Four easy ways to increase the value of your business

April 20, 2008

The only real reason to start a business is to ultimately sell it.  With that thought in mind, every business should be making decisions based on what the best ways to operate if you were going to sell your business tomorrow.  Let’s take a look at the four main focus areas that you should concentrate on to increase the value of your business:

  1. Understand and pay attention to your balance sheet:  Many business owners don’t even have a balance sheet.  They are focusing on all of the wrong areas or not focusing at all.  Smart business owners learn how to read and interpret their business’ balance sheet.  Start with your CPA if you don’t understand.  If they are not willing to help you understand, get a new CPA (or call us!).  The balance sheet shows the assets and liabilities of your business.  The difference is your equity or "net worth."  If your business’ net worth is not growing, it might be time to alter the course and get the ship going in the right direction.
  2. Don’t run questionable expenses through your company and make sure you are recording all of your income:  We have all met the restaurant owner who brags about how much cash they take in "under the table."  Yeh, well talk to him when he tries to get financing or sell his business.  As a CPA, I would tell a potential buyer to only consider the income listed on the tax returns since that is the only verifiable source.  Also, if the seller is dishonest on his taxes, what else is he lying about!  Make sure you stay above board with your income and expenses.  As the wise Tax Guru Don Farmer says, "Pigs get to eat slop, but Hogs get slaughtered."
  3. Make sure your business can run without you:  If you "are" your business, the value of your business decreases dramatically.  Also, what would happen if you were sick or disabled?  Make sure a buyer could buy your business today and run your company at a profit.
  4. Develop written systems and procedures:  If you took the time to stop and document the standard operating procedures of our business and creating an operations manual, then it would be easy for someone else to step into your shoes and have a solid direction for the business.  It also helps to document your process to make sure they are efficient and effective.  Put a big sign near your work area for a week — "why did I do that?"  For each routine process or procedure, ask the question.  Sometimes you find the answer is "because I did it that way last time."  If so, is it really the best way?  If your business is based on processes that are efficient and effective, it’s value will increase and the bottom line will too!

Building a successful business is not based on luck, but solid knowledge and principles.  If you are determined to be successful and pay attention to the big picture rather than the day to day tasks of your business and you have a solid team of business advisors, you will be the winner of the biggest payoff on the day you sell your business!

Donna Bordeaux is a Certified Public Accountant and Personal Financial Specialist with Calculated Moves, CPAs, PA in Lake Wylie, SC (a suburb of Charlotte, NC).  For further information about Donna or her firm, please visit

Donna Bordeaux, CPA with Calculated Moves

Creativity and CPAs don’t generally go together.  Most people think of CPAs as nerdy accountants who can’t talk with people.  Well, it’s time to break that stereotype.  Lively, friendly and knowledgeable can be a part of your relationship with your CPA as demonstrated by Donna and Chad Bordeaux.  They have over 50 years of combined experience as entrepreneurial CPAs.  They’ve owned businesses and helped business owners exceed their wildest dreams.   They have been able to help businesses earn many times more profit than the average business in the same industry and are passionate about helping industries that help families build great memories.