Whether or not you have plans to one day sell your business, I believe you should run your business as if you were going to present it to prospective buyers. This does two things. First, it makes you think big – you begin to treat it as a saleable asset, not a hobby that earns you money. And second, it makes you operate on a different level day-to-day, putting systems in place that you might otherwise not be so diligent about if you planned to carry on as an owner-operator or solopreneur.
There are three things you can do to make your business more valuable and more attractive to potential buyers (as well as prospective clients and employees):
Here it’s not just about size of your database and the number of people who “like” your company’s Facebook page. What’s more important are the relationships you build and the interactions you have with your contacts.
When someone buys your business, they’re buying your relationships not your data. Anyone can collect data. Just go to a bunch of networking events, collect business cards and enter the details into a CRM system or spreadsheet. But they’re not worth anything until you begin to turn those names into interactions, relationships, prospective clients or prospective referrers.
If you do have a large database of recent contacts, use them strategically. Don’t bombard them with email marketing trying to sell them something. Think about ways you can offer them valuable and relevant information, free advice, or even a trial of your product or service.
An email marketing effort that goes out to 500 people but with a high percentage of unopened receipts is less likely to lead to more business for you than one that you send to 100 people with a 100% open rate. People who interact with you get to know, like and trust you. They may eventually go on to do business with you or refer you. So remember, with databases, quality wins out over quantity.
Look for ways you can secure ongoing business from your clients, rather than one-off sales. Not only does this help with your revenue projections, but remember, the cost of new business from existing clients is usually always less than acquiring new customers.
Someone looking to buy your business will also be interested in your cash flow. If they were to take over tomorrow, how much business will be coming in the door even if they do no sales or marketing? These future transactions are valuable and can add quite significantly to the sale price of a business.
You may not run a business that operates with contracts for service, but think about ways you can offer services on subscription or monthly maintenance packages. If you sell a product, think about ways you can secure a future up-sell or add-on. If you sell a service, think about ways you can offer service packages that clients can use and pay for on a month-by-month basis. This exercise in itself will get you thinking bigger and more long-term beyond the one-off sale. It also reinforces the approach of thinking of your clients and customers as ongoing relationships, not just names in a database.
For many business owners, this is a tricky one as we think so much of branding is intangible. Many definitions of branding exist, but I like to think of branding as how you present yourself in the marketplace. It includes (but is not limited to) everything that you use to promote your business, whether it be your business cards, brochures, website, sign written car, email signature, estimates, invoices, staff uniforms, office furniture, company colours, font and design elements, right down to the pad and pen you pull out at a client meeting.
Think about how you present your business both in the office and out in public. What have you done to increase recognition in the marketplace? And more than just recognition, what have you done to build trust? What do prospects think when they see your logo and your marketing materials? What message do they get? If you’ve never asked them, start here. Find out just how credible and recognisable your brand currently is and how much this matters to your clients. Hold on to this research and use it as a benchmark for future customer research and to demonstrate brand awareness growth to prospective buyers. It’s often called ‘brand equity’, and for good reason – it’s the value of your brand which adds to the value of your business.
To grow and add value to a business, then, you need to work on these three things – your database, your ongoing customer relationships, and your branding. Whether you do eventually try to sell your business or not, you’ll find that regular and consistent marketing efforts in these areas will take your business to a new level.