‘Planning’ to Build Business Value: Small Moves with a Big Impact

As year-end approaches, business owners often find themselves reflecting on lessons learned, setting new goals, and planning for growth for the upcoming year. For many HARDI member companies, especially independent, founder-led, or family-owned businesses, the reality is that their time is tight and schedules stretched thin. Owners wear many hats and can easily get caught up in the day-to-day demands of working in their business, leaving little time to work on it. However, it is in those moments that focusing on low-effort yet high-impact moves—or “low-hanging fruit”—can make a big difference.

At Carter Morse & Goodrich, we have spent our nearly 40 year history working exclusively with founder- and family-owned businesses to help them build value, whether in preparation for an eventual sale or just to improve the way their businesses operate. Whether you are planning to run your business for the long-term, transition it to the next generation, or eventually explore a transaction, here are some simple, high-return steps to consider as you plan for the coming year to boost your company’s performance, position it for long-term stability and maximize value.

1. Profit Enhancements

Each dollar added or saved flows directly to the bottom line, especially for high operating leverage business models like wholesale distribution. Here are a few practical actions:

• Raise Prices: When was your last price review? With recent market changes, a modest price increase can significantly boost profitability. Many business owners worry about alienating customers, but in reality, pushback from customers is often far less than feared.

• Explore Vendor Discounts: Most vendors offer volume discounts and/or discounts for long-term commitments. Why not negotiate harder for them? These discounts set the stage for future profitability enhancements and, in the context of an M&A sale, may even be considered an ‘add back’ to historical profitability which certainly increases value.

• Revisit Operating Expenses: Most owners are hyper-focused on the big expenses (costs of materials, labor, etc.) but it may be worth reviewing basic operating expenses too. By addressing these smaller costs, you may be surprised by how much you can save in the aggregate.

• Optimize Net Working Capital: Accelerating receivables and managing payables strengthens cash flow, making your balance sheet nimbler in the short term. In a sale scenario, it will also lead to more cash for the sellers as less working capital will need to be delivered at the closing.

2. Strengthen Contracts

Many family businesses operate on trust-based agreements, especially with long-term relationships. Take time to review and formalize customer and vendor contracts. Updated, well-documented agreements help secure your base and you may even find new pricing opportunities. Looking further down the road, these moves will reassure future partners or investors by reducing risk while also improving value.

3. Data-Driven Customer Decisions

Does intuition match reality? A data-driven look at customer profitability can yield unexpected insights. By segmenting and analyzing customer data, you will better understand which customers drive profits and which customers might need more proactive management. Typically the 80%/20% rule can apply, so focus on your top – and bottom – customers to improve profits. Strong, profitable customer relationships are the key to increase long-term value.

4. Enhance Your Physical and Online Presence

First impressions count. Keeping your physical facility well-maintained and your website up-to-date project both professionalism and credibility. A strong online presence not only improves customer experience but also signals that your company is in step with—or ahead of—current industry trends. As distributors invest more in digital interactions, any upgrades that enhance the online journey or improve operational efficiency will pay off—both now and in the future.

5. Develop a Clear Growth Plan

A well-defined growth plan keeps both business owners and their teams focused on high-value initiatives. In the near term, setting achievable growth targets provides direction and motivation. Over the long term, a solid growth plan showcases the company’s potential, attracting favorable financing opportunities and positioning you as a platform for growth. This strategic focus enables you to stay proactive and aggressive when others might hesitate, appealing to investors who can provide the resources and expertise to accelerate your vision—if that’s a path you choose to pursue.

These steps can add measurable value to your business and prepare it for future success. With a little planning, your company will be well-positioned for whatever the future holds.