Business & Economy Startups How to increase the value of your startup before you sell it

How to increase the value of your startup before you sell it

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Are you ready to sell your business?

Before you even think of putting your business up for sale in a marketplace like LookForBuyer, you’ll need to make sure the value is as good as possible.

You know the type of revenue you have and you’ve done all you can to reduce the expenses — but there are so many other ways to put your best foot forward.

These seven steps to increase the value of your business are essential for business owners:

1. Work on boosting your profits further

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Don’t allow your business to stagnate.

Before you put your business up for sale, you want to show boost the profits. That will mean you need to plan your exit and put in some extra effort in the beginning.

If your business is failing, you’ll want to work on keeping the negative balance as low as possible. When you’re just breaking even, you can’t expect to work miracles.

There are many ways to increase profit margins e.g. increase price, narrow your focus, reduce the discounts, cut expenses, try to change the fixed cost to commission based or outcome based with your employees or distributors.

While working on boosting profits, don’t take too much out of the business. The expenses will negate sales.

Your negotiation power will be higher if you manage the profit and loss well.

2. Create a strategic business plan

A good business will have a plan in place. You may think you do not need one as your goal is just to exit.

However, having a good plan and a business case will help the buyer visualize how valuable the business can be in the future will enable you to sell at a better value.

In a business plan, you may want to show to the buyers how he can leverage the current setup to expand to other different product and services or growth through geographical expansion.

What are financial projects and funding requirements? Show that there is potential for growth and reinvestment, encouraging buyers to pay more.

3. Set up a recurring revenue stream

One of the most powerful things for a business is a recurring revenue stream.

Look at the likes of Amazon and Netflix. They have subscription plans that people are likely to remain signed up to.

All they do is get one person to pay for one month and they’ve locked them in for months into the future. Continue to offer a good service and people will remain loyal.

Say you want to make US$10,000 in your business each month. Getting just 50 per cent of that from recurring revenue puts you in a powerful position. Getting 75 per cent is even better.

Your business has a future in the longer term compared to a business without those recurring customers.

4. Ensure key employees remain onboard

If your business is one with employees, you need to try to keep the best members of staff to stay on.

It’s a difficult period for employees. When they learn you’re selling the business, they worry that they’ll lose their job and start looking for others.

That leads to high employee turnover at the start for the new business owner. By keeping the best members of staff, you’re selling a business with a team already in place.

Also Read: AI, gamification fitness app publisher OliveX secures US$1M investment from Tony G

New business owners are likely to pay more because they know there’s no need to spend extra money on recruitment at the very start and the business can run as before.

Don’t make promises you know you can’t keep, though. You can’t guarantee that anyone will definitely get to keep their job, but it makes more sense for a new business owner to keep on staff than start from scratch.

5. Make the business stand out

The business needs to stand out from the crowd. Those that are unique attract more customers and that means the future is brighter.

People are likely to pay more for a business that stands out and delivers on its promises.

Look at what makes your business unique from all the others in the same industry. What do you offer that others don’t? How do you help in ways that other businesses don’t?

This isn’t about creating some crazy gimmick to literally stand out from the rest. It’s all about the products or services.

Know what you offer that someone else can’t that is invaluable to your customers. Show that your business has a future that’s brighter than anyone else’s and is worth investing in immediately.

If you don’t yet know what you offer that others don’t, this is your chance to think about it. Put the steps in place to start offering that unique service or product.

6. Grow your business online presence

Like when selling a home, you want your business to give the best first impression.

Nowadays, internet presence plays an important part.

While potential buyers will look into the profits, expenses, and products or services later, they’ll search online and understand what the business looks like.

Get your website redesigned and work on your social media platforms. Grow the page, increase the unique users and accumulate the customer email base — which are ultimately helping the new owner to have a good base to build your business further.

If you don’t have a budget for everything, look at the areas that will cost the least to fix but offer the best first impression.

Also Read: Why Echelon will give voice to a diversity of startups

Can’t get a whole website redesigned? What about a Facebook or Twitter page instead? Do not have a budget for Google Ads to increase pageview overnight?

How about advertising through a social platform like joining social media groups and write meaningful blogs to promote your site.

7. Hire a professional to help

You can’t tackle it all. No matter how much you want to, it’s impossible to deal with every little area by yourself. This is where professional business sellers come into play.

A professional will show you where you can increase the value of your business, offering the best tips to do so.

Whether it’s tips on boosting profits, offering suggestions to boost page views on your website, or even just the best way to make your business plan look amazing. All these will enable you to get the best deal possible and it could be far more than you ever expected.

Are you ready to sell your business?

Before you do, make sure you raise your profits and improve your online presence as much as possible. The above seven steps are essential for all business owners.

Image Credits: papobchote

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