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How To Increase The Value Of A Business Before Selling It

Increase Your Business Value Before You Sell It

As the age-old saying goes, “You’ve got to spend money to make money.” This saying still holds true when it comes to business. If you are considering selling your business in the next 10 years, you should make a plan for growth within your business. Having a plan designed around your company’s success and increased value will pay out dividends when you plan to retire and sell your business.

There are a variety of ways you can invest in your business before selling it. We have listed a few areas of investment that will result in a large increase in the value of your business.

Actionable Ways To Increase Your Business’s Value

Many lists on how to increase your business’s value will say to increase your profits, think big, or keep moving forward. These lists are obvious, vague, and are not helpful or valuable. We seek to provide you with a variety of valuable, actionable ways to increase your business’s value.

Investing In Tangible And Intangible Assets

Below are actionable ways to increase your business’s value by focusing on tangible and intangible assets. While a yearly income is a tangible asset, your market reach or website can appear as an intangible asset that greatly affects your business’s value. When investing in intangible assets, you will see an increase in your tangible assets.

1. Invest In Marketing To Increase The Value Of Your Business

As a business owner, you know the value of investing in marketing. From your website and digital marketing to traditional marketing. Investing in the right areas of marketing and communication typically leads to more business. More business leads to increased profits. Investing in marketing is an extremely effective way to increase the value of your company.

How Marketing Can Increase The Value Of Your Business

When you invest in marketing, you increase the number of clients you receive and the yearly revenue. When investing in marketing, one thing to consider is looking at different types of marketing and investing in business marketing that has an ongoing value. When you pay for a billboard or an ad in the paper, the ongoing value is minimal. You may increase awareness of your business, but once the ad disappears or the billboard is taken down, there is very little value left. What types of marketing produce ongoing value and, as a result, become a business asset?

Looking At Marketing As A Business Asset

There is a variety of digital marketing that can become a business asset after investing money and time into them. Some examples of digital marketing assets are your website, search engine optimization (SEO), influencer marketing, and social media marketing. Below is a breakdown of each of these types of digital marketing and how they can be a massive asset for your business.

  • Website: Having a well-built website, designed correctly, and focused on getting leads is an asset in itself. Adding to your website can increase its value and effectiveness and results in more leads. By adding visuals, video, and written content, you can take a simple website and make it a powerful tool that creates leads and streamlines business processes. What you add to your website will have an ongoing return on investment.
  • Search Engine Optimization (SEO): Search engine optimization is a specific type of marketing that you can invest in that takes your website from looking nice to garnering ongoing leads. If you get your website to rank at the top of many Google searches, your business’s value will skyrocket. The best part about SEO is the ongoing return that makes it an invaluable asset for your business.
  • Influencer Marketing: by becoming an influencer within your industry, you will have a large stake within your market and control over the perception of your industry. Many businesses invest in making weekly videos about their business to attract attention.
  • Social Media Marketing: Similar to influencer marketing is social media marketing (where a lot of the influencing takes place). If you are looking at a business to buy and one has a social media account with 12,000 followers versus a business that has a social media account with 12 followers. Which business has a greater value and potential profitability?

Your Brand As An Asset For Your Business

In all of the digital marketing assets listed above, you can design a digital marketing strategy focused on building your business’s brand. By building your business’s brand, it will be easier to sell your business in the future, and you will have an ongoing asset. If Coca-Cola were to ever sell as a business, its value would pay massive dividends simply because of its branding. If you are a marketing company, you know the value of increasing your digital marketing presence.

2. Invest In Recurring Clients To Increase The Value Of Your Business

Your clients are what allow your business to thrive. Creating a process that will encourage return customers will increase the value of your business. You can take your business from constantly chasing after new clients to a business with ongoing sales due to return clients.

How Recurring Customers Can Increase The Value Of Your Business

While it may seem obvious that recurring customers will increase the value of your business simply through sales, if you keep track of recurring clients, you have a more concrete asset. If you track clients and which clients return and make purchases ongoing, you can leverage this information by indicating projected recurring sales. Just as marketing is a business asset that results in new sales, customer service is an asset that results in recurring sales. Knowing a breakdown of recurring sales and new business can be valuable information when discussing the sale of your business.

3. Invest In Streamlining Processes To Increase The Value Of Your Business

The first two actionable ways to increase your business’s value primarily involve increasing sales. But you know, if you increase sales, you increase work, and as a result, you need more time or more employees. To save time, take time to see how existing processes can be improved or streamlined. This initiative will help increase productivity and profitability and make sure the business you are selling is in the best shape it can be.

Look At Your Business’s Workflow As A Business Asset

Many people that will be interested in buying your business will be familiar with your industry. A major selling point will be indicating how you’ve increased production workflow over recent years. This information is invaluable to any person looking to buy a business.

4. Invest In An Employee Training Process To Increase The Value Of Your Business

What better way to increase productivity and workflow within your business than to invest in your employees. Many business owners say their employees are their biggest asset. Taking time to invest in your employees’ training and education can increase the value of your business as a whole. This is an intangible asset for your business that can’t be measured in clear numbers when selling your business, but investing in your employees will undoubtedly make your company succeed over time.

How An Employee Training Process Can Increase The Value Of Your Business

If you create an internal employee training program, that is an asset within your business. When you sell your business, some employees may leave. By having a training program within your company, you can ensure the business is a future success. Investing in your business and employees today will result in your business surpassing your lifetime and becoming a legacy.

