You’ve closed out the books on another fiscal year (congratulations!) and Q1 is off and running. In addition to setting some of my own goals (alright, “resolutions”) for the coming year, I’ve read plenty 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 business value in the coming year — as I’m sure it is — here are eight suggestions to get you started:
- Get a 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. Wean your customers off relying on you as their point person. By the time you sell your business, 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 make your business vulnerable. 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 during the due diligence phase of selling your business.
- 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.
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 this the year you build a more valuable one.