Four questions to grow your sale price

Written by: | January 31, 2019

Picture it: the day someone hands you a great big cheque to buy your business. The question is: how big is the cheque? 

For me, business success ultimately means building a business that others are clamouring to buy (and are willing to pay a truckload of money for the privilege). Whether you decide to sell or not is up to you – it’s all about having the choice.

For many business owners, selling their business for a huge sum seems like a pipe dream. But if you plan ahead and chip away over time, you can implement the big (and one-percenter) changes that will get you closer to that dream result.

There are no quick-fixes to growing your sale price. Instead, focus on these four key questions:

1. What’s your desired sale price?
You first need a clear idea of the price you want to get. Make sure it’s achievable while still giving you a worthwhile payday. 

2. How much is it worth right now?
This shows how far you are from your desired price, and helps you determine a realistic figure.

3. How do you bridge the gap between your current business value and desired business value?
Identify the key drivers of your business’ value so you can determine the issues causing the gap. Then develop an action plan to bridge that gap.

4. Who’ll buy your business?
List your potential buyers so you can understand the attributes they’re looking for in a business, and make the necessary changes to appeal to them.

You need to understand the key areas that drive your business’ value. Generally, business value is driven by 1) consistent, upward-trending true profit, and 2) sound business fundamentals. Fundamentals of loyal customers; good relationships with suppliers; and a well-trained team following solid processes so the business doesn’t rely on the owner (meaning a buyer can step in and get the same or better result). Focus on doing the non-financial fundamentals well, and your financials will follow.

While getting a business valuation is important, it’s just a guide. Ultimately, your business is worth what someone is willing to pay for it. The price will be negotiated depending on the number of buyers, how well the particulars of your business stack up against other available businesses or other investment options, and how they rate its ongoing potential.

An experienced business adviser will help you get the best outcome. They’ll identify your drivers of business value, help you build an action plan to grow its value over time, and negotiate the best price with the buyer.

Even if selling your business is not on your radar right now, planning ahead enables you to make changes over time that will add up to a massive difference down the track. And until you’re ready to sell, they’ll help you build an even better business.

Learn more about all aspects of buying or selling a business in Jason Cunningham’s latest book, Have Your Cake And Sell It Too – the 7 Key Ingredients of Business Success.

 

Jason Cunningham is a business growth expert, author, keynote speaker and industry commentator, and owns his own successful financial practice.

Get jason’s book at jasoncunningham.com.au/book

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