Increasing the Value of a Small Business
Earlier this summer, I attended an interesting session at Sage Summit 2014 that was led by columnist, author, and small business owner Gene Marks. An energetic and entertaining speaker, Gene shared 10 things to do that will increase the value of your business. As Gene explained each item on his list, it occurred to me that as an advisor to our clients, the solutions we represent and the experience we offer play an important part in each and every one if the items on this list.
How To Increase The Value of Your Business
1. Be smarter about your financials
Get a review of your financial statements at least every 3 years. An audit is even better. Financials signed by a CPA provide credibility and confidence in your numbers. Being smart about your financials will also pay off as you look to grow or sell your business in the future. For example, one of my clients attributed their ERP system as the reason they received the asking price when they sold their business.
2. Differentiate
Have 3 solid reasons you stand apart from competition. Here are a few examples of items that differentiate your business: efficient order processing and quick turnaround time, pricing flexibility, CRM for excellent customer service, RMA handling, inventory control, and mobile solutions.
3. Location. Location. Location.
A good location adds value to your business. Having a good location includes the facilities, leases, access to travel, good traffic flow, and other infrastructure. In addition to the location, make sure to track and manage your physical plant and property and also soft assets (software licenses, etc.). Make sure to perform preventative maintenance, to keep your assets in shape while maximizing tax deductions.
4. Invest in people
Overpay your best employees and provide them with no reason to leave. Be sure to review compensation policies and agreements. Meet regularly with employees and establish a mutually agreed upon roadmap for improvement and success. Use a system to monitor progress and document strengths and weaknesses.
5. Invest in the right technology
Effective systems leverage the past, drive the present, and promote insight into the future. Stay current with the most cost-effective systems. This includes not only what technology is employed, but where it’s located. Whether on premise, in the cloud, or a combination of both, staying in the sweet spot of the adoption curve will avoid large upgrades.
6. Build a valuable community
What reasons are you providing for buyers and vendors to do business with you? What reasons are you also providing employees for continuing to work with you? Whether you serve your customers by phone, fax, email, ecommerce, EDI, website, or social media, build systems to help your people understand your customers’ story, needs, and requirements. Pay vendors within terms and provide them forecasted product demands. Treat employees to direct deposit, self-service benefits and training, and access to the latest tools that upgrade their skills and make them more productive.
7. Keep your overhead low
Constantly monitor your costs. Examine every line item on a regular basis and hold stakeholders accountable. Use budgeting, forecasting, and reporting tools to tell this story.
8. Create the right organizational structure
Are you able to leave your business for a month and know it would be in the same condition when you left? The right people, properly trained and incented, should be able to run things while you’re away. Develop a set of KPI’s for each department and other data to give you peace of mind.
9. Get your documents in order
The benefits to having your documents in order are that if a buyer asks you to prove anything, you can do so with “measurable” data and documents in your business. Use document management systems and auditable reports that show Customer Profitability, Top 10 Products, or the Most Productive Sales People.
10. Have a 5 year plan
Where do you want to be in 5 years and what do you want to be doing? Consider using a business coach, life coach, CPA, or other trusted advisor to help you visualize what is really important in your life and what you want out of your business.
I also learned some other interesting insight into why now might be a great time to sell your business. Read more columns from Gene Marks at www.genemarks.com. If you’d like to take us up on how we can help you implement any of Gene’s 10 methods for how to increase the value of your business, then email us at info@dsdinc.com.
Written by Bob Pfahnl, General Manager at DSD San Jose
