We talk with a lot of business owners. One of the neat things about our role is we get to learn a little about many different types of businesses. Right now, every owner is trying to conserve cash, maintain margins, and buckle down in an uncertain economy.
Which begs the question – what can you do now to maintain and improve your business?
I am frequently amazed that owners have not reviewed their P&L, by line / expense, over the last 3 years. This is a great place to start with an objective review of your margins and cost structure. When we do a valuation, we look at each expense as a % of revenue, by year. This helps pinpoint potential areas for review. What is driving your margin pressure? Pricing? Direct materials / labor? Admin costs? Do you know which costs are hurting you the most? I had an owner save nearly $70k / year in merchant processing fees by shopping their business! Call a software supplier before a license renews and ask for a discount. It adds up to real $$.
Next, I challenge all owners to spend a few hours, annually, shopping your competition. What does their online reputation look like? Number of reviews? When was their last customer review? When was yours? Do you know their pricing? Do you know their response time when you call? A few hours investment of your time drilling into others’ processes will yield action items, and when you execute on these, results.
Finally, invest time in documenting roles, processes, and ensuring systems work well. There’s a great podcast I listened to about an owner who spent 1 hour daily, for 3 months, documenting every step in the business. She was prompted to do this after being disappointed with the offers (and deal structure) for the business. The result? She went from receiving offers proposing 60% cash at close to 85%…AND…a nearly 20% higher transaction price. Documentation, process, and systems matter. They increase the valuation and confidence in your business from prospective buyers and their lenders.
Let’s say you were planning to sell your business in 12 – 24 months. What steps could you take today to increase the value of your business and make it more attractive to prospective acquirers?
Do you have an idea of the value of your business? Have you consulted a Business Broker or M&A Advisor? If not, consider contacting Washington Business Brokers for a complimentary consultation on value levers for your business. Regardless of when you plan to sell, a key initial step in improving the value of your business is knowing how it will be perceived by buyers.
Value levers to review
Own your business reputation / reviews / online presence
Hone your market and customer niche
Clean up your financials
Review cash flow and minimize running personal expenses through your business
Review fixed assets, inventory, A/R aging
Develop and motivate key employees
Document processes and organize records
Clean and freshen up any physical space
Identify risks and work to address them
Review customer and supplier concentration risk
Thank past customers and referral partners
These are meant to be thought starters for you as an owner. An additional resource to help you on this process of discovery:
9 steps to take when you are ready to sell your business – Washington Business Brokers – Sell a Business – Confidentiality, Transaction Expertise, Results – Serving Seattle, Bellevue, Tacoma, Everett, Bellingham, Spokane, Vancouver, Oregon (wabusinessbrokers.com)
Wondering if businesses are selling currently?
Not sure where to start?
Perhaps you are wondering how much your business is worth, what the current market is like, or what to expect?
Businesses are selling. The key is that the business is of quality AND priced appropriately. If you are considering selling, now more than ever, professional representation and guidance matters.
What can a Washington Business Broker do for you? Why hire a Business Broker? Aren’t we just going to list your business on BizBuySell?
Want the Exec Summary?
We value your business and set the price correctly to sell.
We maintain confidentiality.
We generate multiple buyer prospects and competition.
We know how to negotiate.
We facilitate the transaction with the appropriate, legal documents, ensuring both parties are protected.
We have a track record, expertise, and systems in place to maximize results.
We work on a success fee – your interests become ours. We go to bat for you.
One last thing – you have a business to run!
You want an independent, objective assessment of the value of your business based on comparable transactions and market activity.
You want your business marketed confidentially and professionally.
You want to generate buyer activity and competition amongst buyers.
You want an expert to vet buyer fit and financial capacity for a deal.
You want transaction expertise to avoid deal pitfalls, maximize net at closing, and ensure a deal happens.
That is it for today – more to come in a future post. Please forward or share this content if you find it valuable. As always, thank you for reading!
At Washington Business Brokers we are experts in valuation, optimizing a business for sale, buyer identification and qualification, negotiation, deal structuring, and closing.
We do not sell you on selling your business or buying one. Instead, we listen, provide options and expertise, and ultimately partner with you to accomplish your goals. We will be ready when you are.
If you would like to better understand the value of your business or learn more about the process of confidentially selling:
Conversations are always confidential and there is no commitment. We will be ready when you are!