Want to make your business worth more money? Let's explore 4 reasons to increase the value of your business and a simple framework to optimize your business so its worth more by the time you want to sell it.

Business owners typically invest years of their lives and make many personal sacrifices to build their companies. If you're planning to sell your business, knowing the amount you want to sell it for will help reduce uncertainty and also helps you understand what makes a good offer when potential buyers come along.

Knowing how much to sell a business for is not easy. Business value depends on your financials, potential for growth, customer relations, and how solid your operations are.

Here's Content Going Into Much More Detail About Business Value: Want to know how much your business is worth and why? Understand How Much To Sell A Business For

The most common way to calculate the value of a 'smaller' business (defined as < $2M in annual revenue) is to multiply your EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization, a measure of profitability) by a factor (called 'a multiple') that's based on industry standards and the unique aspects of your business. This factor is called an 'ebitda multiple' and can vary anywhere between less than 1 to more than 10.

Related Content: Top 6 Online Businesses With The Highest Value In 2024 |

No, no business is too small to sell. It's a common misconception that businesses under a certain revenue threshold aren't valuable from a buyer's perspective.

I love to debunk this, highlighting that businesses < $2M in annual revenue are being sold every day. Read more about it HERE.

When I work with clients, one of the first things I ask is how much money they want in their pocket at the end of the sale. Many don't know, which means there's work to do.

For those who have a number in mind, we look into what it will take to get to that, given the current state of their business. That helps determine whether they need to spend a few more years working to increase valuation or are ready to go for an exit now.

Related Content: How to come to terms with a low business valuation?

It's important to increase the value of your business for 4 reasons:

You can use a simple yet effective acronym called Four EXIT Habits™. Here's a quick overview:

Your business needs to have a strong company brand and market itself effectively to be worth a premium price when you sell it. If your business is built on your personal brand, it is time to switch to building a company brand.

Growth potential is what makes a business attractive to a potential buyer. Make sure you created a 'blue ocean' strategy to stand out from the crowd and demand pricing control.

The backbone of your business needs to be build in a solid way. Tidy up your organizational structure: from team building, to decision-making processes and the implementation of SOPs (Standard Operating Procedures).

T for Tangible Habits:

The quantifiable metrics of success and business value are: revenue, recurring revenue, profit and cash flow. Make sure these parameters are shining bright to be able to demand a premium price.

Getting these Four EXIT Habits™ right can mean the difference between a lackluster exit and a 7-figure exit.

Related Content: HOW TO INCREASE The Value Of My Business, Before Selling It?

The value of your business is a straightforward measure of your success and potential for growth. Increasing its value results in a bigger payout when selling your business. These are all great reasons to increase the value of your business, before selling.