Ready to Retire & Sell Your Business?
Between 1946 and 1964 Americans created 78 million new people, whom we now call Baby Boomers, or Boomers for short. Those 78 million people believed that the ticket to the American dream was to get a college education and work hard. And they did in record numbers, growing our college educated workforce from 6% to 24%. That created a tidal wave of applicants for corporate America that it just couldn’t absorb. So, Boomers did what Boomers do, continued their endless march for upward mobility by striking out on their own and starting their own businesses.
Today, the first wave of those Boomer business owners are turning 65 and getting ready to retire. They’ve worked hard for 20-30+ years to build their businesses, and they’re ready to have someone younger who wants the same things that they wanted when they started out, to buy their business so they can go enjoy the retirement they’ve always envisioned. Problem is, the next generation, Gen Xers, have very different values than Boomers.
Boomers are workaholics, who grew up as the first generation having a common experience of TV advertising to drive their transformation into consumers of bigger better best of everything. They own 50-60% of small businesses in America, and are consumers for each other’s products and services. Gen Xers on the other hand, grew up using debt for everything they buy, and see work as nothing more than a means to get the lifestyle they want. They are not interested in working long hard hours, and they don’t save so have no capital to buy a business. They see their personal happiness as their number one priority. They don’t equate what they do with who they are like Boomers.
The 48 million Gen Xers will have little interest in a brick & mortar operation that requires them to be on site or on call for most of the hours of the week. Since they have no capital, they will need financing to buy your business, so if your cash flow isn’t enough to support financing, you’ll also have a hard time selling it to a Gen Xer. If they do like your business, and can get financing for it, it’s still a buyer’s market; the market will be short by about 20,000 Gen Xers per year to buy the hundreds of thousands of Boomer businesses to be sold over the next 20 years.
To make things even more challenging, corporate America is catering specifically to the needs of Gen Xers by offering things like flexible hours, job sharing, working remotely, additional paid time off, and flexible benefits. These perks are tough for small businesses to match.
If you’re a Boomer who wants to sell your business in the next 10 years, what do you do? If you want to be one of the few who successfully markets their business, maximizes its value and minimizes taxes, it’s imperative that you have an exit plan.
What’s an exit plan? An exit plan is a strategy developed with the assistance of a team of professional advisors who are experts in their specific area such as wealth managers, attorneys, CPAs, insurance brokers, business brokers, business coaches, and business valuation experts. You’ll look at whether your best option is to sell your business to family members, company employees, or a 3rd party. Then your team of experts will help you create your strategy for what is likely the biggest and most important single transaction of your life. Don’t leave it to chance!
To learn more, attend our next seminar.
How often do you ask yourself if you’re paying for marketing that doesn’t work?
In my sessions with business owners, I will sometimes ask if they would hire an employee for $40,000 a year and then never check to see if they accomplished anything or even showed up to work. They usually look at me as if I have two heads, and say “Of course not!” Then I ask, why they do just that with their marketing budget? Then the look changes to mild guilt.
Obviously, your marketing budget may be significantly more, or a lot less, but the principle remains the same. Our marketing spends are often determined by what we have done in the past, or what we feel is affordable. I spoke to a business owner who told me they stopped advertising in a directory completely after having run the equivalent of a full-page ad for an extensive time. When I asked why, they said it was too expensive. I asked what type of results they had gotten, and if they received any type of reporting. The business owner indicated the reporting was excellent, but they were too busy to ever look at the reports.
“If you can’t read the scoreboard then you don’t know the score. If you don’t know the score, you can’t tell the winners from the losers.” Warren Buffet
I’m not promoting one advertising medium over another as they all have their strengths and applications. I am saying that unless you want the equivalent of a $40,000 employee that does not show up, it is imperative that we test and measure the results from our marketing to make informed decisions on what to increase, decrease, add and subtract. Here are a few simple concepts to start the process.
Define your purpose for the marketing investment:
If the purpose of the marketing is to drive revenues and profits, then the measurements of success need to reflect that. If the purpose is something else, like create brand awareness or educate, then adjust your measurements accordingly.
