Archive for November, 2009

Some business owners forget to plan for their exit strategy, others recognize that the last part of their business ownership can have a major effect on what the financial reward their business can provide them and the legacy that they will leave with their employees, customers and the community when they leave their business.

Increase the Price You Get for Your Business – Businesses are usually run just how the owner wants. However, you can probably get make your business more salable and valuable in the marketplace by making it more appealing to a buyer. Many of these changes have bigger impact if they are done long before the business is put on sale. To get the most impact, these changes should be made at least one to two years before you are thinking of selling.

Here are just a few changes that can have a big impact on the price you get for your business:

• Key Employees – One of the biggest concerns buyers have when they look at your business is that when you walk out of the door, much of your business goes with you.
• Report Income – When it comes to reporting income, you, like most small business owners, want to pay as little in income taxes as possible.
• Customer Concentration – Customer concentration is a major issue when more than 10% of revenues come from one customer or when more than 25% of revenues come from the top five customers.

An individual owner may have been in the business for a long time and have a strong enough understanding of how the business is doing without any detailed financial reports. The buyer will not have that same information and ability.

Without adequate information, most qualified buyers will not complete a deal. If they do complete the deal, they will probably assume the worst case scenario and discount the price accordingly.

Sellers should work with their accountants to develop detailed reports that will help them and buyers to understand their businesses better and provide more assurance that the financial information is accurate.

A ton of material has been written about sales and marketing. Most of it is geared toward what works for big corporations.

Most “textbook” sales and marketing activities require a huge investment in time and money in order to be effective. Implementing almost any sales or marketing activity with less than a complete commitment to the program is throwing your money away. 

I have found for myself and my clients that spending money on “sales and marketing” seems like a good thing, so it is easy to get caught up spending money on activities that are not cost effective.

In my business, when I stopped talking about “sales and marketing activities” with “getting customer activities,” it became obvious that many our sales and marketing activities were not producing enough results to justify the cost.  The reason it became effective was that it changed the question I was asking. Instead of “is this a good sales and marketing program?” I asked “is this program getting us customers?

One activity I stopped was casual networking, such as chamber events. Over the last 12 years, almost all of our clients and customers have come from either previous clients or people we had relationships with. We have gotten almost no revenue from the casual networking and these events can consume a lot of time. That time is being spent much more effectively now strenghtening our relationships and finding new relationships through our existing customer and relationship base.

I do not mean to imply that casual networking will not work for you. But unless you have an unlimited budget of time and money, consider looking at each of your activities in terms of how much business you are or will get.

Social Media is all the hit these days. But the challenge is that most of the hype is about connect with lots of people and getting lots of people following you.

As usual, the hype misses the real point. The rules for being successful at Social Media are pretty much the same as they are with traditional networking. 

In my 12 years of consulting, I have met thousands of people and have several hundred business cards laying around my office closet. I do not remember who gave me the vast majority of those cards, let along exchanged any valuable referrals.

Instead, almost all of the referrals I have gotten over the years that have turned into real business came from a select number of strategic networking partners I have gotten to know well. I trust sending business to them and they trust sending business to me.

It might be good for my ego to have 20,000 people following me on Twitter, but it would be much better for my wallet to have 20 people on Twitter who thought enough about what I said to send me real business. I have discovered that most of the people who are successfully using the new Social Media are following the same rules they follow for traditional networking. Relationships and trust are built with time and quality communication.