Business value

Are you sitting on a goldmine? What is your business value?

So you’ve decided to sell your business. You may have all sorts of ideas about how easy it’s going to be, after all it’s your “baby”, right? Well, one of the first things you need to work out is are you sitting on a goldmine? What is your business value?

The reality is that selling your business is a complex process. If you’re looking to sell your business right away, you probably won’t get the highest value you deserve.

It typically takes a good year of preparation to sell before you should actually put your company on the market; selling requires planning, patience and panache. And as for sitting on a goldmine, you will achieve the highest value if all the right prep work has been put in place.

Working out your business value depends firstly on determining what kind of sale you ought to proceed with. It is a financial, emotional or synergy sale?

A financial sale is common, yet it generally offers the least amount of value to the seller. This type of sale is often undertaken with little or no planning. No plan means no high return.

An emotional sale involves a nostalgic connection such as someone who loves the brand, the product you sell and so wants to buy it.  It can be good for you, but you won’t be able to plan too much for that type of buyer, so it is very unpredictable.

A synergy sale typically produces higher valuations than a purely financial sale. The reason this type of sale gets a higher value is that it involves selling to another business who can make more out of your business than you can and, as a result, values your business at a higher value.  Best of all, it can be planned for by the vendor.

Now that we’ve established the different types of sales, you need to put several steps in place. They include:

  1. Mastery – moving from chaos to control with an in-depth examination of your goals for the business and understanding where your money’s going. Strong delivery systems and time management are crucial here too.
  2. Niche – ensuring a growing and predictable cash flow by asking some big questions such as Is your data in good shape? Do you have a solid marketing plan? Do you have a system that converts leads into customers? And so forth.
  3. Leverage – creating systems for efficiency, thereby knowing what you have to work with, and what you need to focus on to create the right sales package for prospective buyers. Systemising your business to the point that it doesn’t depend on you is also a necessary pre-requisite to getting a good price when you sell it!

The above are basic steps to start planning the sale of your business.

We have worked with many business owners who are planning to sell their business. If you would like some coaching assistance through this process, speak with one of our business coaches today. You can also check out this eBook called Selling your Business.