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How to add value to your business for sale

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By Jo Thornley, Head of Brand and Partnerships at Dynamis

Preparing to sell your business can seem like a complex process. 

However, in the midst of creating an attractive offering for prospective buyers, don’t overlook further advantageous options. For example, besides just putting things in order and ensuring your balance sheet is healthy and ready to support the sale of your business, there are also some straightforward opportunities to add extra value to your business.

Here’s a look at a few ideas you might consider: 

Business expansion and/or planning permission

While adding an extension to your business can be labour intensive and costly, there’s no doubt it also has the potential to add substantially to your business valuation.

As a restaurateur for example, you could increase your income by adding further covers - or as a retail shop owner, a business extension could allow you to diversify and offer a whole new range of products. 

It should be mentioned that you may need planning approval for business extensions. 

And if you decide to list your business before any work is actually carried out, this will still show your business has extra potential beyond what buyers can presently see – provided that you can produce all of the relevant paperwork and approved permits.

Reducing your outgoings

The bottom line in so many business sales is profit. 

And with increasing your profits, you increase the saleable value of your business

The most obvious, but time-consuming, way to do this is by increasing your business sales. But it can also be achieved by looking carefully at your overheads to make cost savings.

Though this approach is always sector-dependent, it may well be that you forged relationships with suppliers and agreed supply contracts in a very different business climate from present conditions. 

For example, if your supply market is now very competitive, it could be in your interests to renegotiate deals with your major suppliers. Provided they are happy to continue to have your custom, you might be able to agree considerable reductions with them, or even contemplate moving to a new supplier. 

So, shopping around to lower your supply costs will also boost your profits and your business valuation – all for very little effort! 

Simple renovation and maintenance

Many business owners will be selling after some years trading. 

What that often means is that you and your staff may be blind to minor wear and tear of equipment and fixtures and fittings. 

Even though this may not seriously impact on your day to day business and profits, a prospective buyer is almost bound to see things differently.

At the very least, you could be presented with a long list of issues from a prospective buyer that will require repair or replacement before they would be happy to take over.

In general, this is a simple negotiating ploy to pick holes and leverage some reduction of your proposed business valuation and drive down the eventual sale price. 

To avoid this scenario, it’s always better to inspect your premises early on with a view to making small repairs, or some restorative maintenance. 

However, don’t be tempted to just substitute a coat of paint for a full renovation – such actions tend to set off alarm bells with a buyer, who may then start looking for all sorts of hidden snags they think you’re trying to cover up! 

Good renovation not only means your business looks tidy and in good repair, it will also remove opportunities for buyers to drive a harder bargain at sale time, as well as leaving you with some extra room to negotiate.

When you are about to start your sale preparation, always try to look beyond the status quo. 

Provided you allow yourself plenty of time, there are often some surprisingly easy ways to enhance the appeal and potential of your enterprise. But, remember too that your final business valuation must be an assessment that is both realistic and accurate. 

A buyer will only pay what your business is worth, and any over-valuation could well compromise your chances of obtaining a sale at favourable terms.

By Jo Thornley, Head of Brand and Partnerships at Dynamis. Joining in 2005 to co-ordinate PR and communications and produce editorial across all business brands. She earned her spurs managing the communications strategy and now creates and develops partnerships between, and and likeminded companies.