Founders who would like the option to sell their business someday want to attract premium offers rather than average or discounted offers. It all comes down to the multiple. Every +1 to the multiple can millions of dollars in increased valuation.

To command a higher multiple you need a better story. Yes, you need to be able to reassure the potential buyer that your finances are accurate. The buyer needs to feel comfortable that the operational structures are in place so the business can continue to operate once you exit the scene.

However, clean financials and operational excellence are table stakes. To command a premium valuation there needs to be more to the story.

What is the best story you could tell about your business?

Innovation creates an incredible story.

Innovation inspires the buyer with the story that the business is going somewhere. It will continue to grow. It shows the buyer that they are purchasing more than a going concern. They are investing in a GROWING concern.

1. Pipeline of New Ideas: Innovation shows the buyer that the business has a process to generate new ideas. There is a pipeline of innovation to ensure that the company can adapt to changes in the market.

2. Profit Growth Trajectory: Customer-focused strategic innovation accelerates revenue and profit growth. Not only does growing profit immediately increase the value of the business, but the increased growth trajectory creates the expectation of even more future cash flows.

3. Positive Work Culture: Negative company cultures make buyers nervous that key people will leave. A positive culture of innovation and growth signals that people are engaged in what they do and might be more likely to stay.

4. Pool of Future Leaders: Innovation spotlights employees engaged in the strategic direction of the business. These are the employees who could be tomorrow’s leaders.

5. Portfolio Impact: Many buyers own multiple businesses. Buying a company with an innovation process creates the possibility that this innovative culture could spread to their other portfolio businesses.

What would it mean if you could increase the sellable value of your business by 1X, 2X, 3X or more? How much more impact could you make in the world?

Innovation has the power to increase valuation. But it takes more than just saying, “We are an innovative company.” You need an engine for innovation that includes structure, systems, and a scorecard.

Becoming an innovative company begins with a decision to take the steps to become an innovative company rather than just talking about it. Talk is cheap. Fortunately, innovation doesn’t have to be expensive. Here’s how you can unleash substantive innovation in your business:

1. Identify the employees with Working Geniuses of Innovation: Wonder, Invention, and Discernment.

2. Ideate by gathering this team quarterly innovation days structured to generate ideas.

3. Investigate throughout the quarter with a proven process to pilot, optimize, and package up ideas for rollout.

Want to learn more about how you could increase your multiple on EBITDA 1X, 2X, 3X or more? Reach out to schedule a confidential executive briefing. When you do, you’ll get a copy of A Visionary’s Guide to Unleashing Strategic Innovation.

Originally published on Darrell Amy's LinkedIn.