The books are closed on 2013 and we’re already halfway through January. In addition to setting some of my own goals (alright, “resolutions”) for the coming year, I’ve read dozens of blog posts on the topic, including this one on why you should commit your goals to writing, this one on why we get sidetracked from our New Year’s resolutions, and this one about how to keep them.
Most of us set personal goals this time of year. Those of us who are business owners also tend to set goals around hitting specific revenue or profit targets over the next 12 months. But if one of your goals is to increase your business’ value in 2014 — as I’m sure it is — here are nine suggestions that will help you do just that:
- Get an affordable business valuation. It’s hard to plan for building the future value of your business when you don’t know what it’s worth today. You don’t need a full-blown, certified report for this type of internal planning – just a reasonable estimate of what your business might be worth to an outside buyer.
- Take a two-week vacation without checking in with the office. When you return, you’ll see how well your company performed and where you need to make a key hire or create a new system.
- Write down at least one process per month. You know you need to document your systems, but you may be overwhelmed by the task of taking what’s inside your head and putting it down in writing for others to follow. Resolve to document one system a month and by the end of the year you’ll own a more sellable business.
- Offload at least one customer relationship. If you’re like most business owners, you’re still your company’s best salesperson, but this can be a liability in the eyes of an acquirer, which is why you should wean your customers off relying on you as their point person. By the time you sell, none of your key customers should think of you as their relationship manager.
- Cultivate a new relationship with a new supplier. Having a “go to” group of suppliers is great, but an over-reliance on one or two suppliers can create a liability for your business. By spreading some of your business to other suppliers, you keep your best suppliers hungry and you can make a case to an acquirer that you have other sources of supply for your critical inputs.
- Create a recurring revenue stream. Valuable companies can look into the future and see where their revenue is going to come from. Recurring revenue models can vary from charging customers a small amount for a special level of service to offering a warranty or service contract.
- Locate your lease and other key contracts. When it comes time to sell your business, a buyer will want to see your lease and understand your obligations to your landlord. Having your lease handy can save time and avoid any nasty surprises at the eleventh hour in the process of selling your company.
- Check your contracts and make sure they would survive the change of ownership of your company. If not, talk to your lawyer about adding a line to your agreements that states the obligations of the contract “surviving” in the event of a change of ownership of your company.
- Get your Sellability Score (just a quick, 15-minute questionnaire). All goals start with a benchmark of where you’re at today, and by understanding the underlying issues that contribute to sellability, you can pinpoint how you’re doing now and which areas of your business are affecting overall value.
A lot of business owners set New Year’s resolutions around financial metrics, but those goals are blunt instruments. Instead of just building a bigger company, consider making 2014 the year you build a more valuable one.
Author: Barbara Taylor
Barbara is co-founder of Allan Taylor & Co. and a former New York Times blogger. She has been a small-business owner since 2003. Barbara lives with her husband, Chris, and their two sons in Northwest Arkansas.