Access to Cash Is the Golden Nuggets for Enhancing Business Value
A potential buyer for your business will look at many areas to understand the business value, such as:
• Professional management
• Loyal customers
• Engaged employees
• Sales growth
• Low cost provider
• Sustained profitability
• State of the art facilities
• Superior technology
• Strategic suppliers
• Speed to market
• Patent protection
• Product or service innovation
Not one of the items on this list will have as much impact as to access capital or cash. The ability to generate attractive cash profits is the #1 success factor for selling your business in the future. Profitable companies have failed because it took too much working capital to fund their growth and it destroyed their business.
Consider a brand that stood for integrity and quality throughout the world like Arthur Anderson then one mess up caused them to lose access to capital. To get the capital they needed to survive, they had to be absorbed into a competitor at a huge discount to their true business value.
Focus on access to capital or cash – without it – a business cannot survive for long. This is the #1 reason an owner fails to sell a business.
Access to cash is important throughout your ownership and is not something you can change overnight. Work towards a long term strategy of improving your cash position to grow your business value and prepare for your eventual exit.