Track your leads and record the prospect’s data:
At the very minimum always ask the prospect some version of “How did you hear about us?” Collect their information and put it in a database. The goal is to know how many leads (and ultimately how much profit) per week or month are coming from each marketing medium and be able to continue to contact those leads. I know from my mystery shopping this is a huge leak in the pipeline for most businesses.
Know your key numbers:
Marketing is simply a matter of buying clients for less than their lifetime values. Many businesses will not break even until after a new client makes more than two purchases. A chiropractor and a hair salon are two good examples where loyal clients have many transactions over a period of years. The two key numbers are acquisition cost (cost of gaining a new client) and lifetime value (how much in total the average new client will spend as your client). The key to making marketing an investment is to keep the acquisition cost as low as possible while driving the lifetime value as high as possible. How much do customers from each lead source spend with you? Do you know your numbers?
Use the information you collect to make educated decisions:
Once we record the information over time, we will know the acquisition cost for each marketing method as well as the number of new clients driven by each technique. You will likely notice a significant difference in the lifetime value of clients from different method. Build the information over time and use it to determine how to allocate your budget.
There are entire books written about these concepts and others. The real key is to start systematically recording your information now to increase your revenues and build your decision-making database.
Whatever you do, make sure you’re getting a great return on your investment from that $40,000 employee!
Learn more about marketing and other business results generators at GrowthClub June 20th.
The sales pitch of the past isn’t effective in today’s marketplace. Today, a sales pitch is a two-way conversation. You ask good questions and listen to the buyer. The buyer has the opportunity to ask questions, and in the process they’re able to develop a much more personalized relationship with you, and your product or service. Captivating your audience lies in the details. From relevant buyer information to interaction and negotiation, these seven tips will help you nail your next ‘sales pitch’.
Successfully connecting with your audience involves preparing yourself with relevant buyer information. Prior to the presentation, conduct in-depth research on the buyer’s company, industry, and competitors. Include social media in your search. This will allow to tailor your message, better communicating how you can meet their specific needs.
Drawing on emotion is critical in sales. Highlight the unique challenges of the business you’re talking to and allow them to visualize your product or service as the solution. Most often people react and make buying decisions emotionally first then rationalize with information. Having a compelling story backed by facts is a force to be reckoned with.
Not only is it important to be prepared and leverage emotion, but also to bring confidence to the presentation. Promoting yourself as an industry leader or savvy entrepreneur subconsciously builds credibility with your audience. You can achieve this by sharing stories about your dedication and vision for their initiatives or stories about how you helped other customers.
Even if you are presenting detailed information, you must read your audience during the sales pitch. After all, it’s a two-way conversation. Gone are the days of PowerPoint slides and bullet points. Today’s most successful pitches include choices, audience interaction with products and services, and being prepared for any questions the buyer may have.
As mentioned, the buyer will most likely have questions. The most common objects during sales pitches fall under budget, authority, need, and time. Be prepared to go into your presentation with responses to all four. The goal is to have answers prepared, making you appear more knowledgeable while increasing your product or service’s value.
The negotiation portion of a business pitch can be intimidating. Before pitching, have a plan in place for negotiation. Not only should you be familiar with what you’re offering, but research how your audience members have invested in the past. Have a plan for the best case, the second best, and the worst. Add value before discounting price. This will help you approach your presentation prepared for any response.
Always end your sales pitch with a call to action. If a negotiation isn’t instantaneous, be sure to include a specific follow-up plan. That communication touch point in the sales funnel will keep you on the radar, placing you in a good position for future prospecting. Follow-up meetings and trials are great ways to keep your audience engaged going forward.
Now that you’ve journeyed through our seven steps for a flawless sales pitch, we hope you feel more confident in putting your skills to the test. Knowing your buyer, product or service, showing a genuine interest in providing a solution, and being prepared for any objections will allow you to present your next business initiative with ease.
The Hardest Sale You Will Ever Make – Your Business
They say the three most stressful times in a person’s life are when they get married, buy a house and change jobs. Well, I don’t think whoever said that considered starting and selling a business – your company is your baby, the thing you have built over 15 plus years. You have put your heart, soul and an incalculable number of hours into it. Now you want to sell it.
