Many clients want to know how they can make their businesses more valuable when the time comes to sell.
I tell them to look at the gap between the typical small business and the top earning small businesses.
Top earning small businesses net over $365,000 a year. They do it consistently. And they do it whether the owner is present or not.
Because profits are consistent, the business will sell for a multiple of profit.
Very few businesses, though, generate this kind of income. And if the owner has to put in heroic efforts to achieve the profits, potential buyers will know it.
So — here is the simple but incomplete answer to making your business more valuable — build a business that consistently makes high profits and does it without the direct involvement of the owner in the daily operations.
— What Do Top Earning Businesses Do Differently?
Top earning businesses do three things differently.
First, they apply the model described in the E-myth series of books. The owner works on his business, not in his business.
Second, the owner applies the 80-20 rule. 80% of profits come from 20% of customers. The top earning owner focuses on this profitable 20%.
Third, the top earning owner makes sure he has access every day to accurate financial numbers. This owner knows that what you measure, you can manage, what you can manage you can improve.
— How Do You Become One Of The Top Earning Small Businesses?
To become a top earner, the first step is to free up time so you can work on your business.
For most small businesses, paperwork chaos and bookkeeping hassles are huge time wasters.
But with new technology, you can now inexpensively go paperless in your office in 24 hours.
An outsourced paperless office system is within your reach. Outsourced bookkeeping and accounting are also!
— Bottom Line
You’ve probably seen the UPS commercials about logistics.
UPS argues that small and mid-sized businesses don’t need a large warehouse, distribution center, or global network to access the new logistics. They just need UPS. UPS has already built the systems.
By tapping into those systems, you can operate your business with the heft of a big guy, no matter how big you actually are.
UPS is right!
Exactly the same logic applies to paperless office systems and to outsourced bookkeeping and accounting. The systems exist. And they are easily and inexpensively available to small and mid-sized businesses.
By outsourcing your bookkeeping and accounting, you get the accurate numbers you need to manage your business.
By going paperless and outsourcing your bookkeeping, you free up huge chunks of time.
You can start working on your business, not in your business.
You can analyze your business so you know, for example, which 20% of your customers are generating 80% of your profits. Then, focus your efforts where they produce the greatest results.
As your annual net earnings increase and become more consistent, the value of your business will increase.