04Mar
Your business will sell for a PE (price earnings) multiple of your historical EBIT (earnings before interest and tax). The faster your business profits are growing the higher the multiple.
Here are the 3 steps you must take that will increase your exit price.
1. Overhaul your Brand
If you are looking to sell your business for say $5m or even $10m dollars, then you cannot do that if you look like a $1m business.
The quality of your branding has to match your price point. You could be the leading/largest/biggest/best, but if your Branding does not reflect that, you will not maximise your sale price.
Conversely you can lift the value of your business by rebranding. Think of it like street presence when selling property, you only get one opportunity to make a first impression. If people do not like your street presence, they won’t walk inside!
2. Maximise price points
Price points for your product or service are often set once and never reviewed. Many times your competitors have changed prices and you have not, or you have added value but never adjusted your pricing. Once you have rebranded your business, the next step is a thorough review of your pricing policies.
A price increase falls straight to the bottom line. Multiply your revenue by say 5% then multiply that by the PE multiple you can sell your business for! If your annual revenue is $4m, a 5% price increase will lift your exit price by $600,000 to as much as $1m.
3. Strip the fat
Every P+L has fat, it’s only the quantity that varies. Business owners are focussed on sales and growth, and overheads keep growing quietly in the background. Imagine if you gave as much attention to cutting overheads as you did to growing sales!
Well now is the time, before you exit. Stripping fat from your overheads will increase your exit price by 3-5 x the annual savings!
To your success...
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