How can I better position my business for the next step?
If you are a business owner, hopefully, by now, you understand that in a lot of cases entrepreneurial businesses have a great deal open to them when looking at options for the next stage. Instead of continuing to grow, many consider the possibility of a disposal. If going down this route, there are some key things you should consider to ensure, as a business owner, you are in the right place to get the best deal.
- Many entrepreneurial businesses won’t necessarily have the luxury of a full-time finance director or fully fledged finance team. However, it is essential that you have good “data” on your business. This may include several KPI’s but it is vital that your core financial information is clear and transparent. This information needs to prove where the business’ value stems from, that there are solid revenue streams, good profits and you know what is in your balance sheet. Ultimately, good quality information implies that the management are well organised and have a strong handle on the business.
- The value of trust cannot be overestimated. People will pick businesses to work with which are owned and managed by strong, sensible and trustworthy individuals. Initial conversations and behaviour often sets the whole tone for the transaction that follows. Therefore, those first impressions are really important and a strong indicator as to whether the right businesses are engaging with one another. If you have got off to a difficult start it usually just gets harder.
- Understand exactly what drives value in your business. Is it intellectual property, recurring revenue, your team, your brand, your market position, profitability or simply your potential? Also, accept that, just like any business, there will be weaknesses in your business and don’t ignore these. Take time to identify both and build on the strengths and reduce the weaknesses.
Article taken from issue 7 of Beyond the Numbers