How Accurate Business Records Can Increase the Value of Your Business

Posted by Jock Purtle on 10-Jan-2018 16:55:55

As your business grows, it often becomes increasingly difficult to keep track of everything that is changing but this is no excuse for keeping bad records. Not only will this hinder your ability to increase the value of your small business and grow further in the future, it could also get you in trouble with the authorities. 

increase the value of your small business

 

Yet keeping accurate records is more than just a protection against damaging your company, it’s also a way to boost its value, both now and in the future. It might be hard to think about this now but there may come a time when you want to sell your business so that you can move onto other projects, retire or simply enjoy some time away. When this day comes, know that your business will be worth roughly 2.5 times its yearly revenue. By simply being able to present accurate revenue figures to investors, you are increasing your chances of being able to command an asking price that reflects the true value of your company.

 

Accurate records go even further in helping you maximize the value of your business. For example, they help demonstrate full compliance with all the necessary tax codes and regulations. A company will be devalued quickly if it’s discovered that it owes lots of money in back taxes, or if there are some regulatory issues that will result in fines or other expenses.

 

The need to keep accurate records is also expanding beyond traditional accounting. With the General Data Protection Regulation (GDPR) set to go into effect later this year, it’s becoming increasingly necessary to keep records of how you handle and store people’s data. A lackluster approach that cannot be documented will hurt the value of your business in the long run.

 

Furthermore, keeping good business records also simply makes sense for the growth and health of your company. “You don’t know where you’re going until you know where you’ve been.” It’s cliché, but it’s true. Being able to look back at how you’ve performed in the past gives you the chance to benchmark your progress. It will help you identify areas where you’ve had success and provide a path to avoid repeating mistakes.

 

Good business decisions are usually driven by good data, so to make sure that you are putting your company in the best position to grow and succeed in the future, it’s important to have solid numbers about what you’ve already done. Accurate records are good practice, no matter what. It might be a challenge to implement these processes, especially if you are growing quickly but you’ll be thankful you did once you see how this can impact the value of your business both now and in the future.

 

 Read How to Manage Receipts as a Small Business Owner to ensure you comply with HMRC!

 

About the Guest Author: Jock is an online business broker and founder of Digitalexits.com. He has seen firsthand business owner disappointment as their company is devalued based on their inability to produce accurate records. To prevent this from happening, he is a big advocate of investing in and maintaining quality records-keeping practices.

 

PLEASE DONATE

The SRK Team will be running a half marathon on the 18th of February to raise £5000 for Railway Children - a charity that helps protect lost and vulnerable children from exploitation and abuse. Like Railway Children, we believe in a world where no child ever has to live on the streets. Please join us in helping to raise £5000 to make this vision a reality. 

 

DONATE TO RAILWAY CHILDREN!

 


Thank you for reading! Please leave any feedback and comments below.   

Tags: Limited Cost Businesses, Growth Best Practices

award winning chartered accountants  Ready to grow to the next level? Take advantage of our tendency to give out free advice

 

Book your FREE consultation

Just complete our form and we will buy you a coffee/cake/tequila shot! If you can't get to London or Birmingham, we'll Skype and send you some coffee beans.

Prefer a phone call?

Give us a ring on 0330 403 0010 and we'll be happy to provide you with a consultation over the phone.