5. Invest In Appreciating Assets To Increase The Value Of Your Business

If your business is profitable, it is always good to take those profits and invest some of them back into the business. When investing your profits, make sure you are always trying to invest in appreciating assets. These assets will increase the overall business value, are tangible assets you can sell and are a worthy investment.

Examples Of Assets That Can Appreciate In Value

There is a variety of appreciating assets you can invest in to grow your business’s value. These are likely to increase your business’s value but can be largely influenced by the market.

  • Real Estate: Investing in real estate isn’t just buying land. The office, warehouse, or buildings you own or all real estate that you can invest in, fix up, and protect to increase the value of your business.
  • Stocks: While the stock market can be a risky investment that fluctuates largely, you can see a return over time.
  • Private Equity: Investing in other companies or other ventures can help benefit your business in various ways. For instance, if you own an antique furniture company and that antique furniture needs to be delivered to a variety of locations, a white-glove transportation company could be a good investment for your business.
  • Bank Accounts: Savings accounts can have a low return on investment, but it also comes with low risk. Getting a savings account with a good interest rate can help appreciate money over time.

6. Invest In Widening Your Market Reach To Increase The Value Of Your Business

In many of these steps, you will grow your business by increasing productivity and increasing your revenue and leads. At a certain point, you should consider widening your market. If you provide services in a single state in the United States, Pennsylvania, for example, you should consider widening your reach to New York, New Jersey, Maryland, Delaware, Ohio, and West Virginia. As your web presence grows and marketing takes hold, be sure to scale your business. If you set your site high, you can go to a national and eventually international market.

7. Invest In Paying Off Debt To Increase The Value Of Your Business

When you sell your business, the existing debts you owe will play a major factor in your business valuation. A lot of times, those debts need to be paid through the business transaction. There are various factors around this, but either way paying off your business’s debts will help increase your overall profit when you sell your business.

How Paying Off Debts Can Increase The Value Of Your Business

Paying off your company’s debts can remove ongoing interest and increased losses for your business. Removing debts from your ledger will take away from some of your profits, but it will remove the end deficit within your company’s books.

8. Invest In Mergers & Acquisitions To Increase The Value Of Your Business

If I’m looking to sell my business in the future, why would I invest in purchasing additional businesses or in a merger and acquisition? By investing in specific types of businesses, you can add greater value to your business in all of the areas listed above. If your digital marketing presence is weak, buy a business within your industry with a compelling online presence. You can take that asset and combine it with the strength of your business to make a well-rounded company.

How A Business Merger Can Increase The Value Of Your Business

If you were strategic in merging a business with yours, you could make its strengths your strengths. Strategic mergers need to be well thought out and managed appropriately. View our current businesses for sale to see if any are of potential interest.

Looking At Businesses Acquired As An Asset

If you are running a successful business, you can merge another business with yours and apply your effective strategies to that business. If that business has more success in different areas, apply their strategies for success to those areas of your business. By improving upon both businesses and unifying the two, you can more than double profits and increase all of the strategies listed above exponentially.

Process For Increasing Value In Your Business

While we listed tangible and actionable ways to increase your business’s worth and end value above, these growth strategies will only be effective if you implement them strategically. Below we have broken down a few things to consider in your business growth strategy. In looking to grow your business with the end goal of selling your business, you will have to determine what are necessary and effective investments to make.

Make An Increase Business Value Plan

When making a plan to sell your business and increase your business’s value, you need to consider multiple things.

  • Timeline: if you have a goal of increasing your business value over 10 years and selling within 11 years, there’s a large amount of time for opportunity and growth. If you want to sell your business within five years, there’s only so much growth your business can handle. Knowing your timeline is one of the first steps to making a plan for selling your business.
  • Existing Assets: Taking inventory of your current assets can help clarify where you should invest in your business’s growth.
  • What Assets Would You Like To Increase: After looking at your existing assets, review the suggestions above and determine what you would like to increase within your business.
  • Which Assets Your Business Is Most Equipped To Acquire: review the list of assets you want to increase or acquire within your business. Which ones can your business handle? Are there any quick ways to grow your business’s profitability?
  • How You Will Start: Determine where to start. Or, more importantly, ask where to start. Discussing with your top employees may be an effective starting place. Present your ideas and goals and work with your team to make a business growth plan that is successful.

Get Advice On How To Increase Your Business’s Value

You’ve already started to look for advice simply by reading this article. While our article is focused on helping you and helping your business grow, there’s only so much we can write. Are there business owners who you are friends with who can give you insight; seek it out! You can find a business advisor who is knowledgeable in this area. Continually seeking out information on how to grow your business effectively is extremely important.

Include Your Employees And Team Members In The Plan

While it is a good idea to avoid mentioning your end goal of selling your business, you should include your team members in the growth plan. Initiating growth within your business without communicating the full-scale plan and vision for growth sets your business up for failure.

Invest In The Most Profitable Areas Of Your Business

When you start to invest in your business for development and growth, invest in the top 20% of your company. Putting time into the most profitable areas of your business is likely to see the highest return on investment. This return on time and financial investment can then be used in other areas of your business.

Take Time To Make Small Changes In Your Business

Sometimes small changes in business can lead to the greatest return on investment. Saving money, increasing revenue, and increasing value are beneficial, no matter if you launched a large initiative or enacted a simple action.

Ready To Sell Your Business?

If you are considering the idea of selling your business, you should get a business valuation. Synergy Business Brokers can help to maximize the sale price of your business. We have sold business throughout the United States. Contact us today and see how we can help.

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