by Robert Reid Group • October 15, 2019
Simple Strategic Initiatives
Many small business owners dream of selling their company and using the profits to retire in comfort or perhaps move on to another endeavour. Before selling their business, they want to ensure that the business is positioned in the best possible light to receive its maximum value. Here is a common pitfall a business owner will want to avoid as well as some simple initiatives to help maximize the company’s selling potential, by reducing perceived risk to the buyer.
To receive the maximum price for businesses, business owners want to present their companies with the highest sales and net profits possible. The natural thought might be to spike sales or start slashing costs. However, this may actually work to a disadvantage, and decrease the chances of selling the company. Spiking sales might add excessive expenses, driving margins down. Slashing costs often have a direct correlation to product quality and employee morale which will become evident during the business sale process. Integrating some simple initiatives often can have a greater impact on company value than simply spiking sales or trying to cut costs.
Here are four simple steps that an owner can take to add value to a business before selling it.
1. Effective Key Management
One of the most important steps is to have seasoned key management, ensuring they can continue to run the company effectively without owner involvement. Companies with well-trained management teams provide consistency and will sustain the business at its current level of performance after the current owner is no longer involved. Sustainability is imperative for potential buyers.
2. Personnel Training
A second step is to offer regular and meaningful training for employees. Well-trained employees improve the overall performance of the company. Employee training leads to increased productivity and encourages creativity as well. Creativity can lead to innovative ideas for the company creating natural and sustainable growth. Additionally, employees receiving training feel valued, resulting in a lower employee turnover rate. With higher employee satisfaction rates and better morale, employees will provide customers with consistent, high levels of products and services.
3. Lean Manufacturing Techniques
A third step is to focus on lean manufacturing techniques. Lean manufacturing creates a net improvement in overall productivity by minimizing waste of material and labor resources while maintaining or increasing levels of production. Discarding obsolete inventory, keeping inventory levels low, and having higher turnover of inventory will provide a higher return on invested funds.
4. Up-to-Date Infrastructure
A fourth step is ensuring that the company’s infrastructure is up-to-date and well maintained. Focusing on creating the safest, cleanest, and best possible work environment will have an effect on employees, product quality, and customer satisfaction.
These four simple initiatives will build value, reduce perceived risk, and help in the sale of your business.
Robert Reid Group
If you are investigating selling your company, the Robert Reid Group is here to help you through the process. We take pride in being a trusted and confidential advisor working on your behalf. Our experience provides us with the knowledge and resources to position businesses in their best light to receive their maximum value. We work with business owners to review and recommend company-wide initiatives to strengthen the company’s overall salability and drive a higher valuation.