Are you hiding behind your business?

Published on February 23, 2010 in Uncategorized. 0 Comments Tags: , , , , .

At the moment there are supposedly 2 million plus businesses in Australia. This isn’t a very accurate figure because a lot of businesses get registered and never make it out of the gate. Plenty of other businesses do get started but trot along never getting anywhere. Many business owners remain at the helm of these under-performing businesses because;

  • they aren’t accountable to anyone and quite simply they can get away with it. As long as the business is treading water no-one will be any the wiser.
  • they think “What else would I do?”.
  • they don’t want to work for someone else.

The reality is that as business owners we can hide behind the façade and let everyone around us think that we are running really great businesses where everything is going well, staff are really happy and we’re making heaps of money. The real story is of course often quite different.

In one case I asked a client why he liked being in business. Essentially he told me he felt there was a certain prestige from having your own business and that he liked his friends knowing that he was a business owner. I asked him what he’d think if I brought his friends in and showed them his Profit and Loss. I don’t think I’ve ever seen the colour drain out of someone’s face quite so quickly.

The reasons above are not good reasons to stay in an under performing business. If your business is not profitable, not creating wealth for you, not paying you a good salary or leaning towards giving you a great lifestyle then you have to ask ‘Who am I fooling?’ and ‘How long should I let this continue?’. A quick way to determine whether you’re going well is to ask yourself this simple question; “If I hired a general manager to do my job and they performed like I did for the last 12 months, would they still have a job?”. If you’ve said yes, congratulations. If you said no, think about the consequences of your business never improving. The effects reach wider than your own pride.

So how do I turn this around?

The first area you may need to work on is you. If you have been in the habit of letting yourself off the hook then that needs to change. You need to be ready, willing and able to run an organisation that is goal oriented and target focussed.

Then you need to look at your model. Is the business model that you have chosen the best it can be? Is your business consistent? Do people want to work for your business? Many people focus on the product or service but it’s not just about that. You may have a product or service that is better than your competitors but if you’re not marketing, managing cash flow, hiring people and creating systems better than they do, your model is not working properly and could be improved.

How successful is your business model?

Published on February 23, 2010 in Uncategorized. 0 Comments Tags: , , , .

Here’s a question. If a trusted adviser analysed your business and told you that it will be very difficult in the current configuration to make significant profits, would you continue doing what you are doing or would you stop and regroup?

We often find that business owners continue along the path that they set out on even though years later they might be miserable, getting nowhere and making little or no money. It’s vitally important to get the ‘business model’ that you follow correct as early as you can.

I spoke to someone before Christmas who described himself as a ‘busy fool’ which I thought was a great expression. He elaborated by saying that he was busy all the time but wasn’t getting anywhere, had no exciting prospects to speak of and his business was barely breaking even. These are just a few signs that your business model is not working properly.

Here are the reasons why I think business owners sometimes get caught in this trap:

  • They often want the grand plan to unfold overnight and when it doesn’t they lose patience and motivation.
  • There’s often a sense of being trapped; they can’t stop what they are doing otherwise the money will stop and they wouldn’t survive for more than a month.
  • They avoid the things they don’t like doing mainly marketing, sales, debt collection, budgeting or managing. These things require them to be out in front of others or focusing on areas they are not strong in when they’d much rather be doing things they like.  
  • They don’t do a good enough job measuring what’s happening in their business – targets, staff performance and marketing effectiveness which leaves them ‘flying blind’.
  • They don’t recognise that their own skills and knowledge are a big part of being successful and are often missing key pieces of information.  
  • They wait for opportunities to come to them rather than go after opportunities. They don’t realise that unless they make something happen, nothing will happen and they often depend on ‘low hanging fruit’.
  • They think that there are magic wand / quick solutions to problems or that doing something the wrong way over and over will eventually lead to a favourable result.
  • They let their pride get in the way of sound decisions even when deep down they know that they shouldn’t do so.

We want to encourage business owners away from making these mistakes so that they can make good business decisions and develop a business model that will deliver sound results over time.

By investing time on yourself, you will learn the skills and attitudes you and your staff need to avoid the thinking that leads to the issues above. Making mistakes is part of being in business but continually making the same mistakes is not.

 

Thinking about your model, is it a good one? Do you have all of the information you need to make good decisions? It’s not uncommon to feel overwhelmed by the amount of work that needs to go in to correcting flaws in your model however remember that you don’t need to fix everything .. just choose one problem and persist with it until it’s a problem no more.

What gives a business its value?

