Many business owners only stop to think about the value of their business when they’re planning their exit strategy. Unfortunately, this is often too late and yields a disappointing result.
At CRM, we encourage our clients to consider the value of their business regularly so that they can take steps to improve performance and increase the valuation year on year. We help clients to appreciate the bigger picture and that non-financial factors impact business valuation. So if your business is your pension pot and key to your wealth creation, it’s a good idea to use a consistent business valuation method as an annual guide to creating value for the future.
What is value creation?
The purpose of any business is to create and deliver value that is generated through the work you do. Value increases the health and success of a business and includes intangible things like customer goodwill, employee loyalty, managerial expertise and intellectual property. In the competitive world we operate in, creating value is what differentiates companies from one another and can ultimately affect which survive long-term.
How can I add business value?
There are many things you can do to secure a good valuation, such as:
- Build credibility with customers and employees – make and keep realistic promises on service, quality and delivery. Delivering consistent results proves your company is reliable – an important intangible business value. Keeping your promises with employees builds trust, loyalty and morale.
- Invest in IT and processes – having the right IT systems in place allows your business to adapt to changing conditions whilst improving performance and productivity through information sharing and transactional speed. Create an IT plan and support it with investment to improve your processes and add value.
- Develop your people – invest in developing leaders who can support and motivate employees, and supporting employees to develop the skills and knowledge they need to innovate. Leadership training, effective delegation and encouraging employees to take control of projects, will increase the business’s ability to compete and add more intangible value. It also allows your management team to focus on strategic issues and helps you retain and attract the best people.
- Invest in research & development – to stay ahead of your competitors, strengthen your core competencies by investing your resources in the areas that are most important to your long-term success and growth.
If you would like to find out more about ongoing business valuation and how to increase the value of your business, why not come along to the next CRM Seminar taking place on Wednesday 18th September 2019 at Begbroke Science Park, near Oxford.
Called Planning For Success, this seminar offers lots of useful pointers to help you plan and forecast within your business plus a chance to network with like-minded business people. For more details, check out our Eventbrite page or call CRM on 01865 379272.