6. Show growth potential
A potential buyer will be most interested in growing a new business, so aim to create a business that can be scaled up. For example, if you develop good business systems and operating manuals, you can show buyers that the business has the potential to:
- become a franchise
- expand into other geographical areas
- acquire smaller competitors.
7. Maintain physical assets
Maintaining assets helps to generate value. Failing to do so can see your assets decay beyond repair. Tangible assets such as machinery, equipment and property are relatively easy to register and protect through insurance and maintenance schedules.
If possible, try to own the core physical assets that you rely on for success. Owning your premises can provide both security and the potential for capital growth. Be sure to seek advice from your NAB Business Banker regarding asset finance, business loans and equipment leasing.
8. Protect intangible assets
It’s important to recognise and protect all the intangible assets that add value to your business. Once you start listing them you may discover there are even more of these assets than you realise.
Assets such as intellectual property (IP) can add both security and value. Review IP Australia to see what could be patented, copyrighted, design protected or trademarked.
Remember the less obvious assets too. For example, in a ‘knowledge’ business whose value largely reflects the skills of its employees, the business risks losing value if the employees leave or take intangible business assets with them, such as a copy of the customer database. Consider these steps:
- Protect your customer database and other key records by creating backup copies and keeping them off-site or in a fire safe. Your customer database is a significant source of value to a buyer, especially if you can show that you gain repeat business through it.
- Use passwords to limit employee access to sensitive or confidential information.
- Periodically check that you can successfully restore copied data.
9. Protect your property
Set up systems to minimise the risk of employees ‘owning’ some of the value in your business. For example, sales people may feel they own certain customer relationships. Include clauses in employment contracts to clarify ownership of any IP developed in the business, and to prevent former staff from competing with you.
10. Retain key staff
Dedicated and experienced staff can be a key asset in the eyes of a buyer. Key staff who have helped you create a valuable business are themselves an important part of that value.
To retain them, make sure you provide opportunities for career progression and use incentives to align pay with the value they create. Make your business an attractive place to work. Good working conditions and competitive wages will help to retain their skills.
Strengthen your team through selective recruitment and training. Look for staff who will create value for your business, and managers with transferable skills who can help you manage growth and achieve the best standards.
Clearly communicating your vision and strategy to staff will also help to motivate staff and gain their buy-in to value-adding goals.