3 Critical Business Success Factors

“The successful man is the one who finds out what is the matter with his business before his competitors do.” Roy L. Smith

There are three particular aspects of running a business which, when approached properly, are often acknowledged as being important factors that contribute to success.

Those three factors are:

- prioritization
- accountability
- and planning.

And it’s difficult to argue against the fact that most successful small business owners pay close attention to each of these factors. On the surface at least these are certainly vital ingredients.

However, when you take a closer look at these factors it can also be argued that there is more at play than meets the eye, and a different picture about managing a business emerges.

We can take a look at each of the three factors in turn.

Prioritizing tasks and activities is not just a day-to-day business matter, as it is also vital to look further ahead to weekly, monthly or even longer-term goals and targets. A business owner needs to decide on these priorities in the wider scheme of things, as well as on immediate to short-term activities and targets.

But the prioritizng of tasks, goals or targets is only part of the picture because in a great many cases the business owner’s priorities fail to materialise, targets are not reached and goals are missed due to a related but critical factor.

Deadlines – and a failure to set them and meet them.

It is fine to agree a priority for an activity or goal, such as opening a new store or launching a new website, or commencing a marketing campaign. But targets and priorities are useless without achievable deadlines attached to them.

It is when you need to hit targets that is the key driver of priorities, as a deadline will offer the vital focus for your efforts towards the target to be achieved, and what you need to do along the way. The timing of adjustments to priorities and business activities will be ineffective, and in some cases impossible, if you don’t have genuine deadlines that everyone is focused upon.

So yes, the prioritization of business activities are important but without deadlines they are meaningless.

Accountability is another of those frequently used terms that often get over-used in business management-speak when referring to the running of firms of all shapes and sizes.

Of course it is right to say that someone, generally the business owner or CEO has to be accountable for business solvency, profitability and governance – or for a particular project, marketing campaign, or budget etc.

But being accountable for something is not the same as being responsible for it. Someone who is accountable won’t necessarily be the right person to have, or take, the responsibility for a plan or a target or the hitting of deadlines.

And if things go wrong then being accountable without having taken responsibility is also a waste of time, because it will often be too late to act, or to learn the lessons and take remedial action.

Accountability and responsibility go hand in hand in business. But they are not the same and it is important to recognize this.

The planning of business activities is something that is also justifiably recognized as being a factor contributing to success – or more to the point contributing to under-achievement or failure when it is absent or half-hearted.

Whether it is a strategic business plan, marketing plan, financial plan, exit plan or whatever, those business owners who spend time planning tend to succeed more than those who do little or no planning at all.

However, all of this means very little without another key factor – Execution. 

Failure to execute or act, to perform and do what is planned or intended will make a plan and its associated deadlines and targets completely worthless. Successful business owners don’t just sit back and admire or continue to fiddle with their plans. They put them into action.

If you are a business owner, CEO or manager, or you are in the process of starting a business, it will be important for you to understand these three business management ingredients, which work hand in hand with each other.

Don’t just acknowledge that you are the person accountable for something – instead you have to take responsibility for it by the scruff of the neck.

And when you look at your targets and priorities don’t just sit back and admire them. Give everything that is important an achievable deadline and work towards it. Better to miss a deadline with full knowledge and a back-up plan than just to run aimlessly, wondering when everything will finally click into place.

But above all when you discuss, write down and agree your plans, priorities and targets make sure that every single activity is going to be actioned, even if it doesn’t work out the way you expected and through your best efforts.

Failure to set deadlines, failure to take responsibility and failure to execute your plans, all add up to under-performance and failure in business.

How do you now rate yourself on each of these?

What business owners can learn from 2011

“To achieve great things, two things are needed; a plan, and not quite enough time.” Leonard Bernstein

At this time of year it’s certainly a useful exercise for business owners to look back over the previous 12 months before looking ahead to their business prospects (or lack of them), and the opportunities or challenges they will be facing over the coming year.

Of course, for many small firms this is something that needs to be done anyway in terms of setting budgets and forecasts and using actual financial results from the last year as the basis for their projections, especially if they operate a January-December financial year.

But irrespective of your financial year-end there are some other very good reasons for taking a close look at what has happened to your business during 2011.

In particular these include:

- looking at what went well
- reviewing what went badly
- learning some lessons from achievements and mistakes
- changing things for the better

Obviously every individual business situation is going to be different in terms of what may have occurred over the last 12 months, but in order to carry out a review of your year the following 10 useful questions can be asked by any owner manager no matter what line of business they are in.

