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Higher valuations - putting the cherry on the top

3rd Dec 2010
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So let's assume you've already done all the usual and standard things to ensure your business is highly valued by  potential purchasers.  ie:

  1. it has a good reputation, is profitable and growing;
  2. there's a strong hierarchy with few areas being reliant on the main business owner;
  3. costs are well controlled, operations are well managed and systems are in place to ensure efficiency

Now what else can you do to make sure you get the highest value possible?  The key is to remove absolutely all the potential or perceived business or financial risks.  This is the stage where you ice the cake & put the cherry on the top! 

Things like:

  • write a disaster recovery plan, including what happens if - you are snowed in & your staff can't get in or out, and neither can your deliveries; your key employee goes on sudden and long-term sick; your major supplier or distributor or haulier goes bust; the obvious ones like a fire or flood occurs; the electricity goes off and you have a prolonged power cut;  all of these possibilities, however remote, need to be thought through, and you need to have a plan so that you know how you would continue trading, as quickly and as efficiently as possible.  Consider your IT systems, access to telephone numbers and telephone lines - your staff, your customers, your suppliers and your bank!
  • use daily or weekly KPIs to monitor your business's performance - not just relying on monthly management accounts
  • have a good track record with PR, both locally and nationally, both offline and online, and also have a crisis plan for potential bad PR
  • ensure your website's SEO ranks you highly on google - if you search for your sector, what do you find?
  • carry out an insurance risk assessment and act on any of the recommendations to reduce risk
  • maintain a superb fixed asset register - not just cost & nbv but also monitor repairs for each asset, location/user, efficiency/downtime etc, insured value, secured lender, expected renewal date etc
  • if you're not already accredited with Investors in People, adopt great HR policies anyway.  Appraisals, training need assessements, recruitment policy, interview structuress, disciplinary procedure, family friendly working policy, disability policy, exit interview formats, induction systems etc
  • Regularly carry out and record customer satisfaction surveys, and monitor what % of new work comes from existing customers
  • have a succession plan & strategy for each of your key management and senior teams, not just the business owner.  Consider training requirements, if there's any need to recruit or headhunt, and how you'll incentivise with cash/shares and a structured system for promotion

Once you've dealt with all that lot, you should have them knocking the door down to make you an offer!

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