Selling Business Part 2: Adding Value Prior to the Sale

At the point of selling your business, getting a good price for the company will be a major goal. A key way to achieve this is to add value to the business as part of your ongoing exit strategy.

In this series, we’ll give you all the advice you need to plan your exit, add value to the business, negotiate a great deal and define your new pathway once the business is sold.

You’ve put blood, sweat and tears into this business. So, you’re going to want to achieve a sale price that reflects this hard work, giving you the funds to start the next phase in your journey.

Your potential buyer will be looking for a profitable, well-run business that can prove it’s a viable enterprise. To do this, it’s vital to look at core ways of improving the attractiveness of the company, gradually adding incremental value and allowing you to negotiate a good price.

Let’s take a look at some important ways to add value to the business:

Increase your profitability

A buyer wants an acquisition that will turn a profit. To boost the company’s profitability, look at improving your margins, reducing costs and increasing revenues. Ways to achieve this can include streamlining your operations, negotiating better deals with suppliers and increasing brand loyalty with your customers.

Strengthen your financial performance

It’s important to run a tight financial ship. Aim for the company to be in a positive cashflow position, reduce your ageing debt and strengthen the balance sheet to demonstrate financial stability. This will mean getting in control of your inventory and spending, being proactive about collecting outstanding receivables and exploring financing options, such as invoice finance or bank loans.

Nurture your customer relationships

Loyal customers spend more and provide a stable pipeline of sales and revenue. Building these strong customer relationships is a critical part of adding value, and can start by providing excellent customer service, offering loyalty programs and actively seeking (and acting on) customer feedback.

Invest in the company’s growth

A growing company is an attractive proposition to any buyer, so it’s important to continue investing in growth. Explore new products, services or markets to expand the business’s potential, add value and show the potential behind your business concept. The R&D, strategic planning and resourcing that’s involved will be an investment that pays off once you have an interested buyer.

Prepare for the due diligence process

Before a buyer makes an offer, they’ll want to carry out due diligence checks on the business. To be ready, you’ll need to get your financial records, contracts and other relevant documents in order, and make sure all the information is easy to find and access. Making these checks simple and straightforward helps potential buyers assess the business’s value and gain confidence in the company.

Talk to us about planning the sale of your business

Making your business more attractive to a potential buyer takes good planning, patience and a real focus on adding value. Starting this value-add process early is vital.

If you want to start adding value to the company, prior to selling up, come and talk to us. Our team can help you deliver an exit strategy that increases value and delivers a great deal.

The following content was originally published by BOMA. We have updated some of this article for our readers.

Selling Business Part 1: Planning Your Exit

Building up a business can take years. For some, it will be a lifetime’s work. So when the time comes to sell, you want to make sure you get the best possible return on your investment (ROI).

In this series, we’ll give you all the advice you need to plan your exit, add value to the business, negotiate a great deal and define your new pathway once the business is sold.

Realizing the value that’s locked up in your business isn’t something that happens overnight. Most owners will begin planning the sales of their business well in advance – sometimes years before they actually plan to exit and sell the company to a new owner.

This foresight and planning is essential, giving you plenty of time to form your exit strategy and make the business an attractive proposition to prospective buyers.

Let’s take a look at the important elements to include in your sale plan:

Define your goals for the sale

It’s important to articulate your objectives for exiting the business, whether it’s financial gain, handing the business to the next generation or personal reasons such as ill health or a desire to retire. Sit down and ask yourself WHY you’re selling up and make this goal (or goals) the heart of your exit strategy.

Decide on a timeline

Selling up isn’t a process that can be rushed. Establish a realistic timeline for your exit, taking into account factors such as your age, health and the overall performance of the business. Having a five-year plan for your exit is common, giving you the necessary time to plan your exit and transition the company over to a new owner. Set clear milestones to achieve and aim to stick to your timeline, where possible.

Get a realistic valuation

To understand your potential ROI, it’s vital to get an accurate valuation of the business. Work with your accountant to understand the value of your business assets and engage a broker with experience in your sector to get a valuation of the whole business. Knowing the true worth of the company will help you negotiate more favorable terms with a buyer, generating a better sale price.

Deal with your housekeeping

A buyer wants to purchase a business that’s trouble-free, so it’s vital to address any issues that could negatively impact the company’s value. Make sure you’ve dealt with any outstanding debt, legal matters or operational inefficiencies well before the sale. This will add to the attractiveness of the business and puts you in a strong negotiating position.

Make sure you have multiple exit options

You might have one very clear preferred exit option in mind, but make sure you give yourself a variety of other routes to consider. Explore various exit strategies, such as selling the business outright, transitioning ownership within the family or pursuing an IPO. Think through the pros and cons of each option and choose the one that best suits your current goals and circumstances.

Talk to us about planning the sale of your business

As you’ve seen, there are several important steps to plan before you can think about putting your business on the open market. The earlier you start this exit strategy, the more time you’ll have to plan the fine details, add additional value and achieve the deal you want.

If you’re thinking now’s the time to plan your exit, do come and talk to the team. Together, we’ll work on an exit strategy that hits your goals and delivers the best possible ROI.

The following content was originally published by BOMA. We have updated some of this article for our readers.

Did you know that diving into the data could help your operations run a lot more smoothly?

In this series, we continue to look at how data-driven decisions sit at the heart of running a successful business.

With so much of your operational processes now being run and managed in software, there’s a massive opportunity to sift through this data to find the useful data insights and patterns.

