Whether or not you plan on selling your business, thinking like a buyer (and acting like a seller) will increase its market value as well as improving interim earnings. Your business is your retirement, life insurance, and disability plan – so why not start to improve their value now?
Buyers want the minimum number of challenges. Here are some suggestions that will enhance sales value but also sustain interim earnings:
- Organizational Discipline – everyone knows their role and that of their immediate colleagues. An organization chart and job descriptions signify that employees do not need task by task supervision. They suggest a chain of command and infer that while the organization will require continued leadership, it can function without its owner.
- Performance Discipline – every employee communication, written or verbal reinforces the business’ strategy and values. Their absence suggests dysfunction. Performance reviews and incentive practices in whatever form they take, should do likewise.
- Skills Discipline – an owner can never predict when key employees are going to quit but they can prepare for that occurrence. Who is crucial to running the business and what is the plan for their replacement? Key employees may not be just those at the top of the organization.
When a serious buyer performs a soft due diligence these are the topics that are examined first. They are leadership and management functions that owners take for granted. Institutionalizing them will create sale value but also sustain profitability whether a sale is planned or not. Consider a pre-sale due diligence to identify the discounts to sale price.
These are not activities undertaken every day and external help may be required. Perhaps we can help.