““Well, step three in preparing to sell is now you have to take action to find a solution to close that gap, right? So there’s lots of ways you can do it. We’re going to walk you…through some actions you can take right now in your business to be able to close that gap.”
– Andrea Jenson
Welcome to a brand new episode of the Cash Flow CFO Podcast. Join me on this solo episode as I share valuable insights and a step-by-step guide on how to prepare your business for sale and maximize its profitability.
Join us to learn the whole story!
“Every dollar in revenue equals 100% to allocate in your business, right? So every dollar in revenue has to get allocated proportionately to your cost of goods sold, your general and administrative expenses, your marketing expenses, and your profit…”
– Andrea Jenson
Closing the Gap: Steps to Increase Business Valuation
Let’s kick things off by emphasizing the importance of taking action to find a solution to close the gap between your current business valuation and your desired selling price. I’ve seen many business owners overestimate what they can achieve in a year and underestimate their potential over a longer period. I want to highlight three crucial actions to help you on your journey toward a successful business sale:
1. Set Prices for Profitability: One of the fundamentals is setting the right prices for your products or services. Many business owners fail to understand the true cost of delivering their offerings, which can lead to suboptimal pricing. I strongly recommend conducting a pricing analysis to determine the actual cost of delivering each service or product and aligning your pricing strategy accordingly. This ensures profitability and efficient allocation of revenue.
2. Invest in Your Future: Rather than rushing to sell, consider ways to increase your business’s value. I’m a big advocate of viewing your business as an asset. Instead of an immediate sale, I suggest using our “Predictable Profit Planner.” It’s a tool that helps you understand all the components that make a business profitable. By identifying the key levers that affect profitability, you can develop a strategy for consistent and predictable growth.
3. Focus on Key Performance Indicators (KPIs): In the last phase, I recommend building and tracking key performance indicators that offer insight into the health and performance of your business. KPIs provide a straightforward way to monitor your business’s critical areas and make data-driven decisions to optimize operations.
The Roadmap to a Successful Business Exit
This comprehensive plan is divided into 12 months, with each stage focused on key aspects of your business, including pricing, marketing, and financial strategy. These steps lead to the ultimate goal: a successful exit strategy. By understanding your business’s financial landscape and implementing the right strategies, you can make your business an attractive prospect for potential buyers. Your business exit can become a smooth and profitable process, with the experienced financial experts at the Cash Flow CFO team guiding you every step of the way.
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