Business Valuations: How to Increase Your Business’s Worth
Business valuations are an important piece of your business strategy because they give you an idea of what your business is worth. They are critical to proper planning, especially if you are considering selling your business. This becomes even more important when you start thinking about your retirement plan. If selling your business is part of your retirement strategy, knowing what your business is worth is imperative to properly planning your future.
The thought of having an outside person come in and tell you that your business isn’t worth what you think it is can be unnerving. And having it actually happen? Frustrating! If you’re looking for a way to increase the value of your business, start with these ideas:
Reduce your expenses
Dig into your books, with the help of your accountant if you have one, and see where you can be more efficient. Check with your business’s insurance provider to see if you can get better rates. See if there are better ways to control your inventory. Reducing business expenses helps widen the profit margin, thus making your business more valuable.
Ask for advice
Building a stronger business is rarely a one-man job, and there is no shame in asking for help. Get in touch with a business advisor to see if there are things you can improve. Consult with an operations professional or finance officer about reducing your operational expenses. You could even ask your employees if they have any ideas to help grow your business.
Work on your business proposition
What makes your business unique? How are you different from competitors? Why do your customers choose you? These are the factors that make you valuable in your market. Identifying these things and relaying them to the person evaluating your business will help them better understand your value. Once you have identified these key factors that make your business unique, you can also use them in your marketing strategy to try to boost profits.
How to get a business valuation and when you may need one
There are a few ways you could get a business valuation. You could do it yourself or have an outside expert come in. Free business valuations are often available. Because there are different ways to appraise a business, and timing and other circumstances can have an impact, getting an outside opinion is often the best option. It also often a good idea to get an outside opinion so your own biases don’t skew your valuation.
Business valuations are an important step in the process of mergers and acquisitions. They are also important in buy-sell agreements and getting additional financing. You worked hard to build your business, and knowing what it is truly worth should be a key part of your strategy.