Published on November 26, 2009 in Uncategorized. 0 Comments

There are many ways to value a business but the simplest way is to come up with a multiplier which you apply to the net profit generated in the previous financial year. The actual value of a business (and valuation methods) varies very much from industry to industry but there are key characteristics that most buyers will look for. If you keep these in mind, you’ll maximise the value of your business over time. If any of these are out of kilter, it’s worth considering how you will fix them.

The model

Imagine your business is a machine. You put X in the front and Y comes out the back. If your model is sound then by increasing X, Y increases too. Buyers will also look at the trends. Some businesses can grow revenue by putting in more effort but profit doesn’t grow. A buyer will want evidence that your model has the ability to be grown and replicated successfully otherwise they will find it hard to get their return on the purchase price. Your model should also be simple to understand because if it sounds too complicated then it might scare buyers off or at the very least reduce your business valuation.

The database

The size of your database is very important. A buyer will want to be able to access your pool of prospects and customers. They may be happy to continue selling what you sell but a buyer may also be interested in your business because they have something else to sell to your database. One business that we are aware of had sales of less than $1m but sold for over $10m because they had a large database of blue chip clients that was attractive to the buyer. Many small businesses don’t keep good prospect records. Just because someone doesn’t want to buy today, doesn’t mean they aren’t future customers. Also, buyers will often want to survey your customers to check satisfaction levels.

Relationships

Do you have a good relationship with your suppliers, staff, landlord etc. and are these relationships clearly documented. A buyer will always play ‘devils advocate’ and hand-shake agreements do not have value. Anything that can be easily taken away will reduce the value of the business. Make a point of documenting your relationships as it will be one of the first areas examined during due diligence.

Accounts

Your accounts need to stand up to major scrutiny when you sell your business particularly if you’re selling a company and not just the assets of the business. A smart buyer will examine every aspect of your accounts. If it’s a big transaction, they might even go down to individual invoice level to check your figures and they’ll look for patterns. Trying to ‘fatten the pig the day before market’ i.e. ramping up sales artificially around the time of the sale will only cause mistrust and doesn’t work. It’s like only brushing your teeth a few days before going to the dentist! If your accounts are a mess or it’s hard to tell your household accounts from your business accounts, now might be a good time to straighten that out.

Dependencies

Does your business require you to work around the clock to function? Is it dependent on a key person who could be hard to replace? If this is the case, your valuation will be affected. Nobody wants to buy a job let alone a job that is hard and time consuming. If you’re not paying yourself a commercially competitive wage, a business valuer will reduce the value of your business because the buyer won’t get someone to do your job for your wage.

Growth and consolidation

Does the business have other opportunities to expand? If a buyer pays you four times your profit then logically it will take them four years to get their money back if nothing changes. Most buyers will want to grow the profit either by looking at new opportunities or by absorbing some of the functions of your business into theirs to reduce costs. Business owners often spend a lot of time talking to us about what doesn’t work but you must be able to talk about what does.

So, how does this apply to you?

Why not take 10 minutes out of your busy schedule to find out what you can do to maximise the value of what is one of your most important assets. You might be very surprised by some of the simple steps you can take now that will pay off in the years to come. Simply call 1800 632 907 and ask to speak to a consultant. You’ve got nothing to lose – it’s free.

5 steps to writing a killer business plan

Published on August 19, 2009 in Uncategorized. 0 Comments

Business planning is one of those things that many business owners know they should be doing, but either don’t know how, or don’t do consistently enough to be useful.

Proper business planning is simply working through various scenarios and deciding on the one that you think is most likely to be successful. Read the 5 keys to effective business planning below and sign up FREE to access free business planning videos.

5 keys to effective business planning

  1. Plan for multiple scenarios
    A good business plan doesn’t just discuss the best case scenario but gives the reader insight into different possibilities and why the business is likely to be successful. Anyone with experience in business understands that a business plan is not a forecast.
  2. The process is important, not the document
    The document you end up with is only a by-product of the business planning process. The thought processing, investigating, analysing, researching, advice seeking, information processing and skill acquisition you do while you are planning are what really matters.
  3. Your abilities are under the microscope too
    Your skills and knowledge as a business leader will be very obvious to readers of your business plan as will your attitudes. Remember that “you don’t know what you don’t know”. If you sense that some areas of your plan are weak, you should address these concerns before implementing the plan. Management capability always receives a greater weighting than other aspects of your plan.
  4. Back up your plans with concrete facts
     Every statement you make should be backed up with concrete facts. It’s also important to avoid sweeping statements like ‘we will take on Google’ or ‘we’re the next SEEK’. Even if it’s true, it can make you sound over-confident or naïve.Instead of a general statement like ‘We’ll recruit 3 sales staff’ expand by saying ‘We will be recruiting salespeople with 3+ years experience in our industry. We have spoken to several recruiters who can help us to source both permanent and contract staff. Our 2 month training schedule will ensure new recruits are well-equipped to succeed in the role.’
  5. Keep figures clear, concise and realistic
     Your figures should be clear, concise and realistic. Three years of projections and a cashflow statement would be standard. If you are presenting to investors or a bank, it is best to talk them through the figures and the assumptions you’ve made face to face rather than let them draw their own conclusions.

