Every business owner or management team of a company, large and small are focusing on one thing commonly - increasing the value of their business. Don’t you think?
So in my opinion, you should focus on implementing strategies that best seize opportunities for growth and determine whether or not it makes sense to take on a partner in pursuit of that growth.
So here are the 5 tips to boost your business which you should endeavor to implement in its process:
Customer diversification
Win recurring revenues
Find your niche
Budget
Be capital efficient
Be replaceable
Investors, acquirers, and Bank
Diversify your customer base
* Businesses with many customers are worth more than businesses with customer concentration issues. Your biggest customer shouldn't account for more than about 20% of your revenues --with sub 10% being ideal
Win stable revenues
* Businesses with stable or recurring revenues and long-term contracts are worth more than businesses with lumpy or hard-to-forecast sales. It may require offering new products or services, but migrating to recurring revenues will pay off in the long run
Find your niche
* Seek to build out your offerings that are complex, differentiated or consumable. Products or services that are difficult to replicate, IP protected or require engineered specifications create a defensible position, thus increasing the value
Budget
* It is important to keep solid financial statements, forecast an annual budget and return to that budget monthly. Devise and follow a short, medium and long-term strategic plan in coordination with your budgets
Be capital efficient
* All companies strive for capital efficiency in tough times in order to survive. Great companies are capital efficient at all times. Actively manage your payables, receivables, and capital structure
Be replaceable
* One who have gathered and mentored a complete and sophisticated team always comes out ahead. If the success of the business is tied to the owner's activity or presence in the industry, the risk profile changes and will be reflected in the valuation.
Investors, acquirers, and Bank
This will reward you to tackle some specific situations. As you might have realized growth and acquisition need capital hence Investors and Banks are important for any business.
Good companies get stronger in times like these by taking advantage of the environment to grow organically, by acquisition or both. However, growth takes capital so it's important to identify which approach makes the most sense for your business.
A bank loan to expand a facility, make a small acquisition, or increase your working capital could make good sense. Even with all the talk surrounding the impending rate increases, banks are always lending to good companies, but there are several actions to take to generate a favorable outcome.
Start building relationships with potential lenders and/or equity partners now, before you need them. Take the time to build a relationship- invite them to your facility, present them a short overview of your company and the success that you intend to have.
To conclude
These are the some specific strategies that you should consider, in order to maximize the value of your business. However if you need any further help please feel free to contact me. I am just a click away at jpauljha@gmail.com J
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