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From 10 Employees to 10X Revenue

Posted by & filed under Build Business Value, Building Business Value, Business Growth, Business Owner, Business Valuation, Valuation, Value Builder System™.

Alex Bates co-founded Mtell in 2006. The software company used artificial intelligence to predict when a piece of heavy machinery like an oil rig was about to fail so workers can preemptively fix what’s about to break.

If that sounds like a niche service offering, it was. Bates and his co-founder were able to grow the company to around $3 million in revenue using strategic relationships to fund growth and boost sales. But, in order to sustain their growth momentum, they needed more money.

Would they attempt to go public, or find a strategic buyer?

In this episode, you’ll learn:

  • The definition of corporate venture capital and how you can leverage it for your company
  • How to identify strategic opportunities to increase your multiple
  • An innovative way to generate sales when you don’t have contacts in your target industry
  • The difference between Series A and Series B venture capital rounds
  • The definition of a ‘whisper number’, and why you want one

Listen Now

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If you’re interested in improving the value of your business, take our questionnaire or contact Colonial Business Brokerage today at 443-982-7332.

Why You Should Fire Yourself

Posted by & filed under Build Business Value, Building Business Value, Business Owner, Business Valuation, Valuation, Value Builder System™.

If you find yourself in a position where your customers always insist on speaking with you directly instead of your employees, then you might want to consider shifting your structure so you can improve the value of your business.

Here’s why: a business that can thrive without the owner at the center of all its operations is more valuable because processes can run smoothly with or without you. If you’re too stuck in the weeds, you’ll have a difficult time improving or evolving – and your employees won’t have the opportunity to grow and become advocates for your brand.

To maximize the value of your business, you should set a goal to quietly slip into the background and let your staff take center stage. Here are five ways to make customers less inclined to call you:

1. Re-rank

If you display the bio of key staff members on your website, re-order the list so that it is alphabetical rather than hierarchical.
2. Re-brand

If your surname is in your company name, consider a re-brand. There’s nothing that makes a customer want to deal with the owner more than having the owner’s surname featured in the company name.

3. Hire a President

Giving someone the title of president conveys the message that they have real authority to solve customer problems.
4. Use an email auto-responder

Tim Ferriss, the author of The 4 Hour Work Week among other books, made the email auto-responder famous, and it can serve you well. Set up an automatic response to anyone sending you an email explaining that you are travelling or attending to a strategic project and unable to answer their questions immediately. Instead, train customers to direct questions to the person best suited to answer them quickly.

A word of caution using this strategy: if you continue to answer customer emails after setting up an auto-responder, it’s going to become transparent that you’re just trying to hide behind your autoresponder, which could diminish your credibility. If you set one up, you need to be ready to let others step in.
5. Play hookey

If you have the kind of business that customers visit in person, set up a home office so you can spend more time away from your location.

For a hard-charging A-type entrepreneur, the steps above can be complicated and feel counterintuitive. They may even have a short-term negative impact on your company’s sales, but once you get your customers trained to go to your team, you’ll be able to scale up further and ultimately maximize the value of your business.

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If you’re interested in improving the value of your business, take our questionnaire or contact Colonial Business Brokerage today at 443-982-7332.

 

Did You Know This About Your Marketing?

Posted by & filed under Business Growth, Business Owner, Marketing, Small Business Marketing.

Everything you have ever learned… everything you have ever been taught… and everything you have ever been told about marketing is WRONG!

Please consider this! Next time you’re online, I want you to search out and compare a few websites.

Compare 2 or more moving company websites, or perhaps fencing contractors, or attorneys, or accountants or any other professional or service-based business.

THEY ALL LOOK IDENTICAL TO EACH OTHER!!!

This explains why so many businesses compete on price.

Think about it, when you go to buy something, don’t you always want the best deal?

Well, when businesses look and say the exact same things, isn’t price the ONLY way to determine who is offering the best deal?

The following statement is often shocking to business owners, but price is NOT what customers shop for!

They’re shopping for VALUE. Customers will pay twice the price if they believe they’ll receive four times the value.

Prove this to yourself… do you buy all of your clothes at Walmart? Do you drive the cheapest car on the market? If not, why not?

Value trumps price every time, but when all businesses look identical to each other, the ONLY value proposition left to the customer is the business offering the lowest price.

