At some point in the future, you will consider selling your company. Before you arrive at that moment consider increasing the enterprise value of your company NOW by performing a SWOT analysis and make important improvements. Here are some of the key questions to ask yourself.
Concentration issues – Any of your customers account for more than 10-15% of your top line revenues? If you combine the top five customers do they collectively account for more than 50% of top line revenues? Are there supplier concentration issues? Are any suppliers sole source? Can you execute contracts with suppliers that provide you with exclusivity?
Products / Services – Do they drive repeat visits or create regular servicing needs? Are your clients dependent on this service? Is the product or service unique from the competition? Is it consumable? Does it require periodic maintenance? Is it non-discretionary or have a non-discretionary component?
Growth Opportunities – What are they and what are the deployment costs in terms of people, technology and money. What are the geographic constraints of the opportunities? What will the working capital requirement be to take advantage of the growth? What are the CapEx costs required for this growth and where will you find it and how much will it cost?
Quality of Books and Records – Do you have accounting software and a viable data entry system? Does your accountant finalize or close out your monthly books? Does management review results routinely to leverage performance and so fixing inaccuracies? Are your books reconciled to your tax return each year?
Goodwill – Does your company contain “personal goodwill” or “entity goodwill”? Does the goodwill reside with only you making it more difficult or risky to transfer to a buyer? Does goodwill also reside with key employees and or management?
Weaknesses and Risks – In the current business model what are the points of risk and weaknesses in terms of people, technology and money? Is the team performing? Does the team have excess capacity? Are the strong performers in the right positions? Is the current technology required easily scalable? Does the business have sufficient working capital?
Arizona Business Sales Advisors performs a detailed SWOT analysis as standard protocol for all of our clients prior to taking the business to market.