1) What did you achieve during the year that you expected or planned to achieve at the beginning of 2011? What enabled you to do this, and can you continue to do it?

2) What was your most significant achievement, over and above what you had planned? What caused you to overachieve in this way and can you repeat it next year?

3) What are you personally most pleased about with your last 12 months? What gave you the feel good reason, and will that cause be there again next year?

4) What did you fail to do in 2011? Make a list of these failures or shortcomings and if possible explain the reasons (not excuses) why they happened.

5) What were your biggest disappointments in the last year? What did you set out to achieve at the beginning of the year but did not happen or fell short of your expectations? Can you explain the disappointments to help you avoid these happening again in 2012?

6) What made you feel really bad about your business during the year? Is there any reason you will continue to feel this way in 2012?

7) What was the most unexpected thing that happened to your business, whether good or bad? How did it affect you and how did you deal with it?

8) From your achievements and successes what are the major lessons you have learned, and can you repeat them over the next year?

9) From your disappointments and failures what could you have done differently if you had the chance to do so? More importantly what will you do differently in 2012, so as to avoid those disappointments happening again.

10) What did you learn about yourself during the year in relation to your successes and failures? How much of what was bad would you say was down to your own personal shortcomings and limitations? And how much of the success was a result of your own talent, skill or effort?

OK, having gone through the exercise of answering most of the 10 questions above, let’s now think about what’s lying ahead in 2012, and look at any lessons you’ve learned in 2011 (from your successes and failures) which could help you become better at running your business over the next 12 months.

Of course it’s an easier exercise to look at your past mistakes and learn nothing from them than it is to learn from them and concentrate on putting things right. It’s also easier to learn nothing from your accomplishments and then fail to repeat them.

To keep this as simple as possible can you identify three or four things that you genuinely believe can be changed for the better next year – this is not just the things you’d wish to change that deep down you know will probably never happen.

Those changes should typically concentrate on the following:

- being better at prioritizing and getting things done on time
- spending more time on the things that you do well
- getting someone else to do things you hate or aren’t good at
- reducing or eliminating the things your business does badly
- working on improving your own limitations
- seeking more help and advice from outside of your business

What most of you will find is that some of what went wrong or right over the last year was as a result of your own limitations and abilities, and possibly even your mood and personal motivation. And some, of course, will have been due to factors beyond your control.

If you do nothing about addressing and making any changes then it’s almost certain that what happens to your business next year will be little different to the last. You may think that’s going to be acceptable in your situation, but it’s also very risky to be so complacent about your prospects.

However, if you do manage to learn some lessons from the last year, then making a few of the right changes and small improvements could make a big difference to your business performance and your personal enjoyment of running it.

Either way The CFS Group would like to wish you a happier, healthy, more prosperous 2012.

More ways to beat your biggest rivals‏

“A man is a success if he gets up in the morning and gets to bed at night, and in between he does what he wants to do” Bob Dylan

In business big isn’t always beautiful, or even desirable, for that matter. And high growth isn’t what the vast majority of small businesses will ever achieve. Nor is it necessarily what they want to achieve.

Despite this it seems that the Government’s policy for supporting business over has settled on targeting support specifically for firms with high growth potential, rather than small firms or start-ups in a broader sense, who might have a need for support but have little potential or interest in high growth. This is a policy which was tried in the mid-90s and again about seven or eight years ago, with limited measurable effect.

 

But that doesn’t mean you can’t succeed as a small business, make genuine leaps and bounds in your market, or beat the stuffing out of the bigger players or even the biggest players in your industry.

 

Being small actually gives you several advantages over your bigger and so-called stronger competitors, and over every other small business you compete against.

 

Because being small doesn’t stop you from being and acting smart.

 

It doesn’t stop you from finding those killer apps, regular victories, and impact-making little breakthroughs that can propel your small, ordinary enterprise into a profit-making – or even market-leading – firm in your chosen niche. In the real business world this is what it’s all about – growing a little in the wider scheme of things, but making a big difference to your bottom line, personal satisfaction levels, self-esteem and longer-term survival prospects.

 

Here are ten ways you can act smarter to beat the bigger guns in your sector as well as everybody else you compete against:

 

1. Be faster – this is all about being able to find a way to be quicker off the mark than anyone else. For example, faster delivery, quicker production lead times, earlier product launches. You could also be open for business earlier, respond to enquiries quicker etc. There are plenty of ways you can be faster than everyone else.

