For many, January is a time of rebirth and resolutions. It’s a month to reflect on last year’s achievements and to set goals for the year ahead. Some people will set personal goals like losing weight or quitting a nasty habit, and most business owners will set goals that focus on hitting certain revenue or profit milestones. But if your goal is to own a more valuable business in 2014, you may want to make one of the following New Year’s resolutions:
- Take a two-week vacation without checking in with the office. When you return, you’ll see how well your business 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, but you may be overwhelmed by the task of taking what’s inside your head and putting it down in writing for others to follow. Resolve to document one system a month and by the end of the year you’ll own a more sellable business.
- Offload at least one customer relationship. If you’re like most business owners, you’re still your business’s best salesperson, but this can be a liability in the eyes of an acquirer, which is why you should wean your customers off relying on you as their point person. By the time you sell, none of your key customers should think of you as their relationship manager.
- Cultivate a new relationship with a new supplier. Having a “go to” group of suppliers is great, but an over-reliance on one or two suppliers can create a liability for your business. By spreading some of your business to other suppliers, you keep your best suppliers hungry and you can make a case to an acquirer that you have other sources of supply for your critical inputs.
- Create a recurring revenue stream. Valuable businesses can look into the future and see where their revenue is going to come from. Recurring revenue models can 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 it comes time to sell your business, a buyer will want to see your lease and understand your obligations to your landlord. Having your lease handy can save time and avoid any nasty surprises at the eleventh hour in the process of selling your business.
- Check your contracts and make sure they would survive a change of ownership of your business. If not, talk to your lawyer about updating your agreements to ensure the obligations of the contract “survive” in the event of a change of ownership of your business.
- Start tracking your Net Promoter Score (NPS). The NPS methodology is the best predictor that your customers will re-purchase from you and/or refer you, which are two key indicators of a healthy and successful business. It’s also why many strategic acquirers and private equity businesses use NPS as a way to measure the health of their acquisition targets during due diligence.
- Get your Sellability Score. All goals start with a benchmark of where you’re at today, and by understanding your Sellability Score, you can pinpoint how you’re doing now and which areas of your business are dragging down your business’s value.
A lot of business owners will set New Year’s resolutions around their revenue or profits for the year ahead, but those goals are blunt instruments. Instead of just building a bigger business, also consider making this the year you build a more valuable one.