When showcasing your firm as an investable prospect to that of a suitor, there are a number of factors that will determine the monetary worth of your business. At Champions UK plc, we specialise in working alongside businesses to maximise capital value through applied strategy. So, what aspects of your business are the most critical?
There are four which can’t be overlooked:
Branding
This is all too often downplayed by the seller, yet branding provides the foundation for everything else that ‘matters’. Branding has the potential to add significant value post-transaction because branded products have a dominant market share and gain brand loyalty from their users. A strong brand also adds value by allowing firms to charge a higher price, thus increasing its margin as customers perceive the product to be superior. One of the most notable examples of strong branding is staring at you every time you go to the supermarket. Next time, take note of the substantial difference between price points within branded and non-branded painkillers.
Repetition
Focus on the duplication of business processes. Repeatable and scalable processes should be the heartbeat of your business. Honing every function of the business is vital for simplifying the processes for the benefit of your employees so they have an adequate framework to follow. As a result, the internal structure of the business is able to establish clearer protocols and higher rates of efficiency. Automation then integrates itself within this process as it allows for streamlining.
Make yourself redundant
Usually, if a small business owner wants to be successful, they would have to be personally involved in every part of the company to maximise the business valuation. With this, the buyers are challenged to change their owners with someone who is equally qualified and capable. Nonetheless, the moment a business owner decides that they want to sell their business, it is since they want to enter another activity or business or they want to retire. The small companies that can operate by themselves gain more profits compared to the ones that need the supervision of the owner. This is normally attractive for the strategic acquirers and the private equity firms, as these kinds of buyers usually look for companies that have a management team in place that is highly experienced.
Invest in your team
To make your company much more self-reliant and to maximise the business valuation, you would need to put all your attention towards training the employees to handle their main responsibilities properly. In short, with each person handling their tasks well, the dependence would be reduced and so would the risks. Not only would your company become more marketable, but also more efficient, reducing the risk and downtime you would have lost due to underperforming employees. Take Richard Branson, for instance. Branson is a leader, but he has always been a strategist and an innovator who knows to remove himself from day-to-day business function. He applies his unique ability to the business without actively being there every day, and knows to surround himself with people that are better than himself.
Finally, remember, maximising the value of your company will not only help you to achieve a higher value when it comes to selling your business, it will also make it more attractive to prospective buyers – even if a sale is not imminent. It may seem like a difficult task, but by tackling the process as a series of small steps it becomes much more achievable; and by taking the first steps as early as you can, you have a better chance of realising a higher sale price.