 

2. Be easier to do business with – you’re small so take advantage of that fact. Your customers can speak to the right people (especially you) in your firm without hassle. You can also make it as smooth and as painless as possible for your customers to order, pay, get their money back, get advice and feel good about dealing with you.

 

3. Be flexible – this is where the big players often struggle and the small firm can win hands down. You have fewer decision-making levels, no politics to avoid, and can just make the difference your customers are looking for.

 

4. Be seen as an expert – you should carve out your niche and exploit it. Work out what you’re better at doing than anyone else, and then let everyone know about it as often as possible and in as many ways as you can.

 

5. Be open-minded – don’t just look inside your own sector for new ways to do things or promote yourself. Try and find new ways of doing things from outside your industry by looking at what’s working and what’s successful in unrelated sectors, and then try to apply these in your own.

 

6. Find opportunities that others don’t – spend as much time as possible looking for new business opportunities, get out and join face-to-face networks, do joint marketing deals, find piggy-back partners, and sniff out other little places for doing business that bigger companies would never have the time to find.

 

7. Be first – innovate in little ways all the time and get a reputation for always trying things first in your sector, even if they don’t always work – because often enough they will and you’ll get noticed for it and admired for it as well.

 

8. Be caring – make it clear that you care about every aspect of your business – i.e. your quality standards, your customers, your suppliers, your business neighbours, your staff, your local community – and again, you’ll soon get noticed and appreciated for this.

 

9. Be slightly different – in all aspects of your business, not just your products and prices. Find little ways to make your marketing, IT, after-sales service, terms and conditions, shop front or website unique and attractive to your target audience. Even a slight difference can make a noticeable impact.

 

10. Be a fanatic – this could be your biggest opportunity. Get yourself known for your beliefs, knowledge, enthusiasm and madness (or slight insanity) about your business and sector, and make sure you strut your stuff as often as possible, so that everyone knows about what you and your business stand for.

 

If possible, try out and act upon as many of these things as possible in your business, go out of your way to apply them every day, and make sure they form the backbone of your unique business proposition and marketing strategy.

 

None of these ideas have to be done in a big way. If you can find ways to be slightly better than your rivals in at least some of these ten ways then that could give your small firm a big competitive advantage.

Making money means making sales

“Year: A period of three hundred and sixty-five disappointments.” Ambrose Bierce, The Devil’s Dictionary

As a small business owner, it would probably be difficult to argue that you don’t want to be successful, with a desire to create financial independence for yourself, your employees and anyone else with a share or a stakeholding in your enterprise.

In fact no matter what type of business you are in, you’re in the business of making money – even if you are going to plough it all back into your enterprise.

But you’re only going to make money if you have a product or service that is selling enough.

However, in the majority of small businesses, it’s also a fact that they only make money if the business owner takes personal responsibility for selling their product or service, and for ensuring that all their sales activity is working properly.

But too many small businesses are simply not effective enough at selling their products and services. As a result they let good business prospects drift by, push existing customers away, letting their competitors pick up lots of new business in the process.

Money-making business owners, however, do the opposite. They work incessantly at finding ways to attract new customers, by using educational, informative and persuasive selling techniques that result in prospects knocking on their own doors, rather than their rivals’.

It’s as simple as that. Making money involves taking personal responsibility for making sure that your products and services are selling enough.

Here are five proven tips to help you improve your effectiveness at selling, no matter what line of business you are in:

1) Sell it thoroughly

This is probably the one area where every small business can be more effective. Just think about this. Would you put your best salesperson in front of a prospective buyer but only let them use a limited number of words to give their pitch? Why would you handicap them in this way? The old adage “the more you tell, the more you sell” applies in just about any situation. Your prospects want to know as much detail as possible about the benefits and value they will get from your product or service. So don’t hold back. Tell them as much as possible, not just some, of what they need to know.

2) Your offer is less important than your prospect list

In any form of direct selling, there are three components for success. The first and most important is your prospect list, which ideally will consist of people or organizations with a proven interest, want or propensity to buy or use your product or service. The second is your headline offer, which expresses the primary benefit or “unique selling proposition” your customer will get from you. The third is your sales brochure or letter – or in other words, your pitch. The money is in the list, as they say. But if your list isn’t right, your headline offer is just going to miss the target completely and your pitch will be unheard or ignored. So make sure your prospect list is full of quality leads, ideally built up from scratch by yourself.

