A Quick 10-Step Business Tune-Up
Take a closer look at your business and find ways to improve. Whether you’ve started to think about selling or merging your business or are experiencing flat to little growth, it’s always a good idea to look for ways to do things better. Taking a critical look at your current operations and finding ways to finetune what you do will not only provide immediate rewards, it will also help you increase the value of your business. The ten steps we’ve outlined here are important for businesses that are contemplating a sale or merger, but they’re every bit as applicable to businesses that want to continue operating for the foreseeable future. The end of the year is a great time to take stock of what you’re doing, make a plan, and put improvements in place.
1 Take a fresh look at old plans
Far too many business plans and other strategic documents simply gather dust. After spending countless hours developing plans, the owners rarely if ever pull them back out for a review. Take a day to pull out your plans and look at them with fresh eyes. While your business and your market may have changed since you developed your plan, odds are there are some excellent ideas you’ve never pursued. You can implement those ideas (or today’s equivalents), or you can completely update your plans. Either way, taking those great ideas and putting them into action can help you grow your business. 1
2 Boost your profitability
One of the easiest ways to increase profitability is looking for areas where you can cut costs or create efficiencies. Sometimes it’s just a matter of looking at longtime practices and processes in a new way. Perhaps you could purchase heavily used items in bulk. Maybe you’re printing copies of documents you don’t really need or that you could save digitally, so you’re wasting ink and paper and taking up storage space. 2
3 Increase cash flow
Profits are important, but cash flow is an important factor to consider. Strong and growing cash flow is a sign your business has been well-managed, and its customer relationships are healthy. Historical results are important. 3
4 Measure performance
You don’t know how healthy your business really is – and you can’t prove it if you’re not properly measuring it. Develop key performance indicators (KPIs) that are appropriate for your industry and businesses like yours and track them religiously. Good KPIs not only tell you when things are going well; they can provide an early warning of trouble that’s ahead so you can take timely corrective measures. 4
5 Choose metrics that matter
Tracking the KPIs that matter most to prospective buyers or merger partners will help you get the most value when the time comes. Learn what matters to them and add those factors to your tracking. It may also be worthwhile to obtain regular thirdparty audits or other financial reviews. Getting outside validation can be a wise investment. Not only will that tell a prospective buyer that you pay attention to what’s important, but it will increase their confidence in your books and the story they tell. 5
6 Romance your customers
You don’t mean to take existing customers for granted, but that’s what tends to happen. When people are prospects or new customers, you go out of your way to treat them well and let them know how much you value their business. Fast-forward several years, and you assume they’ll always be customers, so you may not pay as much attention – until they leave for a competitor. Rekindling your
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relationship with existing customers will keep them around, so you’ll continue to gain revenue from them. You may also discover they have other needs you can address or products to cross-sell, further strengthening the relationship and increasing revenue. 6
7 Keep employees happy
Your employees are a critical element in the ongoing success of your business, and if you’re contemplating a sale or merger, the new owner will likely appreciate a stable workforce that will stick around at least through the transition. Talk with your team to gauge their satisfaction. Benefits such as equity ownership with vesting over time and bonuses based on the profitability of the business will encourage them to work harder. But first be sure you talk with them to learn what matters most. You may think a benefit is appealing, but if they don’t, it won’t do you any good. 7
8 Step up marketing
When was the last time you considered going after a new market or trying a different marketing channel or approach? Explore ways for expanding your marketing efforts. In the short run, you may see increased revenues, but more important, a prospective buyer or merger partner will find a growing business more attractive and valuable. 8
9 Update your website
Your financials are important, but so is your company’s image, and one of the first places a prospective client, buyer, or merger partner will go is to your website. Like it or not, what they see will color what they think of your business. If your site is dynamic, contemporary, and professional, that’s how they’ll see you. If it’s clunky or outdated (with telltale signs like a “news” page that hasn’t been updated
