If you’re hoping to one day sell your technology company for a substantial profit, you need to start making plans now. Don’t sit back and hope the value of your business increases; make it happen! Here are five tried-and-tested techniques that will make your business more valuable.
Position Your Business to Where the Demand Is
You know what makes a business or product valuable? Demand. The more that people want your product or service, the more you can charge and the more volume you can sell. If you’re in a dying industry, it can be hard to create demand. You need to reposition your business. You can try expanding through marketing campaigns; however, they can be inefficient and ineffective long-term if you don’t have a clear strategy.
The key to demand is to remember your new customers and clients probably look a lot like your existing customers and clients. Where can you find more of them? The demand for your product or service probably already exists. You don’t need to create demand, you need to position your business where the demand is! If you can find demand for your products and services, you will gain repeat customers who buy more and buy more frequently. Demand creates sales, sales create cash-flow, and every business needs cash-flow to be valuable.
Create a Brand
Create a brand that is known in your industry as a leader. If you’re a small ‘me-too’ business, it can be difficult to take on the big boys head-on. Be creative! What niche area of the tech industry can your brand be famous for?
Remember, it’s not what you know, it’s who you know. Better than that, it’s who knows you. That’s what a powerful brand can do for your business. There may be copy-cats that come into your industry; however, you own the niche because you own the brand. People are willing to pay for a strong brand that is positioned well in the marketplace.
Tidy Up and Reduce Your Expenses
Tidy up shop by reducing your expenses where you can. If you are a small business with an office, you may find co-working facilities are a more cost-effective option. By reducing costs, you increase profit, which has a huge impact on the value of your business. Even larger corporations are using co-working facilities these days for a range of reasons.
Physical assets such as property, equipment and infrastructure will hold their value better if they are well maintained. Perform regular maintenance, repair anything that is broken and keep your workplace tidy. This includes your admin tasks! Tidy books, databases, systems, policies and procedures will all add value to your business. If your business is a mess, it’s very difficult for a new owner to come in and run the show. Your business should be turn-key if you want to get a fantastic price when you sell.
Protect Your Intellectual Property
While Intellectual Property (IP) may be intangible, often it is much more valuable than physical assets. Ask your staff and clients to sign non-disclosure agreements so when it comes time to sell, your IP will be safe. Even if you have great faith in your staff or clients, your potential buyer doesn’t know them from a bar of soap, so protect your IP.
If your company has a revolutionary idea that could change your industry, you need to ensure that this information is protected. Items you may consider mundane should also be protected. How you do what you do is the key to IP for your business, even if it’s not particularly unique. The pragmatic aspects of your business is where much of its value is.
Make your staff replaceable
If your business depends on key members of your team (including you the owner) find a way to build fool-proof systems. If a new owner of your business can’t continue to operate when certain team members leave, you’ll find it hard to sell. Start documenting processes and procedures so if a team member left the business, the business will continue to be successful.
When you sell your company, your buyer will likely want to keep your staff to provide continuity with customer relationships. The new owner will likely want to move some people on too, so you must make this process an easy transition.
Lastly, invest in your team so they enjoy working with you and stay long-term. Alarm-bells will sound with a potential buyer, if you have a high staff turn-over. For some buyers your staff will be one of your biggest selling points. If your buyer has confidence in the people who will be running the business, it will increase its value.
To learn more tips on improving your business, read Making Time for Strategy.
Alison Golan is a writer, social media consultant, and marketing expert with 20+ years of experience teaching technology companies how to better tell their stories. At Porter Consulting, Alison works with a team of professionals to help companies grow revenue and market share by utilizing the latest marketing and sales methodologies. To read more blogs by Alison, check out Porter Consulting’s blog site at www.porterconsulting.net.