3) Inject scarcity

A sales offer without a compelling reason for your prospect to act quickly is often dead in the water. The problem is that consumers and buyers generally are passive, and they won’t automatically act even if you present a great offer. You often have to give them the extra incentive to act quickly, or even now. One proven motivator is the fear of losing out, by injecting a sense of scarcity into your offer, where you play on people’s fear of not being able to take advantage of a good deal. You can do this by either limiting the time that people can respond to your offer, or by limiting the quantity that you are offering under that particular special deal.

4) Beat rather than copy your competitors

If you look closely at your competitors’ sales and marketing strategies and campaigns, you might notice certain offers that they repeat often. They almost certainly won’t be doing this because they’re clueless, but more likely because it is working and they keep making money from it. The key for you is to test this type of offer yourself to see if it works, and then look for ways to beat your rivals’ offer by providing an even better deal. Don’t just copy – improve it!

5) Use higher-priced offers

If you are able to offer both a lower and higher-priced version of your product or service, you’ll almost certainly find that a number of your prospects will go for the higher-priced offer. The psychology behind this is that it switches the choice in your prospects’ mind from a ‘buy or don’t buy’ choice to a ‘offer one versus offer two’ choice. This can sometimes lead to an improved response, and when this happens it usually results in a higher average sales amount being achieved.

These are just a few practical suggestions, but when all’s been said and done about this, it still comes back to you, the small business owner, taking responsibility for the effectiveness of your selling and making money in your enterprise.

Have you fully taken that responsibility?

How Buyers Value Your Business – 10 Key Factors

“I am glad that I paid so little attention to good advice; had I abided by it I might have been saved from some of my most valuable mistakes.” Edna St. Vincent Millay

 

If you are considering selling your business this article will help you evaluate your company as a strategic acquirer might. From that perspective it pays to focus on ten critical areas of value creation. The better your performance is in these areas, the greater the selling price of your business. Below is our list of STRATEGIC VALUE DRIVERS:

 

1. Customer Diversity - If too much business is concentrated in too few of your customers, it is a negative in the acquisition market. If none of your customers accounts for more than 5% of total sales, that is a real plus. If you find yourself with a customer concentration issue, start focusing on a program to diversify.

 

2. Management Depth - An acquirer will look at the quality of the management staff and employees as a major determinant in acquisition price. You should make the move of assigning your successor a year in advance of your scheduled departure date. If you have a strong management team in place, you should try to implement employment contracts, non-competes, and some form of phantom stock or equity participation plan to keep these stars involved through the transition.

 

3. Contractually Recurring Revenue – All revenue dollars are not created equal. Revenue dollars from a contract for annual maintenance, annual licensing fees, a recurring retainer fee, technology license, etc. are much more powerful value drivers than projected sales revenue, time and materials revenue, or other non-recurring revenue streams.

 

4. Proprietary Products/Technology - This is the area where the valuation rules do not necessarily apply. If strategic acquirers believe that a new technology can be acquired and integrated with their superior distribution channel, they may value your company on a post acquisition performance basis. The marketplace rewards effective innovation and yawns at commodity type products or services. Continue to look for ways to innovate in all facets of your business. If you create a technology advantage in your company, think what that could mean to a much larger company.

 

5. Penetration of Barriers to Entry - In its simplest form, a large restaurant chain buys a small family owned restaurant to acquire a grand fathered liquor license. Owning hard to get permits, zoning, licenses, or regulatory approvals can be worth a great deal to the right buyer. The government market is extremely difficult to penetrate. If your product or service applies and you can break through the barriers, you become a more attractive acquisition candidate.

 

6. Effective Use of Professionals - Reviewed or audited financials by a reputable CPA firm cast a positive halo on your business while at the same time reduce the buyer’s perception of risk. A good outside attorney reduces the risk even more. A strong professional team is a great asset in growing your business and in helping you obtain maximum value when you exit.

 

7. Product/Sales Pipeline - Smaller companies often are more agile and have better R&D efficiency than their high overhead big brothers. In technology, time to market is critical and big companies evaluate the build versus buy question. Small companies that develop new technology are faced with the decision of developing distribution internally or selling to a larger company with developed channels. A win/win scenario is to sell out at a price, in cash and stock at closing, that rewards the smaller company for what they have today, plus an earn out component tied to product revenues with the new company.

 

8. Product Diversity - A smaller company that has a quality portfolio of products but may lack distribution can become a valuable asset in the hands of the strategic buyer. A narrow product set, however, increases risk and drives down value.

