What increases the value of a business (or decreases)?

The value of a business is determined by many factors including tangible and intangible assets. For example, profits and intellectual property matter as much as good reviews and customer loyalty. In the same way that having strong financials and returning customers can help your business, disorganized financials and displeased customers can decrease your business’s worth.

In other words, what can help your business can also hurt your business, depending on how it is managed. Prioritizing employee morale and customer satisfaction can make a significant difference in how your business is literally valued, and “valued” by potential buyers.

To start, make sure your books are clean. Do not wait until you are ready to sell to focus on your financial statements, balance sheets, and other documentation. Not only will this make selling easier when the time comes, but it will also help you while you are still in management. Understanding your books can help you make your business more profitable; consider the following questions, for example.

• What aspects of your business are leaching money?
• Which products don’t sell as well versus what is flying off the shelf week after week?
• Which services are sought out by clients the most?
• What overhead costs can be decreased?
• How and where can you be more sustainable and cost-efficient?

The answers to all of these questions (and more) can both increase the value of your business value or decrease it. In essence, it is important to manage your business well if you hope to have a business that is worth what you hope to sell it for. If you are unsure of where to start as it is understandably a potentially daunting process, contact a business advisor who can simplify it and guide you through it. Transworld Business Advisors has a team of experienced business advisors available to assist at any time. Contact us today!