By: Lydia German from Hilton Smythe
If you’re an entrepreneur, you’ll know all too well the feeling of staying up late at night, stressing about revenue streams and trying to get your business out to as many people as possible in order to grow.
This can go on for years and even decades, so when it’s time to sell, you deserve to be financially rewarded for your years of hard work.
To get as much as possible at the end sale, it’s incredibly important to consistently increase the value of your business year-on-year. Here we’ve rounded up our top tips to get you well on your way to reaping the rewards.
1. Attract a diverse customer base
Having a wide and diverse customer base is crucial to increasing the value of your business. Any company who is too reliant on one or a few clients/customers for a majority of their revenue can put off potential buyers – if customers decide to spend elsewhere, the company will be seriously hard hit and would have to source new customers to make up for the revenue loss rapidly. Buyers just won’t want to face that risk.
There are a few ways you can do this, for example restaurants can offer a variety of options to cater for different dietary requirements, e.g. plenty of gluten-free, vegan and vegetarian options. Or you could diversify your service offerings, for example marketing agencies could offer different pricing options to appeal to both startups and SMEs and larger corporations.
This increases your value as you will have access to a wide demographic who can provide you with multiple sources of income.
2. Set out a clear five year progression plan
Whether you want to sell in the next five years or not isn’t really relevant – buyers will just want to see a successful business that increases revenue year on year.
Set tangible goals with in-depth details about how you plan on getting there. This could be factors such as outsourcing certain tasks until you generate enough revenue to hire someone full time, moving into bigger premises that could attract more customers, marketing plans and much more.
Along with revenue goals, it’s also worth consistently tracking the value of your business to make sure you’re on the right path to sell for your ideal amount. There are numerous tools online that can help you do this for free.
If you discover you’re worth less than you currently expected, make some adjustments and perhaps seek the advice of a business consultant who can help you pinpoint your next steps.
3. Focus your efforts on pushing your unique selling point
Many startups and SMEs can get lost in the sea of others in their industry by blending in with the values and services that everyone else has to offer. But what is it that makes YOU stand out?
If you can’t immediately think of anything, consider implementing one or a combination of the following:
- The personal touch you provide for your customers
- Going above and beyond with client communication
- Offering free trials/samples
- Offering a money back guarantee if customers aren’t satisfied
- Offering a unique experience that can’t be found anywhere else
- Offering complimentary 1-2-1s/consultations
- Regular sales/discounts for repeat customers
It’s certainly worth consulting your clients and customers about this. Perhaps you could send out a short survey via email with the chance to win a voucher or discount in return. You could ask questions such as why they chose your business, anything else they’d like to see you offer, how they found out about the business etc. These consultations can feed into further improvements to the business.
4. Consistently improve cash flow
A buyer will want to purchase a business that can demonstrate positive improvement in cash flow each year. Some tips for keeping on top of this are:
- Making sure invoices are paid on time and quickly chasing those that haven’t been – perhaps you could offer a small discount for those who pay early
- Reviewing hardware and software used, cutting down on any non-essential items or finding cheaper solutions
- Avoid buying physical items in full and lease instead until you can clearly afford it without significantly harming revenue
- Implement several employee benefits in order to improve retention, cutting down on recruitment and training costs
- Consider outsourcing certain tasks or hiring part-time in the short term
- Use a savings account that offers high interest rates
- Offer incentives for the team, e.g. bonuses or discounts – this will work out less than the potential new revenue they bring in!
- Use your time wisely – don’t let meetings run over too much or waste time on tasks that aren’t going to benefit the business in some way.