 

9. Industry Expertise and Exposure - Encourage your staff to publish articles and to speak at industry events. Encourage local and industry reporters to use you as the voice of authority for industry issues. Your company is viewed in a more positive light, gets more business referrals, and an industry buyer will remember you favorably as an acquisition candidate.

 

10. Written Growth Plan - Capture the opportunities available to your company in a two to five page written growth plan. What additional markets could we pursue? What additional products could we deliver to our same customers? What segments of our current market offer the most growth potential? Where are the best margins in our customer base and product set? Can we expand in those areas? Can we repurpose our products for different markets? Can we license our intellectual property? What about strategic alliances or cross marketing agreements? Documenting these opportunities can add to the purchase price.

 

When it comes to unlocking the market value of your privately held company, it is not limited to the bottom line. Profitability is hugely important, but the factors above can result in significant premiums over traditional valuation approaches. When you sell Microsoft stock, there is no room for interpretation about the market price. The market for privately held businesses is imprecise and illiquid. There is plenty of room for interpretation and the result for the best interpretation by the marketplace is a big pay off when you decide to sell.

 

Why Exit Planning is Important

“After all is said and done, a hell of a lot more is said than done.” Olmstead’s Law (Jester’s Condescending Dictionary)

At some point in time every business owner will “exit” their business.  In most cases, a small business represents a significant part of family wealth and the owner will be keenly interested in maximizing this value when the business is either sold to an outside 3^rd party or key employee, or transferred through an orderly succession to a family member.  Unfortunately, most entrepreneurs are so immersed in the daily demands imposed in operating their company that they have neglected to properly plan for the inevitable transition of their business.   The goal of this article is to briefly review the exit/succession planning process and highlight the importance that these plans have for every business owner.  Whether the goal is to exit the business in six months or ten years, it is critical that a business owner recognize that succession planning is the single most important way to take control of the terms and conditions of exiting their business. Proper exit planning will cut the variability of the business control transfer, and can secure a sound financial future for their family. 

What is Exit Planning?

Exit Planning, also commonly called ”business succession planning,” is a method that addresses three critical questions a business owner will face at some point:

1. What is the timetable the owner seeks to exit the business?

2. Who will succeed the owner when the business is transitioned or sold?

3. How much income is needed from the business transition/sale for retirement?

The Exit Plan becomes a written roadmap that is developed in conjunction with legal, accounting, and financial professionals and is designed to maximize the value an owner receives when exiting the business.  Exit planning can be a fairly complex long-term process and take many years to properly carry out. The process can be broken down into simple action items and deliverables and should illustrate how value can be received at a very early stage.  A professional team will bring efficiency to the process by implementing a basic structure of steps to be followed, and can make sure that the experience will be a personally gratifying and financially rewarding endeavor for the owner.

The key steps involved in developing an Exit Plan include:

1. Establishing Exit Objectives:  Determining the retirement timetable, long-term income needs, and financial requirements necessary to reach them.

2. Identify the key drivers of business value:  What is the fair market value of the business if it were sold today?

3. Plan to build & keep business value and reduce risks:  Activities that can be implemented to leverage best practices and maximize the business value.

4. Transfer of ownership, management, & control:  Determine the anticipated buyer (outside 3^rd party, key employee, family member) and develop the structure for ownership transfer that maximizes financial security while minimizing taxes. 

5. Contingency Planning:  Protect the continuity of business operations should an unexpected event occur.

6. Wealth management/preservation:  Secure financial independence by developing a financial plan to manage the income from the business sale. 

7. Successful Exit

While nearly all business owners will recognize the importance of having a formalized exit and succession strategy for their future and the future of their company, very few actually have a plan in place.  What most business owners fail to recognize is that the process is fairly easy to start and can be done at a minimal cost.  While many components of the Exit Planning process will need the ability of a CPA, Attorney, and Wealth Manager, significant value and efficiency could be achieved by implementing this process through a competent Business Intermediary/Brokerage firm. An experienced business intermediary firm will be able to streamline the exit planning process significantly by taking the lead in the planning framework and tapping the necessary resources (accounting, law, wealth management) over time as they are required. This team concept is very cost-effective for the business owner as he is only paying for the specific services at the time of use.  A business owner is now able to put a toe in the water and set up the framework for the exit plan at very little cost. By establishing the current market value of the business with a determination of the owner’s exit timetable and the income needed for retirement, the Business Intermediary will have the essential elements for the foundation of the Exit Plan.

