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Are you thinking about selling your project? Whether you’re thinking about selling it in a few months or a few years, selling a business for the best price requires prep work.
According to allBusiness, Luba Kagan, CoStar Group’s director of business development and strategic partnerships, offers seven steps you can take now to increase the value of your business before you decide to sell.
1. Increase your profitability
Potential investors will need proof that your company is currently profitable. If you can show them that these profits will continue to increase, you can sell at a higher price. Look for places where you can reduce costs and increase efficiency.
2. Create recurring revenue streams
Look for opportunities to increase sales and revenue, especially recurring revenue, which will generate income for the new owner right from the start. This may include supporting any outstanding customer or supplier contracts to give the new business owner peace of mind that they will have a steady stream of revenue as they adjust to running their new business.
3. Create processes
Setting up and documenting structured processes that allow the company to operate effectively without your input will put buyers at ease. Potential investors need to be confident that the company will continue to thrive and operate smoothly long after you exit.
4. Build a highly skilled workforce
New owners don’t want to deal with employee turnover, especially if they’re new to the company. Experienced employees ensure balance and stability and help make profits.
5. Stand out from the crowd and differentiate your products or services
Companies with diverse products and services are in a unique position to control a portion of the market. If they have an advantage over their competitors, they can charge a higher price. You can achieve this by developing and promoting intellectual property, patents or other unique features of your products or services.
6. Identify and highlight tangible and intangible assets
It’s important to list and price all of your business’s physical assets, including furniture, fixtures, equipment and inventory. But also consider the value of your intangible assets such as contracts and agreements, customer relationships, brand recognition and more. Any intangible asset that contributes to your company’s bottom line has the potential to increase its price.
7. Reduce your risks
Put yourself in the buyer’s shoes and do everything you can to increase the value of your company. Are your financial records accurate and up to date? Does your project look optimal? Buyers prefer companies with low risks and high returns. By taking these basic steps, you will not only increase the value of your business, but also increase its revenue, improve its profit margins, and help it stand out from the competition. When it comes time to sell, your business will become more attractive to buyers and fetch a higher price.
Is it a good or bad time to sell?
According to the BizBuySell Insight Report, conditions improved slightly and small business acquisitions rose 2 percent year-over-year in the third quarter of 2023, continuing steady gains after a 13 percent decline in the fourth quarter of 2022. He also notes that business selling prices have continued to rise, which is good news for business owners looking to sell.
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