How To Increase The Value Of Your Startup Before You Sell

startup value

If you are considering selling your business, it is important to ask yourself a few questions. Are your financials in order? Will the business be able to be profitable once you are removed from the equation? Is it profitable now?

By asking yourself these questions and being retrospective of your company, you can find ways to improve. Improving your business before selling can help you increase the value of your startup. By increasing the value, you will be able to earn more money with the sale. The tips below should be considered in order to improve and increase the value of your startup.

1. Remove Yourself

In general, far too many businesses are built and operated by the owner, with the company relying on this individual on a daily basis to ensure success. The loss of the startup founder can impact the overall growth and development of the company. You need to ensure that your business is viable without you so a potential buyer can see how they can be profitable in the long run.

2. Clean Financials

Further helping to ensure the value of your company is clean financials. The books need to be neat and thorough, easily providing accurate tracking information. Books that are transparent and accurate will be a true representation of your company. Potential buyers will see the value of your startup after reviewing this clear and concise information.

3. Automation

Another great tip is to build your business where a owner does not have to run it. Documentation can be created with systemization and automation so that there are processes in place as well as procedures for every aspect of the business. With operation manuals in place, the business can be ran by a new owner with ease.

4. Drive Revenues and Reduce Overhead

For additional value in your startup, focus on driving more revenues. Before selling your business, you should be creating as much revenue as possible. This will help to provide the maximum value for your business with a sale. Reducing overhead is also important. Increasing the bottom line before valuation will help to improve the overall value of your company.

5. Lengthen the Time Frame of Stable Revenues

It is recommended that a business owner take one to two years to sell in order to get the maximum value. If you can take this time, it is important to focus on lengthening the stable revenues that your company can produce. Having customers with yearly contracts or longer will help to create stabilized revenues. With the certainty of revenues comes more value for your startup.

Potential buyers will be able to review these contracts and know that they will have a stable source of revenue coming in for a certain period of time. If you can show such potential, then prospective buyers will find value and want to purchase your business.

Following these key tips can be beneficial to selling your business. Take a look at what you can do to improve the value of your business for a more successful sale. 

About Mohit Tater

Mohit is the co-founder and editor of Entrepreneurship Life, a place where entrepreneurs, start-ups, and business owners can find wide ranging information, advice, resources, and tools for starting, running, and growing their businesses.

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