Increasing the value of your small business is no easy feat, and whether you are doing so to make the company the best it can be, to get it ready for sale, merger, or acquisition, or to sustain growth, making value a priority in your business is an excellent use of your time and resources.
But what exactly does it mean to add value to your business?
Value and growth are often intertwined, and while they can both result in the same or similar results, growth is making the business do more and sustain itself over the long term in all areas by improving what you do, adapting to new technology and consumer trends whether or not make a profit. While adding value does just that, it enhances the business to increase profits and turnover and makes the industry highly attractive to others, be it customers or those you wish to sell in the future.
Adding value to customers is about looking at their wants and needs and fulfilling them, while adding value to investors or buyers is about showing them your company’s potential and viability.
With this in mind, how exactly do you add value and, by extension, growth to your business without ruining everything you have worked towards?
Know your Current Value
Knowing your current value gives you a baseline to start from. You should know your sales performance, key growth areas, and financial projections at a minimum. Every business should know this, but if you want to add value, you need to know precisely what it is you offer as you stand right now.
A business value is determined by multiple things, including;
- Book value
- Market value
- Financial health
- Owned assets
- Financial prospects
If you are looking to sell your business, these are the key areas that business valuations will focus on; however, even if you don’t plan on selling, you still need to know this information to help you make your business the best it can be because adding value to what you do and how you do it will improve all of the above and allow you to sustain your business and attract and retain customers.
Know your Weaknesses
As well as knowing your business’s monetary value, you also need to identify any areas that are affecting how much your business is worth and what you aren’t doing so well that will be detracting from the overall customer experience.
You can’t be begin to make improvements if you are unaware of your shortcomings, and far from brushing things under the carpet, you need to be shining a spotlight on potential areas that are letting you down.
Is your team lacking in knowledge and skills for areas of the business? Do you not have the right tools or equipment to get the job done, or do you need to work on your soft skills and communication to help you boost employee and customer relationships?
Break the company down into small sections and collect feedback from as many sources as possible to find the lacking areas and give you a better idea of what is and isn’t working so well.
From here, you can put a plan in place to help you overcome your challenges and turn your weak points into solid links that support the business and not threaten to derail your progress.
Be A Customer
To better understand your company and the impact it has, you can be a customer. Take yourself out of your current role and insert yourself into the role of the customer to see precisely what they experience when engaging with your company.
If you run a store, take out into the store and walk around the premises as a customer and try to find specific items that you sell and assess how easy it is to find them, how your staff can help, and what makes life difficult, e.g., too many floor displays affecting easy navigation around the store. Then, look at your checkout and payment processes. Do you make it easy for customers at checkout? Or are you focusing too hard on the upsell and leaving a sour taste in their mouth when all they want to do is pay and leave?
This can give you valuable insight into how people experience your business from the other side and your role in this experience, both good and bad.
Become A Leader In your Niche
A great way to bring value to your company is to be a leader, the one others in the industry look up to. You need to be appealing to your target audience and niche both of the watches you have likely narrowed down at this point. However, by narrowing them down or expanding your knowledge set and skill base, you can establish yourself as someone in the know who needs to be followed in the sector.
You can do this by hosting seminars, creating informative octet, staying abreast of changes within the industry, and continually innovating and looking for ways to disrupt the status quo if required.
Improve Your Skills
To be the best; you must be open to learning everything you need to know and take feedback and criticism to improve things for everyone within your company or who comes into contact with your company.
Let’s say you run an SEO company, but your proposals are flailing short and aren’t securing your customers the way you envisioned they would. In this instance, you can learn how to write an effective SEO proposal and what writing an SEO proposal entails to help you seal the deal and increase conversions. This way, potential clients will be able to see the value in what you do and the value you can offer them via your services. The more clients you can bring on board, they more valuable your company is! Pus, improving your skills means you can add value by proving to clients you know what you are doing and you are the person for the job.
Hire Correctly
Your team is instrumental in increasing the value of your company. If they aren’t performing well or to appropriate standards, it doesn’t matter how much money you can make or have the potential to make; things won’t go to plan because you don’t have the right team to help you get to where you want to be.
You need a robust recruitment policy to help you find and attract the right employees. You want people who share your vision, have the applicable skills, and know they are invested in innovating and supporting your growth.
You want to be thinking long-term when recruiting, so putting effort into advertising job roles in the right places and screening candidates is essential. You want to hire on more than just experience; while they need the right skill set, they also need the right attitudes and fit into your company to match the energy and brand values you hold. Finding the right team should be a top priority.
Improve Cash Flow
If you don’t have good cash flow within the business, then you won’t be able to add any value whatsoever. A buyer or investor will want to acquire a company with good cash flow, and consumers want to know that the company they’re doing business with can sustain itself, which requires you to be in control and on top of your finances.
There are many ways you can improve your cash flow and stay out of the red, from identifying waste in your expenses and operations and looking for ways to eliminate this to implementing forecasting or seeing how your future looks based on your sales history.
Other options include
- Running customer credit checks
- Leasing, not buying expensive equipment
- Cutting nonessential spending
- Conducting inventory checks
- Ensuring invoices are sent and paid on time by offering various payment options, efficient tracking, and implementing late fees if required.
Attract A Diverse Customer Base
While you might have narrowed your customer base, you must also diversify too.
Contradictory, sure, but there are ways you can do this without compromising on what you do, or neglecting your target customers. Let’s say you market small flashing lights for runners to wear when out in the dark for increased visibility. You can also market the lights to parents for their children when walking home from school when it is dark outside, or you can sell them to pet parents to add to dog collars for nighttime walks and even other businesses who have workers who are outside in the dark, i.e., retailers who have employees collect shopping carts around parking lots. Get creative with who exactly purchases your product and services and what other markets and customers will find value in it, too. Not only will this benefit new and existing customers, but it will boost your market value, too.
Adding value to your business can be done for one of two reasons: to attract and retain customers and to make your business attractive to potential buyers or investors. But far from it being something you do when the time comes to sell, or you aren’t getting enough custom; you need to look at the value your company offers every day and make it the best it can be at all times.