There are many things you need to do and consider, but these seven areas are of immense importance when it comes to finding a buyer, selling the company and getting the most value for it.
1. Think about who would want to buy your business:
Do you have employees that have the management ability and the mindset of an owner and the ability to access capital to pay for the business? If these people aren’t working for you now, do you have time to recruit them and teach them the business with an understanding that they might take over? What about your suppliers, customers or competitors? They might be looking for an opportunity to enter your part of the industry.
Finally, you can go to the general market. Contact a broker that has experience in your type of business or get in touch with me for a referral to one.
2. Remove Yourself from the Business:
Many businesses revolve around the owner. Customers are used to dealing with you. Suppliers have long relationships with you. Your team trusts you. All these relationships need to be transferred to your other staff or the new owner.
3. Setup the Business as if you are going to Franchise it.
If the business exists primarily in your head, it’s not a company you can sell. No one will buy a business that relies solely upon the current owner – the person who wants to sell it and walk away.
Off load your knowledge and expertise into systems you can sell with the company. A well-systematized organization is attractive to prospective buyers who see the potential to own a business that runs smoothly using systems and, importantly, can run without their personal input.
A business that runs under management attracts a premium price when it comes time to sell.
4. Lock in your Key Staff – The most Important People in the Business:
If your senior staff aren’t in a position to buy the company, you need to lock them in some way. Best thing to do is talk to them and keep them fully informed.
Keep them up-to-date with developments in the sales process and make sure they understand where they will fit in after a successful sale. Consider introducing bonuses contingent on a successful sale.
5. The Customer Database – Your Pot of Gold:
This is what will add value to your sale price. Think about it from the buyer’s perspective, they are buying a company that with the hope that the customers continue to deal with them.
By developing solid relationships and a detailed database of your customers you will be giving them more confidence that they can manage the client relationships after you have gone. And they’ll value the business much higher.
6. Formalize Everything – Agreements:
Get all loose agreement in writing. Start with your employment agreements. Develop up-to-date agreements that lay out the terms and conditions that you employ your staff under.
Put agreements in place with your suppliers and customers as well. These should include trading terms, pricing contracts and any other “verbal” arrangements.
7. Ensure you have the Best Looking Financials:
You should aim to show three years of constant growth, with healthy-looking financials. Clean up any personal items that could be questionable as business expenses – this will improve your profit figures.
Clear up all outstanding debtors – this will improve your cash flow figures. Reduce any excessive spending and make the company look as profitable and attractive as possible.
8. Get a Business Coach to give you an Outsider’s Perspective:
Clients often come to me looking for someone outside the organization to assist them with the eight steps above. They are GREAT business owners, but may never have been through the sales process before.
An experienced business coach will not only provide you with advice to keep you on the right track, but also the motivation and confidence to see the project through.
Many people wake up one day, fed up with their company and then hurriedly attempt to sell it. This doesn’t work. Plan it two to five years in advance so that you get the best outcome.
Follow the eight steps above and you will reap the rewards for the many years you spent building your business.
To learn more, come to my free workshop this Friday on “How To Build A Business You Can Sell”.
Six Steps to Boost Sales
Without exception, every business owner I talk to says they want to boost sales. How well, how often and how profitably – your business makes a sale, determines its success. It follows then, that motivation and performance of the sales team and your sales process are critical.
Having worked with many companies over the past few years on sales, I have found that there are a number of key success factors that business owners overlook that inhibit sales growth and long-term success.
1. Set Sales Targets
While many business owners do set yearly targets, or have something “in mind”, the number of companies that do not have clear written sales targets in place constantly surprises me. It comes down to simply planning for success. Develop sales targets for the following:
• The overall financial sales target for the company for the year
• Quarterly, monthly, weekly as well as daily sales targets
• Sales volumes: Break the sales target down into the number of units and by product category as well. Prioritize those higher margin items.
• Set Sales targets by region as well as by sales representative. Then track actual versus plan on a daily, weekly and monthly basis.