So let me prove to you right now that everything you have ever learned… everything you have ever been taught… and everything you have ever been told about marketing is WRONG!

Here’s a video I created for you. Trust me when I tell you this may be the most important video you will ever watch as a business owner.

Click here to watch.

It’s a little long… 73 minutes, but I promise you it will be the BEST 73 minutes you will ever invest as a business owner!

I hope you enjoy it, and next week… I’ll help you begin to market your business the right way, and watch what happens to your leads and sales once you do.

Click here to watch.

Talk to you then.

 

Understanding Corporate Social Responsibility (CSR)

Posted by & filed under Build Business Value, Building Business Value, Business Owner, Buyer FAQ, Buying a Business, Seller Articles, Seller FAQ, Selling a Business, Valuation.

If you don’t exactly understand what corporate social responsibility (CSR) means, don’t worry.  We’ll cover the main points you need to know.  CSR is increasingly seen as something that companies of all sizes need to be aware of, so let’s take a closer look at a few of the finer points.

There are 4 basic pillars in CSR: the community, the environment, the marketplace and the workplace.  The community pillar of CSR refers to your company’s contribution to the local community; this contribution can take a variety of forms ranging from financial support to personal involvement. 

The second pillar of CSR is the environment.  The simple fact is that people around the world are becoming much more environmentally aware.  You can be quite certain that a percentage of your customers and/or clients have environmental concerns. 

Increasingly, consumers want to know that the companies that they are purchasing from have good environmental practices.  There are many ways that businesses can show that they are environmentally aware.  They range from recycling and using low-emission and high-mileage vehicles whenever possible to adopting packaging and containers that are environmentally friendly. 

The third pillar of CSR is the marketplace.  Proper corporate social responsibility includes the responsible utilization of advertising, public relations, and ethical business conduct.  Another key element in the marketplace pillar is adopting fair treatment policies towards suppliers and vendors, contractors and shareholders.  In other words, the marketplace aspect of CSR means rejecting exploitative business practices in favor of fairer and more equitable business practices. 

The final pillar of CSR concerns the workplace.  In the workplace pillar, CSR encourages the implementation of fair and equitable treatment of employees, as well as observing workplace safety protocols and embracing equal opportunity employment and labor standards.

Adopting CSR practices in today’s business climate is a prudent decision, as it serves to increase both shareholder and investor interest, while simultaneously encouraging a company’s value.  Likewise, embracing CSR practices can make it easier to attract a buyer and that party may be willing to pay a higher selling price.

Typically, buyers want a business that has many of the attributes supported by the four pillars of CSR.  Buyers want businesses that enjoy a high level of customer loyalty and have good overall relations with the local community.  Additionally, buyers want businesses that have quality relationships with their suppliers and vendors as well as loyal and dependable employees. 

Sellers must realize that buyers want products, goods and services that are in line with the current trends of the marketplace and have an eye towards future trends.  Finally, buyers want as little “baggage” as possible.  You can be certain that buyers don’t want to find any skeletons lurking about in the company closet.  The proper utilization of CSR can address all of these concerns and, in the process, make your business more attractive to a potential buyer.

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Whether you are looking to exit your privately held business, represent an acquisition-minded corporation, value your business, or are personally interested in owning or building value in your own company or franchise, Colonial Business Brokerage offers the professional services that successfully bring buyers and sellers together.

Copyright: Business Brokerage Press, Inc.

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The Snag Of Selling To Private Equity

Posted by & filed under Build Business Value, Building Business Value, Business Owner, Business Valuation, Exit Planning, Seller Articles, Seller FAQ, Selling a Business, Valuation, Value Builder System™.

Sherry Deutschmann got the money to start LetterLogic Inc. – a company that printed and mailed patient statements for hospitals – by having a yard sale. She made her first desk out of an old door.

From these humble beginnings Deutschmann built LetterLogic into a $40 million juggernaut which she recently sold for more than seven times Earnings Before Interest Taxes Depreciation and Amortization (EBITDA).

Deutschmann credits her success to the culture she built based on empathy, transparency and a juicy profit-sharing plan which is why she was so surprised when her acquirer decided to shut it down.

