How to Enhance Business Value

Business value includes both tangible and intangible assets.

The value of a business is a cumulative total of both assets and intangible assets such as human capital and intellectual property. Valuation is based primarily on hard dollar figures but additional items can help raise the overall total value of your business.

Things You'll Need

• Business plan
• Profit and loss statements
• List of all assets
• List of all personnel

Instructions

1. Review the assets that your business owns. List all assets and include the value of each item. Calculate the total of all assets. Include tangible assets only and include items such as land, buildings, vehicles, computer equipment, cash on hand, investment holdings and equipment.

2. List cash on hand and investments that you currently own. Include stocks, bonds and real estate investments. List outstanding debt associated with all assets. Update internal financial statements to reflect current asset and debt information. Update profit and loss statements to reflect current business activity.

3. Review ability to purchase additional assets to increase the value of your business. Discuss your ability to purchase assets with your financial adviser, accountant or internal accounting staff. Purchase items that you can comfortably afford.

4. Develop a list of all personnel and include detailed information on key employees. List the intellectual property that your employees provide. Detail the value that your employees provide to your company based on their experience, areas of expertise and general business knowledge. Review employee data and determine where additional staff could be used to increase the value of your business in terms of your staff.

5. Gather information on your customers and potential customer base. Utilize CRM (customer relationship management) products and tools to compile customer information. Business value is increased by the amount and types of customers your business attracts. Determine areas where you can increase customers and increase value of your business in that area.

6. Increase revenue and sales prospects to add value to your business from a revenue standpoint. Cut costs where possible. Make changes to your profit and loss statements to reflect increased revenue and decreased costs.

7. List all intangible assets of your company beyond customer data and employee information. Add intangible items such as intellectual property, brand name recognition, reputation and business age. Compile all items into one document to illustrate the total value of your business.

Tips & Warnings

• Maintain current and complete information regarding the value of your business. Make changes, additions and deletions as necessary.

• Do not overstate the values of assets, both tangible and intangible, if you are soliciting funds from lenders or personal investors.

References

• American Institute of CPA's: EBRC

Resources

• Entrepreneur Magazine: Selling Your Business