Small Business Value Improvement

Maybe you set personal goals for this year like losing weight or quitting a nasty habit. If you own a company or small business, your goals focus on hitting revenue or profit milestones. The trick is how to make that happen.

If your goal is to own a more valuable business, try one of the following:

• Take a two-week vacation without checking in with the office. When you return, see how well your company performed and where you need to make a key hire or create a new system.
• Write down at least one process per month. You know you need to document your systems and avoid feeling overwhelmed by writing what's inside your head for others to follow. Resolve to document one system a month; by the end of the year your company will increase in value.
• Offload at least one customer relationship. An acquirer might see you remaining your company's best salesperson - which you probably are if you're like most owners - but that is a liability. Wean customers off relying on you as their point person. By the time you sell, none of your key customers must think of you as the major relationship manager.
• Cultivate a relationship with a new supplier. Over-reliance on a small go-to group of suppliers can create liability for your business. Spread some of your business to other suppliers and keep your best suppliers hungry. Thus you make a case to an acquirer that you have other sources for critical inputs.
• Create a recurring revenue stream. Valuable companies look into the future for where revenue comes from. Recurring revenue models vary from charging customers a small amount for a special level of service to offering a warranty or service contract.
• Find your lease and any other key contracts. When you sell your company, a buyer wants to see your lease and understand your obligations to your landlord. Having your lease handy saves time and avoids nasty surprises at the 11th hour of selling your company.
• Make sure your contracts can survive the change of your company's ownership. If not, talk to your lawyer about adding a line to your agreements that states the obligations of the contracts surviving a change of ownership.
• Start tracking your Net Promoter Score ( NPS ), part of a methodology to predict which of your customers will re-purchase from you or refer you (or both), two key indicators of a healthy and successful company. Many strategic acquirers and private equity companies also use NPS to measure the health of their acquisition targets during due diligence.
• Get your sellability score. All goals start with a benchmark of where you are today. Understanding your company's sellability score allows you to pinpoint how you're doing now and which areas of your business drag down your company's value.

Many company owners set resolutions around their revenue or profits for the year ahead; those goals are blunt instruments. Instead of just building a bigger company, make this the year you build a more valuable one.

Follow AdviceIQ on Twitter at@adviceiq.

Scott Thompson is the co-founder of Bridge Business Consultants ( BBC ). BBC is a consulting firm that specializes in helping business owners and certified public accounting firms recognize tax incentives and realize expense recovery. BBC also specializes in business exit planning and has been recognized by The Wall Street Journal for their Business Exit Solutions. Scott is a certified specialist in Retirement Planning. Laura Thompson (co-founder) is a CPA and certified specialist in Estate Planning.

AdviceIQ delivers quality personal finance articles by both financial advisors and AdviceIQ editors. It ranks advisors in your area by specialty, including small businesses, doctors and clients of modest means, for example. Those with the biggest number of clients in a given specialty rank the highest. AdviceIQ also vets ranked advisors so only those with pristine regulatory histories can participate. AdviceIQ was launched Jan. 9, 2012, by veteran Wall Street executives, editors and technologists.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.