In this episode, you’ll discover:

  • The downside of selling to a private equity group
  • How to create a positive cash flow cycle using your customer’s money
  • Why Deutschmann paid her profit-sharing plan monthly
  • The definition of “Major in the majors” and why Deutschmann credits this philosophy for helping her sell
  • How your Trailing Twelve Months (TTM) financials impact your value

Listen now

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If you’re interested in improving the value of your business, take our questionnaire or contact Colonial Business Brokerage today at 443-982-7332.

Ownership Has Its Privileges

Posted by & filed under Build Business Value, Building Business Value, Business Owner, Business Valuation, Valuation, Value Builder System™.

Walk down Nashville’s Lower Broadway any night of the week, and you can hear aspiring artists belting out cover tunes from Elton John to Garth Brooks.

In many cases, these musicians come to Nashville to be discovered but pay their rent using the tips they get by playing other people’s songs. Most are lucky to eke out a modest living while the stars they impersonate run thriving empires.

Forbes estimates[1] that Luke Bryan, country music’s highest-paid star last year, earned 52 million dollars on the back of his stadium tour and duties as an American Idol judge and Chevy spokesperson.

What’s going on here? Is Bryan that much more talented than the dozens of artists playing his songs in Nashville every night?

Probably not.

The difference comes down to who controls the product. In Bryan’s case, he owns the music and the personal brand he has created to perform it. The cover artist is just reselling his stuff.

The Value Of Your Brand

The music business can be a helpful analogy in explaining why creating a unique brand is such a big contributor to the value of your company. Acquirers want what they could not easily copy. If you’re reselling other people’s products and services, an acquirer will likely argue that there are probably dozens of competitors driving down your margin next to nothing. Further, they may even conclude that they too could earn a license to resell whatever you’re distributing and will, therefore, place little value in the company you’ve built.

However, if you have something exclusive – a unique product or brand that makes people believe what you do is different – an acquirer will pay more, arguing it is difficult to reproduce what you have created.

If you find yourself reselling other people’s products or services, you can still drive up the value of your business by creating a brand around the way you do it. You could argue that Peloton is just selling a stationary bike. Still, it is the unique company they have created around the bike –including the community of riders that subscribe – that has recently driven Peloton’s value north of $7 billion (almost eight times trailing twelve months revenue at the time of their recent Initial Public Offering).

To drive up the value of your company, own the stuff you sell. If that’s not possible, create a unique brand that makes consumers feel as if you do.

[1]  http://www.nashcountrydaily.com/2018/08/14/forbes-list-of-the-highest-paid-country-stars-of-2018-includes-luke-bryan-garth-brooks-kenny-chesney-more/

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If you’re interested in improving the value of your business, take our questionnaire or contact Colonial Business Brokerage today at 443-982-7332.

 

When Disaster Strikes A Founder

Posted by & filed under Build Business Value, Building Business Value, Business Owner, Business Valuation, Exit Planning, Seller Articles, Seller FAQ, Selling a Business, Valuation, Value Builder System™.

Tom Pisello built Alinean, a consulting company which offered a set of tools to help salespeople express the value of picking their solution. The business was cruising with about half of its revenue coming from recurring licensing fees and the other half from consulting when disaster struck the Pisello’s family.

Pisello’s wife succumbed to a seven-year battle with cancer. Pisello knew he needed to focus on his family and decided to sell quickly and picked an existing partner as a new home for Alinean.

In the episode, you’ll discover:

  • How life events can change your motivation in an instant
  • How to value consulting compared to recurring revenue
  • How to evaluate a potential acquirer
  • Why your best acquirer may be an existing partner
  • How to vet the likelihood you’ll hit your earn out
  • Pisello’s biggest regret and what he might do differently if he could sell Alinean all over again
  • The definition of “Evolved Selling” and how it applies to B2B companies

Listen now

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If you’re interested in improving the value of your business, take our questionnaire or contact Colonial Business Brokerage today at 443-982-7332.

Understanding M&A Purchasing Agreements

Posted by & filed under Build Business Value, Building Business Value, Business Owner, Business Valuation, Exit Planning, Seller Articles, Seller FAQ, Selling a Business, Valuation, Value Builder System™.

M&A purchasing agreements can have a lot of moving parts.  A recent article from Meghan Daniels entitled, “The Makings of the M&A Purchase Agreement” serves to outline a range of facts including that every M&A deal is different.  The article, which serves as a general overview, raises a range of good points.

