How to Increase the Value of Your Business
Use your experience to create what the vast majority of businesses do not have; a business plan to protect and create value. It's not just quality products and services, everyone claims that.
Here are the steps.
Want to set your business apart from the masses? Use your experience to create what the vast majority of businesses do not have; a business plan to protect and create value. Here are a few suggestions to include in your plan:
• Protect what you have. We see a lot of businesses with over 50% of their value in intangibles such as customer relationships, methods and software, intellectual property, etc. It takes more than just insurance to protect your business. Consider the following:
• Employee non-disclosure agreements.
• Employee non-compete agreements.
• Employee intellectual assignment agreements
• Monitoring and reacting to forces that affect your brand.
• Buy-sell agreements supported by life insurance for all owners.
• Business interruption insurance.
• Customer base. It's not just quality products and services at a fair price, everyone claims that. A good customer action plan can create a solid barrier to entry:
• Identify add-on possibilities for your existing customers.
• Create a system to measure customer satisfaction and retention.
• Identify, then target more customers by knowing the cultural landscape.
• Create a modern, efficient customer database that recognizes trends and opportunities.
• Participate in community reinvestment activities.
• Why, or why don't customers buy from you?
• Why do customers buy from your competitors and what are you doing to combat it?
• Operational Value Drivers. Don't wait until you're ready to exit the business to document and measure the following:
• Maintain a 3-year pro-forma at all times.
• Discontinue poor performing products and services. Keep a product and service history.
• Establish recurring revenue streams.
• Compare your performance to your industry.
• What trends are emerging in your industry? Are you following or setting those trends?
• Increase returns and more fully utilize your physical assets.
• Have a Succession Plan. We rarely see this but when we do, Buyers and Lenders are impressed:
• Have an emergency plan in case of an unforeseen change in key personnel.
• Periodically implement training of the next generation of managers and key employees.
• Document best practices and ideas for improvements from the next generation of company leaders.
• Have a plan that ensures company-wide understanding of the owners' vision, desires and knowledge.
Contact Roy Moss, President of Empire Business Solutions at 714-374-6430 to discuss the process in selling or buying a business in Orange County. Empire has been in business since 2005 and is considered a leading California business broker (https://empireoc.com/
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