How can I grow my business to increase its value before selling?

To increase the value of your business before selling, focus on sustainable profitability, recurring revenue, customer diversification, strong management and reducing reliance on you as the owner. Buyers also look for scalable operations, reliable financial information and a credible growth plan that demonstrates how the business can continue to perform after a sale.

Growth can increase value, but simply becoming a bigger business does not necessarily make it a more valuable one. The aim should be to strengthen the areas that reduce risk for a buyer, improve the quality of earnings and give them greater confidence in the future performance of the company.

Some of the most important areas to focus on include:

• Improve profitability and financial performance
  Buyers will want to see consistent earnings, healthy margins and good cash generation. Clear, reliable financial reporting also makes it easier for a buyer to understand the underlying performance of the business.
• Build predictable and recurring revenue
  Contracted, recurring or repeat revenue can give buyers greater confidence in future earnings and make the business less reliant on continually winning new work.
• Reduce customer concentration
  Heavy reliance on one or two customers can represent a significant risk to a buyer. Building a broader customer base can make revenues more resilient and the business more attractive.
• Strengthen the management team
  A business that can operate successfully without the owner being involved in every decision is generally easier to acquire. Developing a capable management team can therefore be an important part of increasing value ahead of an exit.
• Create scalable operations
  Well-documented processes, appropriate systems and sufficient operational capacity can demonstrate that the business has the infrastructure to support further growth without costs increasing at the same rate.
• Develop a credible growth plan
  Buyers are not only acquiring the performance you have achieved to date. They will also consider the future opportunity. A realistic, evidence-based growth plan can help demonstrate where additional revenue and profit could come from under new ownership.
• Strengthen your competitive position
  Specialist expertise, intellectual property, strong customer relationships, market reputation or a clearly differentiated offering can all help make a business more attractive compared with other acquisition opportunities.
• Prepare for your exit early
  The earlier you understand what may strengthen or weaken the value of your business, the more time you have to make meaningful improvements before approaching the market.

For a more detailed look at these areas, read our article How to Build a Business Buyers Can’t Resist: Growth Tactics That Work or our guide to 7 Essential Strategies on How to Grow Your Business Before Selling It.

You can also use our Business Valuation Calculator to get an initial indication of what your business may be worth today. For a deeper understanding of the factors that influence valuation, read What Is My Business Worth? A Clear Guide to Understanding Business Valuation.

Ultimately, increasing the value of a business before selling is not about making short-term changes purely to achieve a higher valuation. It is about building a stronger, more resilient and less owner-dependent company that a buyer can see continuing to grow after you have stepped away.

Ultimately, increasing the value of a business before selling is not about making short-term changes purely to achieve a higher valuation. It is about building a stronger, more resilient and less owner-dependent company that a buyer can see continuing to grow after you have stepped away.