Here are eight factors that affect the value of your business and what you can do, in each case, to increase it.
The reputation of your business can affect what a buyer is willing to pay for your business. Before you sell, encourage happy customers to leave good reviews on Trustpilot or Google Reviews. This can go a long way to creating a good perception of your business in a buyer’s eyes.
2. Customer base
A narrow customer base can seem risky to potential buyers and, so, diversifying this can help to increase value. Focus on finding new customers through new social media strategies or by attending networking events.
When creating these new strategies, though, keep them relevant to your purpose. You should also identify real problems that you are solving that would be helping new customers in some way.
3. Trade marks
Protecting your intellectual property will reassure buyers that your business will not be as vulnerable to competitors. Trademarks ensure that your branding isn’t misused – something that can devastate the value of a business.
4. Circumstances of sale
Depending on the circumstances of the sale, the value of your business may change. For example, if it is a forced sale, you will certainly not be in the power position.
The best way to get the price that you want for your business is to time the sale for when there are several interested buyers- this will drive up the value.
5. Age of business
If a business is established, there will be a more reliable established track record for buyers to see. If you have been running your company for a number of years and can show regular profit year on year, your business will have value to a buyer.
However, this does not discount the value in a start-up that is brimming with the potential of future income.
6. Strength of team
Having a strong team is a real asset to any business. When you sell, a strong team will also be an asset to the new owner.
It can be particularly ideal for the buyer to have employees that are able to help during the hand over while they learn the ropes.
7. Type of product
What your business sells is also going to play a role in its value. You will need to consider the level of demand for what you are selling. Is this predicted to continue or increase?
Before you sell your business, is there any way that you can adapt what you offer to create a product with more longevity?
Any buyer will also consider how many similar businesses there are that are in your sector on the market. They will also look at how these other businesses are being valued.
It can be beneficial for you to time the sale of your business with when the market is favourable for you.