In this part of the series: “How Small and Mid Sized Firms Grow” we will discuss how to maximize the market value of your business.
It obviously takes a willing buyer and seller to sell a business and as the saying goes, beauty is in the eye of the beholder. Having said that, how does one maximize the value of their business, whether or not they plan to sell their business? Having a highly marketable business is always a good thing. It is like a house, if it is in good repair and in a highly desirable neighborhood and marketplace one can feel comfortable knowing that for any reason they wanted to sell they could do so and have a ready source of income if they needed. Think of yourself as a potential buyer and all the things you would want in a company.
So what things maximize the market value of a company? Here a brief checklist:
1. A solid history of growing sales and profits, (EBITDA), without any gimmicks
2. A great reputation and a trade name that makes you a leader in your field
3. High gross margins that demonstrate you are not competing on price alone
4. Having sufficient profits, retained earrings and line of credit for most all eventualities
5. A loyal, stable and highly productive staff that is fairly compensated with retention tools
6. A diversified client base, where no client represents more the 15% of sales and profits
7. An owner who is not one of the key producers so relationships do not die when thye depart
8. Value added services, IP and products that differentiate you from your competitors
9. A business plan that provides a vision for growth and alternatives as conditions change
10. A tactical plan that anticipates events and so one can quickly deal with day to day problems
11. A team that regularly evaluates everything around them for the winds of change
12. A management team that thinks for themselves, are trusted and have dealt with crisises
13. A set of metrics to evaluate their team and work with them to optimize their performance
14. A self critical, introspective team, not afraid to recognize mistakes and make changes
15. Understanding risk vs. reward to make moves when the relative payoff makes sense
16. The understanding of the cash flow and how far one can extend themselves
17. A company that does not settle for hiring 2nd best staff, with a vigorous vetting process
18. A nurturing environment that encourages your employees to explore their ideas
19. No skeletons in the closet that when exposed will turn gold into dross
20. Future earningd that looks every bit as bright as the past, with a rational that backs that up
In our next blog we will consider growth options: geographically; new lines of business, acquisition, market penetration, etc.
To see all articles in this series please go to http://optimal-mgt.com/blog.
Optimal Management is the premier management consulting company to the staffing industry. We act as mentors to owners and managers to maximize their sales, profits and value of their company. We become an extension of our clients operations and are there for all of their staffing and business needs, from sales, marketing and compensation plans, to finance, M&A, general management and everything in between.