This Formula One season is rather exciting, isn’t it? Even if you have no interest in the sport, the experience that Mercedes-AMG Petronas F1 driver George Russell had over the weekend is a cautionary tale for any business owner.

He crossed the finish line in first position at the iconic Spa-Francorchamps track at the Belgian Grand Prix, a dream outcome at a dream location. But after the champagne had been sprayed all over the floor and into his eyes, the bad news came through: the car was underweight and would be disqualified. From hero to zero, quite literally.

This happens in businesses as well. You can go through all the work of putting together a great business and finding the right deal, only to have your hopes dashed by failing a due diligence. The only way to avoid this is to do exactly what Russell’s team didn’t do: get the basics right and make sure the business is capable of passing an inspection.

Nobody wants to put the cork back in on the champagne. By partnering with bizval to assist with exit strategies, you can identify potential issues early enough to address them effectively. To celebrate this partnership, we are offering an exclusive opportunity for the first five respondents: a comprehensive and complimentary exit assessment. Don't miss out on this valuable chance to ensure a smooth and successful transition for your business. 

Reply to this email and do it quickly to claim your prize.

And to make sure you get the best possible price when you do decide to sell, here are five value-creation strategies that you can start implementing today:

1. Spread your revenue risk

A business with high concentration risk (too much revenue coming from too few clients) is only a few phone calls or emails away from a disaster. Savvy buyers know this, which is why valuations of these businesses suffer accordingly.

The answer? Spread your risk by getting more clients and customers. Just be careful of doing more harm than good, as creating an inefficient organisation that loses focus also isn’t the answer. The trick is to identify smart ways to bring in more key relationships.

2. Be strict on expenses

Some of the expenses in your business are great. They genuinely make the business better, achieving a strong return on investment in the process. A perfect example would be a salary paid to a key staff member, or a subscription to a system that makes you operationally stronger.

As for the rest of the expenses, they are the pests in your garden destroying your favourite flowers. If you ignore them, soon there won’t be any beauty left. Act decisively on minimising and getting rid of as many of them as possible.

3. Measure your margins

If you don’t know how to clearly articulate what’s going on in the business, then how will you explain it to someone else? Not only do you need to have your gross margins on the tip of your tongue, but your operational margins as well. This will help you spot variances more quickly and jump on any problems in the business.

And of course, the information is only as useful as the process to obtain it. Like with Russell’s car, the percentages you give to a prospective buyer need to withstand scrutiny, otherwise the trust will be broken.

4. Collect those debtors quickly

A Formula One team is far more than just a star driver. There’s an entire team working in everything from car design through to race strategy. If the talent doesn’t run deep enough, the team won’t succeed. Even more than that, without sufficient bench strength, it also wouldn’t survive the loss of the one or two superstars in the organisation.

If you hope to sell your business for a strong price and on appealing terms, make sure you’ve created an organisation that can survive you leaving. Otherwise, all you’ve done is build lucrative self-employment rather than a legacy.

5. Build bench strength

A Formula One team is far more than just a star driver. There’s an entire team working in everything from car design through to race strategy. If the talent doesn’t run deep enough, the team won’t succeed. Even more than that, without sufficient bench strength, it also wouldn’t survive the loss of the one or two superstars in the organisation.

If you hope to sell your business for a strong price and on appealing terms, make sure you’ve created an organisation that can survive you leaving. Otherwise, all you’ve done is build lucrative self-employment rather than a legacy.

Let’s talk

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Happy building!

bizval