals but more importantly will give you a better chance of selling at the right price. Good luck!

Posted on May 17, 2013December 25, 2018 by Joanna Miller — Leave a comment

And The Best Time To Sell A Business Is…

The Sale Process Stages & Best Time To Sell A Business

The Sale Process Stages

Most businesses are for sale if the price is right. When someone asks, ‘Is your business for sale?’ I recommend you say yes. It doesn’t cost you anything, and it keeps the opportunity open for further exploration.

(Note: This is in excerpt from Chapter 1 of “How To Sell A Business: The UK’s #1 guide to maximising your company value and achieving a quick business sale.” Get the whole chapter for free by filing out the form to your right)

Exploring opportunities is one thing; entering into the business sale process is another. You definitely don’t want to go into it lightly. The process is costly and mentally and physically draining. It’s not an activity to enter half-heartedly by either the seller or the buyer. A high level of commitment is necessary from all parties.

The actual sale process may be longer than you think, and it involves a number of stages in order to maximise your valuation. The stages are as follows:

Making the decision to sell
Preparing your business for sale
Getting the right business sale team in place
Going to market to find a buyer
Carrying out successful due diligence
Completion Day and the after-party
Communicating the successful sale to the market

When is the best time to sell a business

In an ideal world, the best time to sell a business is when your business is on the up-and-up, still growing with a strong order book, running efficiently, managed effectively, and the going is good. The trick is to recognise this point as it approaches, and make the most of the window of opportunity when it arrives. My business partner and I always looked out for this window, and our indicators were our scarcity in the market, the number of clients with which we had contracts, the volume we were processing, and forecasting over the next few years. Even though we recognised the window of opportunity when it came along, we were a little late. This was partly because the business was going really well and everyone was enjoying themselves, and partly because our business sale process took longer than we expected.

The indicators for your business are likely to be different, taking a number of different factors into account, such as scarcity of your product and services in the market, the market size, future opportunity, profit margins (are they growing or shrinking?), and where your business is in the market cycle. It could even be that you have gone to see some venture capitalist (VC) companies who told you that you need a larger order book.

TIP: To make sure you don’t miss the boat, define the indicators to look out for, which show when the best time to sell is approaching. Make sure this is checked regularly, so have it as an agenda item at your board meetings.

If you are in a market cycle that doesn’t have a ‘best time to sell’ period coming up for the foreseeable future, it could still be the perfect time to sell. Just remember to choose your ‘ready to sale’ point very carefully by taking the calendar into consideration (more details in Part Five of the book — When should we go out to market?).

Posted on May 7, 2013April 2, 2016 by Kim Brown — Leave a comment

Video Review: How To Sell A Business In A Bad Economy

How To Sell A Business In A Bad Economy

Although this video was created in America during the Fall of 2011 everything the presenter discusses is valid today. How to sell a business in a bad economy is just as pertinent today as it was then! The presenter, Bill Whitehurst, of Whitehurst Mergers & Acquisitions explains that now, more than ever, the good will value of a business needs to be substantiated to prospective buyers. Mr Whitehurst outlines three managerial tools/resources that can be created to help buyers to better envision good will. Within the video, you’ll learn about the importance of a ‘Procedural Manual’, ‘Training Manual’ and ‘Formalised Sales & Marketing Program’.

If you’re thinking about selling or preparing to sell, this 4 minute video is worth a view.

For more help on how to sell a business, please read the free first chapter of ‘How To Sell A Business: The UK’s #1 guide to maximising your company value and achieving a quick business sale” To get the free chapter, go here: http://sellyourbusiness.biz/how-to-sell-a-business-free-chapter/

Posted on May 6, 2013December 25, 2018 by Joanna Miller — Leave a comment

5 Ways To Increase The Value Of Your Company

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).

In conclusion…

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!