The first key is to have your accountant take a look at your accounting procedures and make recommendations on how to improve them. He or she may also help in preparing financial projections for the coming year(s). Getting your company’s financial house in order is very important in establishing the value of your firm.
The second key is to review the reputation, image, and marketing materials of your company. Certainly, the quality of your product or service is paramount, but how your firm presents itself to customers, clients, suppliers, etc. – and the outside world – is also very important. The appearance of your facilities and customer services – beginning with how people are treated on the telephone or in the waiting/reception area – are the kind of first impressions that are critical in dealing with your customers or clients. Don’t forget about the company’s Web site; in many cases, it is the initial introduction or “first impression” of your company. Now may also be the time to update your marketing materials. The image of a company can help create a happy workforce, improve customer service, and impress those that you deal with – all of which can increase the value.
A third key is to get rid of outdated assets and inventory. Sell off any extra assets such as unused or outmoded equipment and get rid of old or stale inventory . The proceeds can be used to update the business. If there are any assets that should not be included in the value of the company, such as personal vehicles or real estate, you might want to separate them from the assets of the company or removed them from the company title. This is especially important if you are considering placing the company on the market. A prospective purchaser expects everything they see to be included in the sale. If you have an expensive item like a fish tank for example in your office and you plan on keeping it, make sure it is excluded or deleted from any list of company furniture, fixtures, and equipment when selling the business.
Another important key is to resolve any pending items. For example, if the company has a trademark on any of the important products, and the paperwork for registering is sitting on someone’s desk, now is the time to complete the filing. Trademarks, patents, copyrights, etc., can be very valuable, but only if they have been properly recorded and/or filed.
Contracts, agreements, leases, franchise agreements, and the like should be reviewed. If they need to be extended, take the appropriate action. A contract with a customer has value and if it is scheduled to expire soon, get it renewed now? The same is true for leases. Favorable leases for a long period of time can be a valuable asset and the determining factor to complete a successful deal. Do your key employees have employee agreements? Get all this in order ahead of time to avoid surprises or delays.
The key factors outlined above not only build value, but they make your business more attractive to the marketplace. If you are considering selling your company, these key issues will come back many-fold in the selling price. Don’t focus on saving nickels and dimes to only lose thousands in value. A professional Business Broker / Intermediary can help with other factors that can greatly influence the value of your business.
One other hidden benefit of building the value of your company is that you never know when the Fortune 500 Company will come “knocking at your door” with an offer that you can’t refuse. At that point, it’s probably too late to work on some of the issues mentioned above.