8 Key Factors That Maximize the Value of Your Business Before Exit

So as an entrepreneur looking to enhance the value of your business prior to bringing in an investor or exiting, you know, there's a few considerations that we really have to keep in mind. First and foremost, I would focus on profitability. That is going to be one of the major drivers in increasing your business's value. If you can increase productivity, increase efficiency, maximize the profitability that you're getting in your business, that is going to be a major driver because people don't want to buy businesses that aren't profitable or that they couldn't make profitable very quickly. So if you can already demonstrate that the likelihood of you selling your business is going to be that much higher. So when we consider the factors that go into really building business value, there's eight major factors with a bunch of supplementary factors. So profitability and financial performance is one. How much dependence is there on the owner? If, you know, if I'm going to sell my business and this business is completely dependent upon me now, although my business does have a lot of my personal brand tied into it, the actual delivery of what happens is mostly outside of my involvement. Right. So we've created this business to try and get me out of the way. Yes, I do a lot of marketing, I do a lot of training videos, but I try and get out of the way so that it's not dependent on me to continue to deliver to our clients. We want to make sure that there aren't key employees that are completely dependent upon. So if I'm a potential buyer, I buy your business, your key employees leave. So to all the customers and the business drops, that's a problem as well. So we want to make sure that's so again, financial profitability or financial performance, owner dependence, employee dependence, dependence on major customers. So is there a risk factor related to one customer? So example of this would be a dealership, a car dealership. Let's take Ford for example. Let's say Ford decides we're not offering any more dealerships or we're closing down dealerships. There's an inherent risk in only having one customer or one supplier, which is Ford. If you don't have that supplier, you don't have the vehicles to sell. It changes the business model, it drops the value. So that's another one. Are you growing, Are you in a high growth industry or are you in a declining industry? Like I know for us right now we, we're in a pretty flat industry. I think the accounting industry overall has actually had negative growth over the last two years. We're at 34% year to date. So first and foremost is the industry. Is there opportunity for growth? Yes. We're not even scratching the surface on the potential opportunity of market share in our industry. And we've got a demonstrated growth or year over year organic growth of 34%. That's something that's meaningful to a potential buyer. Is it a cash cow? So do you have to constantly reinvest in the business in capital, or is it just returning to you with minor investments and all that cash is coming back to you? Meaning as a shareholder, as an owner, you continuously get access to lots of cash and resources. So those are really the focus on the primary areas. Secondary, how happy are your customers? Employee or employee net promoter score. Get access to that. Are your customers happy? I would pay more for a business where my customers are happy. If you're an entrepreneur, you're getting ready to sell your business, make sure you're getting a net promoter score. Make sure that you're enhancing your client satisfaction results. Employees, are your team happy? I want to know what the employee net promoter score is. Get those completed. I would pay more for a higher employee net promoter score than a lower net employee net promoter score demonstrates the team's happy. They're not going anywhere. So these are important factors, right? Obviously the other one is making sure that the goodwill, any of the brand identity isn't tarnished online and doing any sort of review like that. So thinking of all these factors that impact a business valuation, start working on each of these and in fact we can help you. We have a program called Value Builder that actually assesses you in each of these eight areas. And what it does is it allows you to identify where your strengths are, where your weaknesses are, so you can continue to focus on improving those areas of weakness which will drive increased value. Because here's the one thing that we need to understand about entrepreneurs before we bring in investors, before we look at selling, is that the probability of selling is much lower than we think. In fact, I believe it's somewhere under 25% where under 25% of businesses actually successfully exit. And it's because we're not focusing on these key areas to drive up value and also increase the approachness, the appearance, the perspective that someone would actually want to buy your business. Right? Because in a lot of cases you're just not making it presentable. It doesn't make a lot of sense for someone to buy a job or, or to buy a business that's struggling. If you're working on creating all of these eight factors to work together you're building a business that's salable, and when that happens, the probability of you exiting successfully are extremely high. So those are the areas that I would focus on if you're looking to maximize the value and to successfully exit your business or bring on investors in the future.