By: Jeff Pocock
When it comes to increasing the value of your business, the old adage rings true: It’s about the journey rather than the destination. Increasing value is an ongoing process—a process that involves the regular assessment of your business’s strengths and weaknesses. The process should ideally lead you to opportunities that allow you to build upon the former, while remedying—or eliminating—the latter.
Because you never know when the need for financing—or the decision to sell—may present itself, you should always be searching for new ways to increase your company’s value. While there are obviously external factors that can play a role in how much your business is worth, there are also many things you can control. These may include:
Prospective buyers and potential lenders have one thing in common: They’re both interested in the financial position of your business. By regularly assessing such things as your balance sheet, debt-to-equity ratio and redundant assets, you can fine-tune areas that may look less-than-appealing and take steps to further enhance others.
Management depth and skills
If you left your business tomorrow, would it be able to survive? Companies with strong management teams are more valuable than those that are completely dependent on the owner(s). If you don’t yet have a strong management team in place, now is the time to start building one. It takes time to find good people, so the earlier you get looking, the better.
Strong hiring and training practices are the cornerstone of a skilled workforce. Hiring the best of the best—and making sure those employees’ skills are frequently updated—has a positive impact on employee morale, retention and productivity, ultimately increasing your business’s value.
Products and services
Regardless of what business you’re in, you’re in it to meet your customers’ needs. The more relevant your products and services, the better you can meet those needs. By identifying and reacting to potential changes in customer preferences, cleverly differentiating your offering and establishing effective marketing plans to get in front of those customers, you’ll not only increase the value of your business, but you’ll be setting it up for long-term success as well.
When it comes to customers, it’s best not to put all your eggs in one basket. By diversifying your customer base—whether through a new product line, marketing strategy or by targeting a new geographical market—you’re lowering your level of risk and increasing your company’s value.
Plant and facilities
Nobody wants to pay top dollar for an ailing plant, building or equipment. That’s why it’s important to keep on top of the state of your facilities. By being proactive about structural repairs, equipment upgrades and safety standards, you’ll not only make your facilities nicer places to work, but you won’t be faced with a laundry list of repairs and upgrades when you decide to sell.
The most successful and longstanding companies are those that are able to adapt to change. Whether you’re faced with new customer preferences, increased competition or innovations in the marketplace, embracing change is a sure-fire way to increase your business’s value.
By making the effort to check in on your business on a regular basis, you can spot opportunities to increase its value as they arise—and make impactful decisions accordingly.
The author is a Partner at Grant Thornton LLP Canada. Grant Thornton International Ltd. is a leading global business adviser that helps dynamic organizations unlock their potential for growth. Punongbayan & Araullo (P&A) is the Philippine member firm of Grant Thornton International Ltd. For inquiries, you may direct them to 988-2288 ext. 760 or visit our website at grantthornton.com.ph
As published in Philippine Daily Inquirer dated 04 April 2016