Instead of resigning yourself to a lower than expected return on the business you have sacrificed so much for, you can and should fight to get the value you know you invested.

To do that, focusing on the end goal--what a buyer or bank will pay or finance--is crucial. Your business value is determined by your cash flow which is driven by the 3 pillars: Product and Service Quality, Record Keeping, and Infrastructure/Processes. Below are eight easy ways to achieve incremental “quick wins” in these areas based on the 80/20 rule and your business’ unique circumstances, to ultimately improve your business value.

Take advantage of customer engagement opportunities

Advances in SEO (Search Engine Optimization), emails, Facebook, Instagram, Twitter, and other social media technologies creates many opportunities for cost-effective customer engagement. Real-time customer feedback and proposals provide immediate ways to improve product and service quality. When you apply this feedback, the positive online reputation you’ll gain will increase sales and translate to a higher value in the eyes of potential buyers, especially if you have positive online customer reviews as proof.

Improve record-keeping

Hire a bookkeeper or install an accounting software that’s both a fit for your business’ circumstance and scalable. Ideally, you want a software that can generate invoices, pay bills, and create cash flow statements and accounts receivable reports. A program like this will produce reports that inform product sales, costs, and cash flow decisions; form the basis for credible financial projections; and, if it captures sales, inventory and waste data, will make for more accurate, efficient, and reliable inventory monitoring and reorder processes. These features will inspire more confidence in a prospective buyer that they can “hit the ground running” after the purchase, assure them that there is a working waste management process in place, and increase the bottom line and the value of your business.

Start omitting discretionary transactions that depress profits

Your financial reports over the next 3 to 5 years should omit transactions that were done to depress taxable profits as a buyer or investor will only be interested in the facts of the past 3 years. These transactions ultimately reduce the value of the business.

Develop the work team

The sustainability and growth of your business depend on your ability to find, train and retain at least one staff member to effectively manage the business without you. Accomplishing this will improve product and service quality and reinforce repeatable processes, leading to a more turn-key opportunity for potential buyers and ultimately enhancing the value of the business.

Document the processes

The price a buyer pays for your business will be predicated on their ability to replicate your value proposition. Make this easy by documenting and maintaining the key activities that make your business valuable. These documents not only engender confidence in the buyer but also reinforce the repeatable processes for existing and new staff. And even more importantly, the documentation could be the basis for the introduction of continuous improvements and an ERP (Enterprise Resource Planning) system that integrates operations with accounting and dashboard reporting.

Improve the capitalization

Take steps to further capitalize your business by seeking more favourable arrangements with suppliers and customers or increased lines of credit. This will free up cash to take advantage of unexpected opportunities or to conduct research and development. A stronger balance sheet will automatically drive up the value of the business.

Improve the storage capacity

If you have a product-based business, obsolete, expired, or slow-moving inventories may be taking up prime spots in your warehouse. Additionally, if items are not properly organized on the floor, they may be inaccessible, or worse, forgotten. You can eliminate excess products by discounting and selling off slow-moving inventories, disposing of obsolete and expired inventories, and creating a floor plan suited to the daily flow of the operations. This positively impacts service quality and repeatable processes through the efficiencies it creates, and the eventual cost savings improve the cash flow and ultimately the business value.

Tweak the business model

You may need to tweak your business model if it’s outdated to take full advantage of the growth and other changes in the market space. This will remove possible bottlenecks caused by your current model’s inability to handle the changes in your business environment. Clearing those bottlenecks will lead to increased capacity and efficiencies and greater sales and scalability, improving the value of the business and attracting more buyers. (The flip side to this is to do nothing, sell for less than potential, and watch a savvy buyer tweak the model and double their returns instead.)

Effectuation Optimum develops these and other “quick wins” for business owners to help them realize the potential value of their business. Business owners who opt to partner with a professional will position themselves to systematically overcome the various obstacles exiting one’s business may present.

Errol Whittle founded Effectuation Optimum to help entrepreneurs profitably exit their business. His MBA from Oxford Brookes Business School, Oxford England focused on exit strategies for entrepreneurs. Errol is a Fellow of the Association of Certified Chartered Accountants (ACCA) and has provided over 25 years of consulting to various clients in his previous work with PriceWaterhouseCoopers (PWC) and various highly regulated Canadian financial institutions. Errol is a member of the Canadian Federation of Independent Business (CFIB) and the Burlington Chamber of Commerce.