For entrepreneurs who are thinking of selling a business further down the line, it makes sense to try and increase the value of the business as much as possible in order to reap the rewards of your hard work. The earlier you take action to increase your value, the better, as it will only continue to grow and become attractive to potential buyers.
Here are 4 tips on how to increase value from business broker experts at Hilton Smythe. Even actioning just one or two of these tips can increase your value, but all four together can rapidly boost your business.
Improve your customer or client service
How can you improve your current customer/client service to stand out from your competitors? This could be small things such as being on a first-name basis with your customers. The most successful businesses know their clients or customers well. For businesses with customers, e.g. hospitality, knowing your regulars by name and remembering what they usually order is a great way to encourage them to return and greet a friendly face behind the counter. You could also offer discounts to repeat customers to encourage loyalty, such as rewarding them with a free coffee once they have purchased 10 cups.
For businesses with clients, such as insurance brokers or marketing agencies, knowing your many clients on a first-name basis and being in regular contact with updates can make you stand out from other businesses who perhaps just see their clients as numbers. Remember, at the end of the day, people buy from people.
Seeking feedback can also help. You could ask your customers to fill out a survey about your customer service in return for a discount or to be in with a chance of winning a voucher. This can give you an insight into what you can improve on. Once you improve your services, customer retention is likely to increase and new clients should start using your services. This all works towards increasing the value of your business.
Have a diverse customer base
Having a diversified customer base protects you from the loss of a major customer who could have amounted to anywhere from 25 to 40 percent of your sales. This can actually put potential buyers off through the fear of loss of revenue if that one client pulls out. This is especially true if your client is loyal to you rather than the business – if you go and new owners take over, they could stop using the business’s services altogether. Some buyers may negotiate a lower price for the business if this is the case as there is a major risk factor present.
Do as much as you can to retain employees
Your employees are key to keeping your business running smoothly – they are essentially the backbone of your operation. Many of your existing clients are likely to have come through their contacts. It can take both time and money to have to train an entirely new team, so it’s important to keep those who know your business inside out. A great team is an attractive asset to prospective buyers, providing assurance and stability.
You can do this in a variety of ways, such as having a strong onboarding process, hosting team activities or away days to boost morale, regular 1-2-1s with staff to track progression, and providing training opportunities.
Stand out from your competitors
What can you offer your customers that your competitors can’t? Do you have a unique selling point? It’s extremely important to get this across in any of your marketing efforts, whether that’s featuring client testimonials on your site, creating a video for your social media channels showing why you’re different, or really getting this across in blogs and PR.
It’s worth speaking to your current client base and asking them why they chose you over another business – was it the price point, the customer service, perhaps the convenience of your location? Use this information and really push it to attract new customers. The more revenue your business makes, the more your business is worth.