video-clip
Enhancing Valuations for Exit Plan of Closely Held Business
- Valuation Enhancements.
- How to enhance value. People, processes, planning, sales, marketing, legal and operations. Address opportunities for enhancement by evaluating each of these categories. For example, when evaluating “people” evaluate each department and transition steps. A challenge of many small businesses is that they will not run if the owner is not around. So, that must be addressed to transition the business. For “process” a typical business owner has tun the business for 30+ years and they may have missed recent technology changes such as a CRM=customer relationship management software. That is just one example of enhancement. CRM tracks all customers and prospects, tracks all communications and creates follow up system and that way one is on the same page if they answer the phone. An example is Hubspot that speaks to Outlook.
- You must look at your Income Statement/Balance Sheet and Cash Flow. This is another way to identify enhancement opportunities. What can you do to imporve revenues, reduce costs. Look at asset side to see where you can improve returns. Say you have a fixed asset such as a building you can convert this into a leased property and remain as productive? If inventory is turning over 10 times, what if you can move that to 11 times per year.
- Sales Force/Productivity – If there is a sales force understand how productive each person is and how you can improve it. Consider “Measure what you want to control” – Peter Drucker.