8 Effective Ways to Enhance the Value of Your Business
“What can I do to increase the value of my business?” is one of the most frequently asked questions I field as a CPA. While most business owners who ask this question are preparing to sell, others are simply seeking to improve their operations. Regardless, it’s always a good question.
Here are eight things you can do today to make it happen.
- Know the value of your business. You need to know where you are before you decide where to go. For this reason, consider having a certified business valuator give you at least a ballpark value of your company—ideally several years before you plan to sell. The sooner you have this, the more time you’ll have to increase its value ahead of the sale.
- Get your financials in shape. We’ve all heard the phrase “what gets measured gets improved.” The same is true for your financials. If you don’t trust or understand the numbers in your accounting records, it’s impossible to improve them. This is why accurate and timely financial information is so critical. It also allows you to proactively identify unexpected expenses or drops in revenue, which, if corrected quickly, can ultimately increase your future net profits.
- Develop and maintain key management and staff. If you, as the owner, are the face of your business, what happens when you leave? Consider taking steps now to ensure the value of your business is based on your company name and not your reputation. Ways you can do this include providing more opportunities for staff development and involving key staff in critical meetings with vendors and clients.
- Improve realization on projects. I’m not talking about obvious ways to improve realization, such as reducing costs, raising prices, or billing clients in a timely manner. I’m talking about analyzing your projects to determine if they were underbid and why. Often this can be traced back to issues with your sales process or staff. Correcting these as soon as possible can help you improve realization in the future.
- Build strong relationships with large clients. Building or strengthening relationships with large clients—specifically those who value your work—is an effective way to build value into your business. Having multiple staff within your organization working with all levels of the client’s staff helps promote stronger relationships.
- Update your equipment, software, and technology. The quality of these three items will directly impact the value of your business, which is why investing in them is so important. Leveraging the right data technology, in particular, can help you track everything from staff productivity to project realization. What’s more, having real-time access to financial reports and information empowers you to make decisions quickly.
- Map your internal processes and define your business model. Institutional knowledge is at the core of your business’ value. Mapping out your internal processes and defining your business model not only helps you preserve it, but it also allows you to identify (and reduce) redundancies and inconsistencies.
- Create specialized services or products. Every business should consider new service lines or products as a way to diversify and cross-sell to existing customers or clients. To start, determine which of your services or products glean higher margins or are used most often by your customers. How could you expand upon these?
Ready to optimize your business?
Increasing the value of your business is never a bad idea, and it’s never too early to begin. Whether you’re planning to sell or increase efficiencies, we can help you get started. Contact us today.