How Value Can Sell Your Business
Creating value to sell your business is one of the most crucial roles you can have as a business owner. There are a number of ways to create value, and each one can add to the overall price your business can command when you are ready to sell.
When searching for ways to sell your business, you first need to know how it is valued. Once you see the true picture of value, you can utilize this measure to generate interest in your business. Profitability and market share are two ways that a business can differentiate itself from similar businesses within the marketplace. Highly profitable businesses, or those with the potential to become highly profitable due to a large market share, are usually the easiest businesses to sell, because they are perceived to have high value. Increasing profitability for the short term can create value and improve your short-term statistics, even if the increase is not sustainable long-term. In turn, this can drum up interest in the purchase of your highly profitable business. Becoming rapidly profitable in the short term can also bolster your company’s financial snapshot by providing an example of revenue growth. Investors and people who are looking to buy their own business are looking for profit and the ability to generate more of it.
Believe it or not, intangible qualities like customer relationships can sell a business. One of the surest, but not the easiest, ways to create value in your business is to maintain relationships with customers long-term. Relationship duration can be spurred by having customers that are highly satisfied with their business relationship, even if it is not mutual. Consider keeping some of your less desirable but long-standing customers if you are planning to sell your business soon to improve this value.
For companies that are not publicly traded, that is, the majority of businesses, value can be determined by a number of valuation methods. Customer value within the products or services you sell, actual revenue, value of tangible assets, and intangible things like insider knowledge, business agility and adaptability are all things that add to the total value of a business.
In the case of publicly traded companies, shareholder value is one of the primary measures of market value. A rough measurement of stock value is the number of outstanding shares times current price per share. Some companies offer dividends, an action that typically designates a company as successful and increase shareholder value. Things like stock splits and shares reduce this value, but an increase in stock prices can offset this decrease.