Implementation should be viewed as a process versus a one-time event, and the most successful and rewarding Exit Plans are those that are started years in advance of the business transition.  Whether the planned exit is six months or ten years from now, an owner should be proactive. The longer that a business owner has to carry out the Exit Plan, the greater the opportunities will be to maximize the business value, reduce tax liabilities, avoid key employee turnover, and end emotionally charged family issues.

Fix Business Opportunity Blindness

“If at first you don’t succeed, try, try again. Then quit. There’s no use being a damn fool about it.” – W.C. Fields

There are some small business owners who seem to have a natural, uncanny ability to know exactly where new business and market opportunities exist.

Or more precisely, there are a few of them that do, because it’s an unfortunate fact that the majority of people who start-up and run a new enterprise wouldn’t recognise a business opportunity if one jumped up and bit them on the nose.

However it’s not necessarily just natural ability that’s making the opportunity spotters more successful than those who have opportunity blindness – there’s a fair amount more to it than that.

A lot of current business ‘gurus’ pontificate about how people who they label as entrepreneurs have ‘strategic vision’, are ‘born leaders’, and ‘economic innovators’. This may well be true, but in a practical small business sense this type of management-speak and academic terminology is about as helpful as a fart in a crowded lift.

Being a visionary is one thing, but turning a vision into reality is something entirely different, and requires a combination of a different set of personal attributes, such as:

1) The ability to learn from criticism, mistakes and painful stings, and to turn them into an advantage.

2) The ability to spot which past successes can be repeated, and those which cannot.

3) The ability to recognize that a dead-end idea shared with someone else can be an idea quickly transformed into an opportunity.

4) The ability to imagine a future opportunity that doesn’t yet exist – as if it were real.

The majority of business owners fall down when it comes to one or more and, in some cases, all of these abilities.

They don’t learn from their past successes and failures, or more accurately they often don’t have anything relevant to learn from. They aren’t able to project themselves into the future without seeing things exactly as they are now, or as they were in the past when they were making mistakes. And they are afraid, unwilling or incapable of sharing the right ideas – even those which seem to be stuck in the mud - with someone with non-threatening, complementary abilities who could help get that idea moving quickly in the right direction.

Successful business owners (who are not necessarily entrepreneurs) do seem to have some critical entrepreneurial instincts, and have enough ability to draw on their earlier failings and triumphs and turn them into actions that will fit into a future opportunity they are able to imagine in their mind’s eye.

And they’re also very good at explaining their thoughts, ideas, trials and tribulations to the right people who can help them – such as colleagues, associates, suppliers and professional advisers.

In other words, small business owners who continue to fail, or at least fail to spot opportunities, only seem to be able to focus on the low points and failings from their past. Whereas small business winners tend to be inspired by their mistakes and continually recycle their career high points and earlier victories, and exploit them even further.

This opportunity blindness is widespread in small business owners, and their visions of the future are more often bad than they are good. They are rarely able to see their past experiences corrected, adapted or used again – and applied to a new opportunity in the future.

But what about these so-called opportunities? How do people who are not blind to them manage to spot so many in the first place?

It may be useful for you to try a little ‘opportunity test’, to help you work out where they are most likely to exist, before you start imagining and visualizing how you could exploit them. To do this, have a look at the following questions.

1) Where is the low-hanging fruit in your sector? In other words are there any profitable little pickings which are easily within your reach?

2) Is there any added value you can add to your own (or someone else’s) product or service that your customers would want and pay for?

3) How can you reinvent your business in achievable little ways, so that it’s doing something different to everybody else? Remember that sometimes a little difference can be just as valuable as a big difference.

4) Are their ways that you can offer and deliver your product or service less expensively than you are doing now?

5) What has worked for you most successfully in the past, and are there ways you could do this again?

6) Are there mistakes you’ve made in the past which, if corrected, might work in your market now or in the future?

By answering these questions, you may be able to find whether there is or isn’t any opportunity for you to pursue.

However, you must be clinical with your thinking. If you do think that an opportunity might be there in the future, will it make a profit or other quantifiable return for you over the longer term? And if it will not, then ask yourself why you are pursuing it.

The mysterious art of selling

“Consolation: the knowledge that a better man is more unfortunate than yourself.” Ambrose Bierce

One of the biggest ailments afflicting small business owners which we’ve met over the years is the lack of importance given to selling. And apart from a lack of financial acumen, an aversion and avoidance of selling is possibly the biggest problem of all facing owner managers.

So why does this happen and how should business owners deal with the issue?

The main problem is that most new business owners genuinely don’t understand how important selling is, and in too many cases even perceive it as a “lesser” business skill.

