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Improve Business Valuation
1. Business Valuation Tip # 1: Monitor Expenses
  • Divide ownership and management expenses. This will track costs and control any personal expenses being booked as business expenses, increasing overall business valuation.

  • Closely monitor and record cash flow of the business.

  • Control discretionary expenses like company dinners, picnics etc.
Business Valuation Tip # 2: Strengthen Cash Flow
  • Use equipment financing rather than your own money to buy equipment.

  • Choose unsecured credit lines over term loans and business credit cards.

  • Maintain lean inventories. Keep fast moving product with high margins.

  • Utilize full billing cycles, and pay vendors on the last day of billing cycle.

  • Negotiate discounts for cash payments.

  • Restructure expensive debt, but refinance hard money and credit card loans.

Business Valuation Tip # 3: Grow Strategically
  • Do not grow too quickly. Over leveraging your business will decrease the attractiveness of your company in the long run, and reduce the value of your business. Also, rapid growth applies pressure to the organizational structure and raises high ballooning costs.

  • Have a web presence. Besides being a low cost marketing tool, web sites increase the validity of your company, chance of getting a loan and the overall business valuation.
Business Valuation Tip # 4: Expand Client Base
  • Diversify your clientele. The more diverse your client profile, the less risky an investment your business is and the higher the business valuation.

  • Add more clients through referral networking and marketing campaigns.

  • No single client should account for more than 10 percent of annual sales.
Business Valuation Tip # 5: Track Inventory Closely
  • Maintain a daily opening and closing statement of the inventory. This will prevent any pilferage.

  • Monitor inventory turn time.
 
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