June

10th

2015

9 Resolutions to Grow the Value of Your Business

By

For many, the start of their financial year is a time of rebirth and resolutions. Its a time to reflect on last year’s personal and business achievements and to set goals for the year ahead.

Some owners will include personal goals like that new car or special holiday along side the business goals that focus on hitting certain turnover or profit milestones. But if your goal is to own a more valuable business you may want to make one of the following resolutions for the next year:

 

1. Take a two week holiday (no laptop, no phone)

When you return, you’ll see how well your company performed. Note the problems you immediately have to solve, as it will provide a guide as to where you need to make a key appointment or create a new system.

Your Business Without You (Hub and Spoke) is one of eight key drivers of a company’s value. Learn more about Your Business Without You.

 

2. Write down at least one process per month

Documented systems help your business run more smoothly, but it may seem daunting to take what’s inside your head and put it down in writing for others to follow. Break it down and resolve to document one system a month. By the end of the year you’ll own a more ‘sellable’ company.

Growth Potential (Scalability) is one of eight key drivers of a company’s value. Learn more about Growth Potential.

 

3. Offload at least one customer relationship

Most business owners are still the company’s best salesperson, but this is a liability in the eyes of an acquirer. So wean-off those customers still relying on you as their point of contact. By the time you sell, none of your key customers should view you as their relationship manager.

Your Business Without You (Hub and Spoke) is one of eight key drivers of a company’s value. Learn more about Your Business Without You.

 

4. Work on building a relationship with a new supplier

Having a reliable group of suppliers is great, but over-reliance on one or two suppliers can be seen as a liability. By spreading your business between more suppliers, you keep your best suppliers hungry and you can make a case to an acquirer that you have other sources of supply for your critical products.

Structural Weaknesses (Switzerland Structure) is one of eight key drivers of a company’s value. Learn more about Structural Weaknesses.

 

5. Build a recurring revenue stream

Valuable companies can look into the future and see where their revenue is going to come from. Recurring revenue models can vary from charging customers a small amount for a special level of service to offering a warranty or service contract.

Recurring Revenue is one of eight key drivers of a company’s value. Learn more about Recurring Revenue.

 

6. Review your lease and any other key contracts

Any buyer of your business will want to see your lease and other obligations. Understanding and having your lease and contracts handy can save time and avoid any nasty surprises at the eleventh hour in the process of selling your company.

 

7. Check your customer contracts

Make sure they would survive the change of ownership of your company.  If not, talk to your lawyer and add a clause to your agreements that states the obligations of the contract do not change in the event of a change of ownership of your company.

 

8. Start tracking your Net Promoter Score (NPS)

The NPS methodology is the best predictor that your customers will re-purchase from you and/or refer you.  These are two key indicators of a healthy and successful company. It’s also why many strategic acquirers and private equity companies use NPS as a way to measure the health of their acquisition targets during due diligence.

Customer Satisfaction is one of eight key drivers of a company’s value. Learn more about Customer Satisfaction.

9. Get your Value Builder Score

All goals start with a benchmark of where you’re at today. Your company’s Value Builder Score will pinpoint how you’re doing now and help you understand those areas of your business that are dragging down your company’s value.

A lot of company owners will set targets around their turnover or profits for the year ahead, but those goals are blunt instruments. Instead of just building a bigger company, also consider making this the year you build a more valuable one.

Uscita Solutions have produced a guide which covers the Resolutions in more detail.  To download your free copy of this guide, please click on the link below;

8 Key Ways to Add Value to Your Business

Alternatively, if you would like to speak with us, please call 01606 535 020.