If someone offered to buy your business how would you value it?
One exercise you would hopefully do is to ask “how much profit will your business make if you keep it?“
You might be surprised (and much better off!) at the answer.
What is the value of your business that others see?
The trick is to stand back from your business and ask where the value lies that others can see but which you might not see simply because you’re too close.
Whatever answers you come up with, almost all of them will present opportunities to increase your profits and make more money.
For example, a buyer might ask:
- are margins fantastic or adequate or too low?
- are you in the best markets for your products and services?
- should some products / services be discontinued and others invested in?
It’s impossible to answer questions like these when you are too close to the coal face, but from time to time try to go through this type of exercise, perhaps with someone who has a bit of distance.
Make the decisions a buyer would make
Having asked and answered the questions, you need to take the decisions that will make the difference. No point in doing it otherwise.
Some of this will be uncomfortable because a new owner would inevitably run your business differently, yet that is exactly where the value of the exercise lies.
But you get to keep your business and the extra profits!
And if someone does come along and make an offer then you can be pretty sure of getting the price you deserve.
I mentioned that this type of exercise can be better done with the help of someone who is not as close to your business as you are. Could that be us? Please give me a ring on 020 7125 0270 if you would like some help.
Michael@bluedotmichael
