Cartoons and Tips #10 - 18 for MAXIMIZING BUSINESS VALUE
Tip #10 Where are the Business Financials?
If business owners do not have all their financials and tax returns at their fingertips (and many don’t), it usually means they don’t refer to them to effectively manage their operations. It can also mean they don’t understand them. Business owners should regularly review their financials with their accountant and other advisors to do the proper planning necessary for a successful business. And when it comes time to seek financing or sell the business, these all-important report cards must be immediately available.
Tip #11 Business Owners Must Make Bold Decisions in Tough Times.
Business owners must be pro-active to reverse any downward trends and they must initiate a plan immediately! They cannot be complacent and just hope for the best. They must consider bold or even painful moves such as adding new product lines or services, drastically cutting expenses and staff, hiring a marketing consultant or even acquiring another company. But sitting back and not taking immediate action is not an option!
Tip #12 “My Business Could be a Gold Mine for a New Owner!”
The statement "with a little sales and marketing, a new owner could make a fortune with my business" has been heard over and over by prospective buyers. The question of course is: "Mr. Business Owner, why haven't you made that effort?" Buyers are not willing to pay the business owner for the future efforts and investment necessary to grow the business. Business owners must take those steps themselves, which not only will increase their revenues and profits in the short term, but will greatly improve the value of their business.
Tip #13 Keeping up with Technology
Not all businesses need to have cutting edge technology, but a company can't fall too far behind. Buyers will be concerned if they must make a large investment in the latest technology to get the company to a competitive level. A business owner should do the necessary research and purchase the technology to keep the company on par in its industry or be prepared to accept a lesser value for the business.
Tip #14 Special Relationships with Customers
Special relationships that business owners have developed with customers can be a real issue when selling the business. A new owner may have a problem continuing that relationship and this could jeopardize the sale of the business. It is recommended that business owners begin delegating any special relationships with customers to other company employees as soon as possible.
Tip #15 Timing is Everything!
Many business owners seem unable to let go of their company and wait too long. Some lose their entrepreneurial drive and the business starts sliding. Or the market starts to change and the company loses value. To get the maximum price, owners need to do some serious planning to prepare selling the business at its peak.
Tip #16
What about that Big Customer?
Many companies have a single customer or a few large customers that dominate their overall sales. After all, nobody wants to turn down business! But when it comes time to sell the company, this becomes a huge problem. Most buyers won’t look at a business whose revenues could drop dramatically after closing from the possible loss of those customers. Some how, some way, business owners have to find a way to diversify their customer base before they ever decide to sell their business.
Tip #17
Financial Statements Others Can Understand!
In too many cases, business financials are so confusing that no one can understand them or analyze them. And it’s not uncommon that the tax returns don’t match up with the Profit and Loss Statements. These can become major problems when the business owner tries to obtain loans or sell his or her company. It is absolutely critical that a business has a set of financial statements and annual tax returns that are easy to understand and make sense to anyone who has to review them.
Tip #18
Don’t Let Your Customers Forget You Are Out There!
When sales are slow, business owners have a tendency to cut back on all marketing expenses. Today, there are various ways of cost effective advertising to keep in contact with customers and prospects that might be considered. Talking to marketing consultants, reading books or searching on the internet are ways to find out what is working for others. There are direct mail campaigns such as postcards or coupon books. Internet advertising or email campaigns can hit directly at the target audience. Not communicating with customers and prospects will only hasten the sales slide and reduce the value of the business.
