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Four Things You Can Do Now To Increase The Value Of Your Business

14 June 2009 No Comment

One of the ultimate goals of a business owner is to maximize the value of their business. There may be no need or desire to sell right now and ultimately that day will come. There are a myriad of factors that determine the value of a business, here I’ll discuss just four that you can begin improving now.

Build Your Management Team

A good management team is essential for operations and growth and also has a big impact on the value of a company. Anyone who is looking to buy, invest in, or lend to a business wants to know that it can continue running without interruption. Ideally you want to hire people who have experience beyond where your business is now so they can help you grow to the next level. Now is a particularly good time to find quality people who are coming available. Make sure and get everyone aligned and focused on executing your business plan (you do have a business plan, right?) and measure your progress against that plan. Ultimately your team should be able to run the business in your absence so when it’s time for your exit. For more on this topic see “Are You Important Or Valuable?”

Update And Document Your Processes And Procedures

Every successful franchise is built on its operations manual. In it every step of every process is detailed in order to make it easy for everyone to do their jobs. That way the work gets out the door without resorting to heroic efforts each time. You’re probably not going to franchise your business although the principle is the same. The secret to effectively documenting your processes and procedures is to make sure you put in the work necessary to get all the details recorded. Not the type of task that most entrepreneurs enjoy doing although no one said you had to be the one to do it.

Get Your Documents In Order

Over time businesses accumulate agreements, contracts, leases, copyrights, bylaws, and the like. With time, evolution, modification, and business growth some of these may be out of date, incomplete, or misfiled. Take some time to organize these and make sure they’re up to date. It’s also a good opportunity to verify that everything is still applicable and to renegotiate, update, or cancel as necessary. During the sale of a business the buyer will examine all these documents. Even if there are no problems, disorganized documents make the buyer nervous and consequently bid less for the business.

Do Your Estate Plan

No, strictly speaking your personal estate plan is not part of your business. Your business, however, is part of your estate. Certain personal issues, like when you want to retire and how much money you need, become goals inside your business. The earlier and more comprehensively you get things set up the more control you have and the more you and your family are protected. Being able to position yourself and your assets properly can save you and your family lots of money and aggravation down the road. For business owners especially, doing the proper planning can be complex, requiring a special approach. For more details on this see our Company Blueprint™.

Doing these four things will give you a good start on getting to the next level. You’ll have easier growth now and more value in the future.

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