For many young entrepreneurs, the thought of building your empire from the ground up, then eventually selling it on and reaping the benefits seems like a distant dream, one for 20, 30, or even 40 years’ time. But it doesn’t have to be. There are steps you can take while you grow your business that can seriously increase the value of your business, meaning there will be a larger financial reward waiting for you sooner rather than later.
Tips for Increasing the Value of Your Business
If you plan to sell eventually, it’s wise to put the steps below into action now so that you can track the value of your business.
1. Build your business steadily
If you’re reading this blog, you’re probably an entrepreneur under 30, meaning that you likely haven’t run a business for 10 years or more yet. The older a business is, the more value you can get for it as you will have built a steady and profitable business – if it wasn’t, it wouldn’t have been around for so long!
This is all the more reason to keep on going even when times are tough in your business. Keep the end goal in mind and know that one day, you will be in a great position to sell and reap the benefits of your hard work because you know the value of your business.
2. Consider your location
Your business may be so young that you may not even have a physical premise yet, which is great as it’s important to remember how important location is before renting the cheapest space just to save money!
Say for example your dream is to build a franchise with offices or stores in different locations. If you are a B2C business, being located in a busy town or city centre can bring lots of new business, simply because you are exactly where your potential customers are.
On the flip side, if you have a serious competitor located on the same street, or even just around the corner, you could be losing business to them. Try to avoid areas where similar businesses have already been established.
3. Stand out
What is your unique selling point that makes you stand out from your competitors? Can you offer something for free to hook them in as a ‘try before you buy’ – e.g. a free consultation or product sample? Or, is it your spectacular customer service that makes you shine above the rest?
Whatever it is, make sure people know about it in all of your advertising materials, especially on your website.
You may even want to speak to your current customers about why they chose you instead of a competitor. Was it the price point, convenience of location, or your personable staff? This can help you to consider highlighting areas you may not have thought about.
4. Improve your customer service
You may think your customer service and reply times are tip-top, but there is always room for improvement. Perhaps you want to look into automatic replies, e.g. a chat bot feature on your website or automatic replies from your Facebook and Instagram pages to let customers know that someone will be in touch soon.
Get to know your clients or regular customers on a first-name basis. A lot of large conglomerates unfortunately see their customers as just another sales number, but as a small business, this is a window of opportunity to make your customers feel appreciated. When they do, they will come back for more.
You may also benefit from creating a survey for your customers about how they feel about the service they have received so far. This should be anonymous and there should be some sort of incentive for them to get involved, e.g. the chance to win something in return. You may find out a few things that surprise you.
5. Have a diverse customer base
Speaking of customers, it’s important to diversify them, rather than relying on a handful of your clients to provide a large percentage of your income. Potential buyers can actually be put off if they see that one client alone accounts for 25-40% of your revenue, so try to bring in as many customers/clients as possible.
This runs the risk of the client pulling out if new owners take over, too. They may only be a client because of you as a person!
In conclusion, there are a few factors to bear in mind when building your business that you’d like to sell one day. For an idea of the current value of your business, Hilton Smythe offers a free business valuation calculator. This can help you to set a goal of how much more value you need to bring and by when. The earlier you plan, the better.