Below you’ll find a set of excerpts from business planning case studies contained in the Your Business Success Program. The program is designed to help you to gain the skills to not only run your business but to compile a bulletproof business plan that will stand up to serious scrutiny. Simply enter your details here and we’ll email you them to you instantly.

Business Planning Video Excerpt 1 – Enlisting the professionals

Quantifying you goal

When you’re business planning, it’s important to involve experienced people. In this excerpt Geoff Harris from Flight Centre and Boost Juice as well as a team of other experts roll up their sleeves in a business planning session. Get instant access now.

Business Planning Video Excerpt 2 – Funding considerations

Financing a Franchise

Whether starting or buying a business or franchise, a major consideration in your plan has to be the money. How will you fund it? Will the banks help? What risk is there for you? How can you insure against the risk? The financial section of your business plan needs to be extremely strong. In this excerpt, a young couple talk to a banker about buying a new business. Get the link to watch this now.

Business Planning Video Excerpt 3 – Protecting yourself

Trademarks

Another consideration worth thinking about is how you protect yourself, your business, your products and the way you ‘do things’ from being imitated by others. When you become successful, this intellectual property will be worth a lot of money so it’s diligent to cover this off in your business plan. Register FREE to watch this video now.

Business Coaching: what you need to know before choosing a business coach

Published on August 19, 2009 in Uncategorized. 1 Comment Tags: , .

If you’re considering bringing a business coach into your business, the first step is for you to have a clear understanding of why you need one.

The following are statements we commonly hear from business owners we come into contact with. If one or more of these statements rings true for you, then engaging a business coach is a proven method of propelling your business to the next level.

  • I’m so heavily involved in the day to day tasks, I don’t get time to look at the business at a high level
  • Nobody can do things the way I do them. The buck stops with me so I get bogged down in the detail in order to survive
  • I know that I’m going wrong but I just don’t know what to do about it. There’s never a good time to address the issues
  • I don’t have time to look for long term solutions to problems so I end up putting out fires all the time. My working week seems to get longer and longer
  • I can’t seem to find the right people to fit my business and even if I do, they don’t stay. Often, they leave at the worst possible time
  • I don’t have the time or money to change things
  • I can’t see how this business is ever going to help me reach my personal goals

How Business Coaching can help

Business coaching is well-established as a sure fire way to grow a successful business and get your life back into balance.

A business coach will:

  1. Boost your business skills and knowledge. Your own personal development is an important outcome of a business coaching relationship and will be vital as your business continues to grow.
  2. Assist in your decision making process. A good business coach will increase the number of positive decisions made and will always provide unbiased opinions.
  3. Allow you to draw on the successes and failures of others to help you properly direct your business. A coach will help you solve problems once and for all rather than ‘putting out fires’.
  4. Act as a sounding-board and provide an objective / aerial view on the conditions in your business. It can be lonely at the top and a good coach will make you feel more at ease about your decisions.
  5. Save you time and help you to reach your goals quicker. Most businesses encounter similar problems and there’s a good chance a coach can immediately answer a lot of your questions.
  6. Offer you someone to be accountable to. Setting goals and meeting them is not only important but vital in order to make your business successful.
  7. Guide you in the creation of a bullet-proof model for your business and help you to continually build value in this important asset. Your business coach will ensure your business is aligned with your personal goals and ambitions.

Introducing the Your Business Success Program

Your Business Success is a business coaching program designed by experts, business coaches and highly successful entrepreneurs to be effective and affordable in the current economic climate.

The program uses 80 business case studies on DVD, workbooks containing over 2,500 ideas, questions and concepts and one-to-one contact customised to your business and your budget.

Much of the material is taken from over 11,000 hours of interactions with business owners during the last 10 years, so it is well-proven across multiple industries and scenarios.

The case studies feature real businesses being assisted by some of Australia’s best known business men and women, as well as an army of marketing, sales, financial, human resource, IT and operations experts. You won’t find this much business knowledge in one place anywhere else.

So you get a taste for how it works, we’ve complied 9 short video excerpts from the Program which you can access FREE just by registering here. Simply enter your details and access instructions will be emailed to you immediately.

Click here to register