This is a big, big mistake and one which often proves fatal.

A major contribution to this perception is made by the likes of some (but not all) university business schools and other academic institutions and particularly the multitude of MBA programs that have sprouted up over the last 10-20 years.

The issue is that these MBAs, and other business management courses, spread the belief that success in business is down to learning effective “management skills” and gaining a management qualification.

And this can be a damaging misconception for a new business owner to hold.

The late entrepreneur and business author Mark McCormack made the point perfectly in his landmark publication ”What They Don’t Teach You At Harvard Business School”.

Here’s what he said about this very subject:

“Selling is what they don’t teach you at Harvard Business School. Business schools admit that their purpose is to train managers, thereby almost totally overlooking the fact that if there are no sales, there is nothing to manage. This escapes a lot of newly minted MBAs, who in their want to run a company may find sales, the techniques involved, the ART of selling, beneath them.”

Unfortunately this is as true today as it was over twenty years ago when McCormack first made the point.

But what’s worse is that this mentality isn’t just confined to MBAs. It’s an affliction that’s suffered by too many new business owners, whether they’ve got a business qualification or not.

So what lesson can we learn from this and what can you do to improve your chances of business survival and success in your new enterprise?

Here are six tips that you should write down in large capitals on a sheet of paper, or print out and stick on the wall next to your desk.

1. Selling and increasing sales are a small business owner’s biggest priority.

2. Selling is not about imposing or intruding on people. It’s about persuading and tempting people to buy from you.

3. Selling involves patience, good timing and knowing exactly when it’s time to persuade and tempt your prospects to buy.

4. Sell your passion for service. If you wholeheartedly believe in your business, make sure your customers get the message.

5. Rejection in sales is guaranteed. So be ready for regular setbacks or failure, and just take it on the chin.

6. The greatest attribute of salesmanship is the ability to listen to what your customers want, don’t want and don’t like.

If you’re running your own business or are in the process of starting up, how high on your daily and weekly priority list of ‘things to do’ are tracking down more customers, winning more sales, or looking for ways to increase takings in your shop or on your online store? And if you’re an advisor to a small business does your client spend enough time on selling, or do they ignore its importance and avoid doing it like it’s some form of disease?

Business Value Drivers

“Business is a good game, lots of competition and a minimum of rules. You keep score with money.” – Nolan Bushnell

Today’s business environment is not just about survival, it’s about focusing on and creating sustainable value. But, which elements of a business are capable of creating value? Equally important which elements of a business are capable of destroying value? Proper business planning is the process of uncovering and identifying what creates and drives value. 

Start by using the SWOT Analysis – Strengths, Weaknesses, Opportunities and Threats – this will help you name the “value drivers” for your business. With this approach, you can focus on key value drivers.

There are many Value Drivers that have been identified in businesses. But, typically no more than 8-12 are critical in any given business; here are the most common 8.

 Financial History:  Are your books correct and up to date? Over the last few years are there patterns of growth or decline? If in decline, are there good reasons for the decline?  Accurate and current financials are important to decide how the company fares in its industry and among competitors.  A comparison to industry ratios can find strengths and weaknesses in the business.

 Management Depth: Can the company run without the owner, for more than a week or two? Is there any cross-trained management to fill in if you were gone?  What is the average age of management?  Will they retire soon? What levels of experience and education do they have? Having a good management team can add value to the business.

 Customer Diversity: Do you have one or two major customers that account for more than 25% of your gross sales?  What would happen to the value of your company if you lost one? Are most of your customers considered “blue chip”? A good overview and a rating analysis of the customer base can be beneficial not only for added value but is crucial for where, how and when you advertise, not to mention a better understanding of your accounts receivable and aging. 

 Owner Involvement: Are you the ‘rainmaker’ in the business? Does everything from sales to production revolve around you and your decisions? How difficult would you be to replace? The more the business depends on you, the owner, the more likely the value will be lowered.  One of the things I see the most is that over the years, the business owner and number one sales person is now an office manager.  Maybe it’s time to get back out in the field with your sales people or give ongoing sales training.

 Competition: Does your company compete in a clearly defined market niche which is defensible? Or, have your products or services become a commodity that is becoming more difficult to defend?

 Customer Satisfaction:  Are your customer relationships based on great products and service, or lowest price? How long and what type of history have they had with you? Are they satisfied or loyal? Do you have systems in place to show your customers and communicate?

 Loyal Employees: Outside of ownership, are there people in place who you can rely on and are capable of doing their job day in and day out? Are they considered knowledgeable for your industry? Again, what levels of experience and education do they have?