Every business strives for better efficiency, productivity and cost-effectiveness, and this is where data analysis and making informed, data-based decisions can be a gamechanger.

Let’s take a look at how data can transform your operations:

Optimized inventory management

By getting to grips with your historical sales data and demand patterns, you can quickly optimize your inventory levels. This reduces the risk of running low on popular product lines and stops you wasting precious cash on inventory that then sits gathering dust in the warehouse.

Improved supply chain management

Reviewing your supply chain data allows you to spot the potential shortfalls before they happen. By being better informed, you can identify potential disruptions in your supply chain, take proactive steps to find other available suppliers and even shop around for more cost-efficient options.

Enhanced production planning

Looking through your production data can be enlightening. Armed with the right data insights, you can optimize your production schedules, reduce waste and improve efficiency across the whole process, so you’re running an altogether more effective production and manufacturing process.

Predicting the need for maintenance

Analyzing historic data for your hardware systems gives you a great overview of when repairs may be needed. Backed up with the right data foundations, you can predict equipment failures and schedule maintenance more proactively, reducing the negative impacts of downtime and repair costs.

Resource allocation

Reviewing your utilization data helps you spot where your people could be used more effectively. Data reviews can help identify areas where your human resources are under-utilized or over-utilized, making it easier to allocate the right people on specific projects and to build teams that can truly help you grow.

Talk to us about using data to improve your operations and inventory

The more information you have about your business operations, the easier it becomes to spot the issues, spiraling costs or productivity black holes that are eating into your efficiency.

Our team would love to talk you through the positive impacts of data-driven decision-making, and how being better informed helps you take your business to the next level.

The following content was originally published by BOMA. We have updated some of this article for our readers.

In this series, we continue to look at how data-driven decisions sit at the heart of running a successful business.

With the best possible data insights, you can set the core foundations needed for growth

Without growth, your business is failing to live up to its potential. But planting the seeds of growth can be tricky when you don’t have enough detailed information at your fingertips.

The good news is that you likely already have all the data you need, sitting idle in your software systems. The trick is to consolidate this data, analyze it and to pull out the important patterns, trends and useful data insights.

Armed with this data, you have the best possible bedrock on which to base your next strategic move or the fundamentals of your growth plan.

Let’s take a look at how data can transform your growth:

Identify the growth opportunities

Start by looking at the trends in your own sales data and by reviewing the latest market trends. Where are the opportunities to diversify into new areas or improve your targeting of specific audiences? With a clearer overview of these opportunities, you can start to build a more solid growth strategy.

Allocate resources more effectively

Delving deeper into your operational data helps you understand how to invest in areas that will drive the most growth and profitability. Where could more staffing make a difference? Where do you need updated equipment? Which processes could be automated to free up resources for growth-based activity?

Set more realistic goals

Setting clear goals as a business is what drives the forward movement of the company. But with access to the most in-depth data insights, it’s easier to set realistic and achievable goals for your business. You want to challenge yourself and the team but also put goals and measures in place that are actually attainable.

Measure performance and adjust your strategy

With a growth plan in place, you can track your progress against your agreed goals and milestones. Recording performance data and key performance indicators (KPIs) allows you to track your journey, understand the company’s performance and amend your strategy for the best results.

Support data-based decision-making

Instead of making big business decisions on a wing and prayer, you have the foundational insights from your business data to inform you. Instead of relying on bias, assumptions and guesswork, your growth strategy can focus on data-backed opportunities and rational, attainable growth goals.

Talk to us about using data to improve your operations and inventory

Leading from the front isn’t just about having good business ideas. It’s about having the data, the evidence and the historic information to back up your ideas. By switching to data-based decision-making, you put solid data insights at the heart of your growth strategy as a company.

Our team would be more than happy to explain the benefits of data-based insights. We’ll explain how to create the most insightful metrics and reporting for driving your growth journey.

The following content was originally published by BOMA. We have updated some of this article for our readers.

When your business needs new plant or equipment, what’s the best choice – buy or lease?

The answer will depend on your specific circumstances, but there are some basic considerations to help you weigh up the options.

The advantages of buying

Buying gives you certainty and ownership, at a higher upfront price, but a lower total price. Owning an item of plant or equipment gives you unrestricted use for the lifetime of the item. You can alter it to suit your business, and you can sell it if you need to free up some cash. The full cost is paid up front, so you have no ongoing payments, and there may be opportunities for tax depreciation.

When equipment lasts for a long time and maintains its value, ownership can be a particularly good choice. Overall, the total price of ownership is usually lower than the total cost of leasing the item.

The advantages of leasing

Leasing tends to give you more flexibility, at a higher cost. It spreads out the cost of an expensive item – you don’t need to save or borrow the purchase price, and instead you make regular payments. You can return a leased item if it’s not working out, or upgrade to a better model as your business grows.

If the equipment or plant is something that quickly becomes obsolete, or that you’re likely to upgrade, or that you’re not totally certain is right for your business, leasing could be ideal. While leasing is generally more expensive across the lifetime of the item, it also frees up your money to invest in other areas of the business.

Running the numbers can help you find the right decision

The decision to invest in new plant or equipment can be a tricky one, but we can help. We can tally up the upfront and ongoing costs, and weigh these against the economic benefits you might get from the new equipment. We consider your cashflow, the cost of borrowing, and sales projections, so you can make an informed choice.

Drop us an email or give us a call – we’re here to help.

The following content was originally published by BOMA. We have updated some of this article for our readers.