Mergers & Acquisitions Advisory

A Neumann & Associates, LLC

September 1, 2017

Increasing the value of a business through recurring income streams

By Achim Neumann

With optimism in the American economy high, many are looking to cash in on the businesses they built during the lean years of the Great Recession.

While streamlining business processes, conducting renovations, and keeping key talent on board are all great ways to increase a company’s value, few consider the power of building recurring income streams.

In this article, we’ll profile several ways ambitious entrepreneurs can beef up their revenues before courting potential buyers. Let’s get into it below:

Add a subscription service for products that need to be refreshed

Many people hate stocking up on everyday essentials. Wouldn’t it be great to have replacements delivered on demand?

There have been a number of success stories in this area of late, as Target has offered delivery of select sundries for several years now, and Dollar Shave Club built their business on delivering affordable and effective blades on a monthly basis.

Dollar Shave Club sold their operation in July 2016 to Unilever for five times their annual revenue (1 billion USD), which proved just how lucrative these subscription services can be.

Monetizing expertise by launching a membership site

Consultants who have built up a considerable body of knowledge over their career can leverage this asset by starting up a membership site.

By filling customers in on situation-specific insights, ambitious business owners can build up a dedicated body of subscribers within a short period of time.

Whether someone is an SEO wizard, a management guru, or a food and beverage expert, they can use this business model to productize their know-how.

This makes it easy for these owners to escape the time-for-money trap, as well as attract experts eager to buy a turnkey business.   

Charge a monthly fee for services provided

Some business owners have no problem working with clients in real time. However, there are still ways they can increase the value of their business while making life easier on themselves.

By instituting a monthly fee for their services, they can make more while adding certainty to their cash flow.

This predictability also makes their business more attractive to buyers, making it easier to charge a premium.   

Looking for opportunities to cross-sell

Here’s another question business owners should ask themselves: what do my customers buy after purchasing my product?

This can be done by researching similar products on Amazon, as they offer data on what customers purchase concurrently with a specific item.

If this technique isn’t practical, entrepreneurs should use their common sense: for example, those who design web pages should realize their clients may also need web hosting.

By offering them a deal which includes ongoing maintenance, a smart business owner can build a revenue stream that will increase their enterprise’s overall value.     

Renting products in addition to selling them

While most entrepreneurs think in terms of selling x amount of product per month, not as many consider the recurring revenue that can come from renting out a portion of their stock to other customers.

Cars are an obvious example of this business model, but there are outdoor stores that rent out their camping gear, and there are hardware stores that do the same with their tools.

By thinking outside the box, business owners can monetize their idle inventory. This is an important adjustment to make, as consumers are owning less and renting more these days.

 

About A Neumann & Associates, LLC

A Neumann & Associates, LLC is a professional mergers & acquisitions and business brokerage firm having assisted business owners and buyers in the business valuation and business transfer process through its affiliations for the past 30 years. With an A+ Better Business Bureau rating, the company has senior trusted professionals with a deep knowledge based in multiple field offices along the East Coast and has performed hundreds of business valuations in its history. The firm’s competitive transaction fees are based on successfully completing transactions. For more information, please contact A Neumann & Associates at 732-872-6777 or info@neumannassociates.com

Comments are closed.

Any questions? Please contact us at 732-872-6777
Call Now

Client Testimonials

“Working with Marc and his company was a pleasure. What I thought was going to be a just another one of those pushy sales companies was just the opposite. Polite, knowledgeable, and a pleasure to talk to and deal with. Marc handled most of the interaction and he has one of the greatest demeanors. Again, it was a pleasure working with him and his firm.”

Douglas DiCeglio

“I recently completed an acquisition using A Neumann & Associates. Tony Valentino was very helpful and accessible during the entire process. They do a thorough job vetting both parties and got us to the finish line.”

Srini Mudambi

“Claus out of Florida helped us with the sale of our business. We had never done anything like this and him and his team walked us through the process from start to finish. We had some challenges through the process and Claus continued to show up even in the difficult conversations.”

Colby Harris, Co-Owner, Del Mar Designs

“Claus Madsen thoroughly helped us with selling our company. From the 1st introductory meeting explaining to us what was possible, to providing us with resources to assist with the sale. Claus was invaluable throughout the whole sales process. Claus was with us every step of the journey and always made himself available for any questions or issues that came up along the way. If you are interested in selling your business, I encourage you to reach out to Claus and the ANA team so that they can let you know what’s achievable. These guys will make it happen!”

Ron Harris, Co-Owner and Vice President, Del Mar Designs

“A Neumann & Associates is the only business broker I would use or consult with. They have assisted with 3 business sales over the past 15 years with me. They are honest and sincere and have always performed better than my expectations. They are the only one i would use for the sales of my businesses.”

James Belanger, Business Owner

“I wanted to take a second to commend the exemplary customer service from both you [Karin Neumann] and Mr. Valentino. It’s both a rarity in the industry, and very much appreciated.”

Andrew G., Investor

“We worked with Neumann & Associates to investigate the purchase of a research company in 2010 and found Achim to be capable, forthright and realistic. His depth of experience enabled us to fully understand our options, offering creative options that might enable the acquisition. While we didn’t acquire that particular company at that time, we know exactly who to call whenever we’re looking to buy or sell a business.”

Daniel Coates, Buyer

“Purchasing a business through this firm was a pleasure. Gary was very professional and transparent throughout the entire process. I look forward to working with A Neumann & Associates in the future.”

William Klemens, Buyer

“I utilized A. Neumann & Associates to assist in an M&A process. They are VERY thorough in using their time-tested process to calculate the value of investment opportunities, a process which provided a very detailed explanation for the value of the potential opportunity. Additionally, they also went above and beyond to extend other services including connecting with others who specialize in your industry and can assist with necessary steps including legal and accounting. Highly recommended!”

Edward Lane , Business Owner

“I recently contacted A. Neumann and Associates about getting a valuation of my business done. I spoke with Achim, who explained the process in detail. He had his colleague Gary come to my office in order to get a clear understanding of my business, and what I was hoping to accomplish. His patience in answering all my questions and his knowledge of the proper way to market my business gave me great confidence that this is the firm I will be using when the time comes for me to sell my business for max value. They gave me great insight into the steps I need to take now to get the best deal in the future. I highly recommend this firm to anybody who wants to sell now or down the road. They not only know their stuff, their actually just real nice guys.”

Robert Kardane, Business Owner
view all testimonials

Contact A Neumann & Associates, LLC

If you are considering selling your business, please contact us to learn more about our comprehensive service spectrum. Our experienced professionals will answer all your questions about selling a privately held business in complete confidentiality. Please fill out our contact form, or call us at 732-872-6777. We will contact you directly and will never identify ourselves to your employees.

call us now
Contact Us for a Free, Confidential Consultation

Experienced M&A Advisors available

Full Name
Email Address
Phone Number
Message