Theo Paphitis, simple and straightforward....

Thinking of selling your business in the future? What is it worth?

Retirement? Change of circumstances? Nobody to take over? Time to exit?

What ever the circumstances, selling the business at some stage in the future will cross the mind of many business owners.

So what is your business worth? Is the loss of annual income worth the sale? How can you increase value?

These are all questions that will float around the brains of many business owners at some stage and many do not know the answers. Many have spend decades building their businesses but really do not have a plan to deal wit the time when they no longer wish to run or own their business.

One client I met recently was in exactly this position. He and his wife and had built the business over eighteen years and were starting to consider retirement. Here is our conversation:

SF: "What do you think it is worth?" 
Client: "around £3 million" 
SF: "ok, how have you reached that figure?"
Client: "well, eight years turnover is around £3million" 
SF: "and has anyone verified that value for you?"
Client: "no"
SF: So why do you think an 8x multiple of turnover is an acceptable basis for value? Are there other examples in your industry?
Client: "I don't know"
SF: "what is a buyer getting for his £3m?"
Client: "the company name, the clients, the vans, the staff, the stock and the website"
SF: "what is the value of the stock and the vehicles?"
Client: "hmm, around £70,000 to £80,000"
SF: "ok, so the buyer is getting the name, the website and the staff for £2,920,000?"
Client: Well.....yes"
SF: "ok, how much is the business making net per year?"
Client: "around £140,000 after everything"
SF: "what is the income from recurring contracts per year?"
Client: "nothing"

In reality this business may be worth between £400,000 to £600,000 today - if a buyer can be found.

I have met many clients who over-value their businesses as they often relate value to the effort they have put in over the years AND the potential value of the business in the future. Neither of these create value for a buyer. It sounds ruthless but its true. A buyer is not interested in the past efforts any more than he or she is interested in paying for the future that does not yet exist. They are interested in NOW.

If you aspire to selling your business in the future then you simply must get some advice as to what is it worth now and how you can create value in the future. A business that is designed to generate a healthy income for its owners may not be correctly designed for creating long-term value. Many business owners do not appreciate the value of their relationships with their clients and many businesses fail after the owners have retired or sold the business.

By talking to SalesFriend we can help you understand how to create the value that businesses want to buy. The vast majority of businesses that we meet are missing opportunities to create value with a few simple changes to their business plans. Here is a very simplistic but genuine recent example: A client had a business offering maintenance services on printing machines. In this business, a client without a contract who earns a profit of £50 per month would be worth only £150 of sale value, however if this client had agreed a 12 month contract then the value of this client would increase to £950 and more again if clients paid via Direct Debit.

As you can see it is often simple changes to trading terms can create a large increases in value. There is little to be lost by letting our team review your business and give you some advice and supporting numbers to help you grow value.

Please share, like, follow and tell others, thanks!

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When invisibility is not a superpower

So you have a great new site.

You have paid the bill and you are rightly proud. The problem is that nobody can see you. On the internet you are invisible.

Seem familiar?

Welcome to the biggest competition in the world! You are competing to be noticed in a space where there are currently 956,426,733 websites and growing by the second.

Yes, it's a challenge but it's not as bad as it seems and it really is possible to get your site noticed on the Internet search engines. It is my personal opinion that if you want to get your site listed on the "Holy Grail" of the first page of the relevant Google search then you have two simple choices:

• Pay money for sponsored listings and/or Google Adwords for virtually instant results
• Pay nothing and invest lots of time into back links, search engine submissions, social media, blogging and discussion forums. This takes much more time but with constant effort and excellent content you will find yourself creeping up the search engines organically.

As with life, organic is best. People are more likely to click your organic listing as they expect your site to interesting and match their search requirements. An organic listing takes time and attention to achieve and I think people have some respect for the efforts invested to be on page one. 

As an outline guide, I find that most clients who are committed to providing good content online through all the methods I have mentioned above will start to see noticeable improvements after around nine months and after eighteen months many have achieved page one listings. Most of these businesses have required some assistance, particularly with the back links, keywords and the background things that can help Google index your site but these skills can be learned easily through online tutorials. There are thousands of businesses out there who will tell you that they can get your site flying up the search engines, normally for a fairly sizeable fee - it is important to carefully research these businesses in detail before instructing them. So many of these businesses make big headline claims whilst offering no guarantee's or promises.

In some instances there are ways to get your content listed higher up the search engines while your actual website may be listed much lower. An online blog is very likely be listed very high with the web address (URL) of the blog and this can be a great way to get people to find your content while your own site climbs the rankings. Channels on YouTube together with cross-pollinating social media will also make a significant difference. 

I will shortly add a few tutorials from YouTube to this blog that will help you to start the building process and more in-depth information will be published very soon.

Thanks for reading my blog, please take just a minute to share and like it so that others may enjoy!