2. Sales Implementation Plan
Once you’ve clarified the sales targets, the next step in the process is to develop a very clear but simple implementation plan. This should include the sales call cycle, new business opportunities and every step of how you plan to convert those opportunities into sales – as well as reviewing the progress being made in this regard. Develop a set of Key Performance Indicators (KPIs) that would include lead as well as lag indicators to success.
3. Clear Sales Process & Scripts
Many companies do not have a clearly defined sales process. Having a clear process in place means tracking results consistently and creating the ability to optimize results. When a process is no longer delivering results, you’ll know it immediately and can revise. Nothing stays the same forever. A written process will enable you to adjust quickly and easily to changing market conditions.
The company will also be able to track sales conversion rates across various stages (e.g. Lead, Suspect, Prospect, Buyer) of the sales process – and is then able to take corrective action in order to increase conversion rates.
4. Sales Pipeline Tracking
Ensure that you are using one of the many robust CRM systems available to be able to track the progress of each lead in the system. This will ensure that you are keeping track of the very important next steps in the sales process, while also giving you the opportunity to build a trusting relationship with each of your prospects.
5. Identify Your Leads Personality style
It is very important to identify your lead/prospects personality style as early on in the process as possible. This enables you to adapt your sales style to meet their personality style: e.g. highly driven people are bored with all the details, and once they see the value will quickly ask what the next steps are. Alternatively, people who have a high attention to detail will naturally ask for more information, facts and testimonials before making a purchase decision. Use DISC assessment training with your sales staff to enable them to identify their prospects style.
6. Selling is about empowering prospects to make a purchase decision
There are three main parts to any sales process:
1. Build the relationship
2. Develop trust
3. Allow your prospect to make a purchase decision.
This process applies to any type of product, and one needs to ensure that your marketing message and sales process takes a prospect through each of these steps if you want to ensure a good conversion rate.
For more on how to do all of this, come to a complimentary Business Building workshop.
In more than 25 years of making pricing decisions and of observing others making pricing decisions, I have come to the conclusion that there is no single business decision that you can make more quickly, but which deserves more thoughtful consideration than the decision of what to charge for one’s goods and services. As a business coach, it still surprises me that business owners and managers don’t do the right analysis before making this critical decision.
If you set your prices too low, you’ll lose money! Set your prices too high and you’ll also lose money! Lets look at an example: if your Gross Profit Margin = 40%, then a 10% decrease (or increase) in prices will decrease (or increase) Gross Profit by 25% (assuming no change in volume). Net profit (what is left after you’ve paid everything) will change even more dramatically.
But wait a minute; if you decrease prices won’t you make it up in volume? Maybe. Using the same assumptions – 40% Gross Margin and a 10% price decrease, since you are selling the units at a lower price and therefore a 25% lower margin, you’d have to sell 35% more volume just to break even on your price discount! You will need a great marketing plan & sales process to ensure more than a 35% increase in volume. And that’s just to break even. Plus you’ll be working a lot harder to produce a 35% increase in volume, to get the same net profit.
Instead of considering discounting to increase your bottom line, think about how you can add value and charge even more. The best way to remove price as an objection by your buyers, is to have a strong and sustainable Unique Selling Proposition. A strong USP will distinguish your business from all the competitors. It will make you the obvious choice in a sea of competition and lead prospects to the conclusion, “I would have to be a fool to do business with anyone but you…regardless of price.” Your USP is something that your competitors can’t or won’t say, that you can uniquely deliver. And it will change the conversation with your prospects from cost based, to value.
USP is a simple concept, but not easy to do. It takes a focused, dedicated process to discover your own USP. It isn’t going to just appear magically. In his book, Purple Cow, Seth Godin explains that the USP must be as remarkable as seeing a Purple Cow. And just like a purple cow, sometimes you have to sit down at the drawing board and create one yourself.
Lisa Walker, ActionCOACH, is a Certified Business Coach who provides services for small and medium sized businesses, helping them to grow and become profitable through the use of proven tools, methodologies, and systems. Lisa targets her clients’ individual needs so they can achieve their goals and realize their dreams.