Nine Strategies To Help You Increase The Value Of Your Business

Picture this: You’ve made it as an entrepreneur, and you can finally afford a bit of the “good life”; you take the extra vacation, buy the boat, build the dream home. Then you decide it’s time to sell, so you get a business valuation. But to your surprise, you find the value is a fraction of what you thought. I specialize in helping leaders increase the value of their businesses, and I’ve seen that this is a hit many business owners take.

Business sales are hitting a peak in volume. This is an interesting side effect of the Great Recession combined with a large generation of aging business owners. Many Baby Boomers were hit hard during the recession and had to delay their exit plans. With a growing economy and stronger businesses, the market is now flooding with sales.

Many of these businesses have great revenues and are profitable. They make money. But it’s important to remember that revenue and profitability do not equal value.

‘Revenue’ is the amount of money that comes into a business.

Many owners only pay attention to their revenue. You might think this is a mistake that only new businesses make, but I’ve watched owners of established businesses do this as well. Why? Because revenue is easy to track. Even without a bookkeeper, it’s easy to check how much was deposited in your bank account this past month. But revenues are not profits.

‘Profits’ are the amount of money left over.

As a leader, you already know that profits are what you can take home. You might think that with great profitability, your business should be easy to sell. But, that isn’t necessarily so. Being profitable is good, but I’ve found that profitability can easily disappear, especially in an owner transition. The value of your business requires more than profits.