 What is the average length of employment among your staff? A responsible business buyer will be looking for opportunities where the current staff, especially management, will stay in place, after the current owner’s exit from the business. Having key employee contracts, non-competes, but more importantly a loyal, dedicated staff that is committed to the company’s success regardless of ownership change will be highly valuable to a prospective buyer and thus reflected in a business valuation.

 Proprietary Technology: Has your company developed a unique application, tool or technology as part of its ongoing operations? Does it give you a competitive advantage? If so, this proprietary innovation or intellectual property can be positioned as a key value driver for your business. Technologies or processes do not have to be patented to carry value but privacy and confidentiality must be maintained. It is critical that non-compete and confidentiality agreements be strictly adhered to and enforced by the company, before and after a transfer of ownership. The benefits, application and purpose of your proprietary technology should be explained to a business valuation consultant.

Intangibles (intellectual property) and human resources (who go home at night) can be protected and leveraged through a combination of business strategies and legal protections. Business strategies include incentive compensation plans to recognize, reward and keep high performing employees. Legal protections include requiring key employees to sign non-compete agreements, registering Trademarks and Copyrights, and taking steps to protect proprietary information/trade secrets such as recipes and formulas. Contracts with key players, including partners, customers and suppliers, are also important.

In conclusion, it’s easy to be distracted by all the demands competing for the business owner’s time and attention. To maximize the value and profitability of your company, you need to focus on the key value drivers – which may be intangibles and employees – as well as having up-to-date equipment and systems.

Become Your Own Customer

“Discovery consists of seeing what everybody has seen and thinking what nobody has thought.” Albert Szent-Gysrgyi

Whenever you walk down a high street crammed with shops, restaurants, boutiques and other specialty stores, have you ever noticed that there is usually a certain business, a particular restaurant or a particular store that is nearly always full or has a queue of people waiting to get in?

Why is it that in certain restaurants it’s impossible to book a table unless you do so days or weeks in advance, and certain shops and stores are so popular that they can’t keep up with demand from their customers?

What is it that makes these small businesses so popular and special, while others around them always appear empty or never seem to have the same buzz associated with customers clamouring to buy their products and services?

The thing that sets these businesses apart is almost certainly down to one reason: they have managed to offer a standard of service that is over and above anything provided by their rivals.

In other words, they offer a service that is efficient, convenient and completely satisfying for their customers. They offer an enjoyable experience and a business encounter so pleasurable that their customers will go there over and over, and urge all their friends and acquaintances to do the same.

The big mistake made by small business owners who do not satisfy their customers to this level is that they usually fail to look at their business in the same way that their customers do.

It never occurs to them that they should regularly put themselves in their customers’ shoes and look for any faults, confusing information or ways to improve the efficiency and friendliness of their service – and hence improve their sales.

If you genuinely want to maximize your sales potential, you always need to look at your business as if you were a customer.

How should you do this?

As a small business owner, there are a few simple ways that you can experience what it’s like to be a customer of your own. For example:

• You could ask your staff what they know about your products and services.
• You could send away for your own information.
• You could buy your own product from your online store.
• You could visit and download pages from your own website.
• You could walk into your own shop, restaurant or office as if you were a visitor or customer, and try to see things as they would see them.

By doing this, you will invariably spot ways that your standards of service, first impressions and a feeling of welcome could be improved.

If you operate in a highly competitive business sector (well, who doesn’t these days?) the more that you do to improve your service and make it a pleasant experience for customers to do business with you, the more likely they will be to take out their wallets or credit card to spend with you.

Here are a few quick-fire questions and pointers to consider which could help any small business improve the standard of its service.

• Are all your staff knowledgeable and helpful to your customers?
• Does your staff totally understand what they are selling?
• Does your staff and your business seem to be an authority on subjects to do with your industry or trade?
• Is your reception area tidy and well-organized? Is it always like this?
• Do your customers ever have to wait an unreasonable amount of time to be served or to have their enquiry dealt with?
• Do the employees who answer the phone do so in a professional, friendly and consistent manner?
• Are your premises, or the parts of your premises that customers visit, impeccably clean at all times?
• Do you, your business and all your staff run a ‘service culture’ that will go that extra mile to help, please and astound your customers?

Give this a try by putting yourself in your customers’ shoes for a day. You’ll almost certainly be surprised by what you see and if you get into the habit of doing this on a regular basis you will also be surprised at how quickly and profitably you can make improvements to your service.