By Scott Patterson

As the majority of small to medium sized businesses are owned by people 50 years of age or older, it is likely that many of these businesses may be offered for sale some time in the next 5 to 10 years or even sooner. With this volume hitting the market, only those that are performing well are likely to attract a premium price. What role then can benchmarking play in ensuring these businesses are sale ready?

Selling your business is no different to selling your house. If your chosen succession exit option (there are several) is to sell your business, then you need to ensure that your business is ready for sale. By addressing a few key issues upfront, you will increase the probability of achieving a sale price that will ensure an adequate return for the time and effort that you have invested in the business.

Managing your business value drivers will assist you in achieving your desired sale price. Compare your 7 business value drivers to best practice businesses:

1. Efficient systems 2. Not owner reliant 3. Benchmark performance 4. Innovative and different to competitors 5. Motivated staff 6. Loyal customers 7. Documented succession plan

We now have a better way of making benchmarking really work for you as a tool in helping to improve the value of your business. We have access to, and actively participate in, a really valuable benchmarking data base. This data base is active and online. That is, financial information on business performance and also business values is continually being added. This information applies to a range of industries and businesses. We can give you industry reports that show both average performance as well as the performance of the top 20% of businesses. We can enter your data in order to get a direct comparison. This is an innovative tool that can give you valuable and timely information about your business. It can also be used in a very real way to help you improve the value of your business. Whether you are planning on selling your business or not, building business value should be a stated objective of all business owners whether you are 50 or 60 or 25 years of age. One of the primary reasons that most people go into business is to build wealth, and for most of these people their business represents a significant portion of that wealth. Surely it therefore makes sense for us all to be endeavouring to maximise the value of our businesses.

To optimise the benefits of benchmarking as part of your business value improvement program the following 7 step process has proven to generate the best results:

1. We value your business as it is today;
2. Compare that value to like valuations and sales data;
3. Determine the gap between today’s value and your future target value;
4. Identify areas of the business targeted for improvement ( value drivers);
5. Use benchmarking to identify strengths and weaknesses;
6. Implement a business improvement program;
7. Monitor your progress and revalue your business at agreed intervals.

Sourced from BStar Pty Ltd