Components of the Deal

It should come as no surprise that M&A purchase agreements have various components.  Everything from definitions and executive provisions to representatives, warranties and schedules, indemnifications and interim and post-closing covenants are all covered in these purchase agreements.  Other key factors included in M&A purchase agreements are closing conditions and break-up fees.

Advice for Sellers

In her article, Daniels includes a range of tips for sellers.  She correctly points out that negotiating a purchase agreement (as well as the different stages involved in finalizing that agreement) can be both time consuming and stressful. 

As any good business broker will tell you, business owners have to be careful not to let their businesses suffer while they are going through the complex process of selling.  Selling a business is hard work, and this fact underscores the importance of working with a proven broker.

Likewise, Daniels observes that any serious buyer is likely to look quite closely at your business’s financials, which is yet another reason to work with key professionals during the process.  Additionally, you don’t want to wait until the last moment to get your “financial house in order.” 

You can be completely certain that prospective buyers will want to examine your finances closely before making an offer.  The sooner you begin working on getting your finances together, the better off you’ll be.

Use Trusted Pros

Another key point Daniels makes is that there will be tension, as every party is looking to protect their own best interests.  Having an experienced negotiator in your corner is a must.  Make sure your negotiator has bought and sold businesses in the past, and he or she will understand what pitfalls and potential problems may be lurking on the horizon.  Daniel’s view is that the sale price isn’t the only variable of importance.  Factors such as the terms of the deal must be taken into consideration.

The bottom line is that there are many reasons to work with a business broker.  A business broker understands the diverse complexities of an M&A purchase agreement.  They also have experience helping business owners organize their financial information and can prove invaluable during negotiations.  For most business owners, selling their business is the single most important business decision they will ever make.  Find someone who understands the process and can act as a guide through the process.

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Whether you are looking to exit your privately held business, represent an acquisition-minded corporation, value your business, or are personally interested in owning or building value in your own company or franchise, Colonial Business Brokerage offers the professional services that successfully bring buyers and sellers together.

Copyright: Business Brokerage Press, Inc.

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The post Understanding M&A Purchasing Agreements appeared first on Deal Studio – Automate, accelerate and elevate your deal making.

The Hidden Secret That Made This Company Worth A Ton

Posted by & filed under Build Business Value, Building Business Value, Business Owner, Business Valuation, Exit Planning, Seller Articles, Seller FAQ, Selling a Business, Valuation, Value Builder System™.

Ian Silverberg wanted to get into the health club business and approached a former employer about buying his gym.

As Silverberg did his due diligence, he realized the club was sitting on a real estate goldmine that would all but guarantee his exit would be lucrative. Silverberg went on to separate the health club from the real estate it was sitting on and sold the gym for almost five times EBITDA and then negotiated a lease that would pay him another $25,000 a month for the next ten years.

In the episode, you’ll learn:

  • The definition of a “ground lease” and when they can be valuable
  • A unique way to finance an acquisition with the help of something called an “RDC”
  • The techniques Silverberg used to triple the value of his operating business in less than a decade

Listen now

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If you’re interested in improving the value of your business, take our questionnaire or contact Colonial Business Brokerage today at 443-982-7332.

 

Key Mistakes that Could Impact Your Sale

Posted by & filed under Build Business Value, Business Owner, Business Valuation, Exit Planning, Seller Articles, Seller FAQ, Selling a Business, Valuation, Value Builder System™.

The old saying, “an ounce of prevention is worth a pound of cure,” most definitely applies to any business owner that believes he or she will someday want to sell his or her business.  The bottom line is that every business owner has to transition out of ownership at some point.  In a recent Inc. article, “Four Mistakes That Could Lower Your Business’s Value and Weaken Its Saleability,” author Bob House explores 4 mistakes that could spell trouble for business owners looking to sell.

No doubt House explores some excellent points in his article, such as that you should always have what he calls, “a selling mindset.”  The reason this mindset is potentially invaluable for a business owner is that when operating in this way, sellers are essentially forced to stay on their toes. 

Or as House writes, “a selling mindset encourages continual innovation, growth, and investment, helping your business stay ahead of the competition and at the top of its potential.”  Having a “selling mindset” means that business owners have no choice but to perform periodic reality checks and access the strengths and weaknesses of their businesses.

Mistake #1 Poor Record Keeping

For House, poor record-keeping tops the list of big mistakes that business owners need to address.  As House points out, both potential buyers and brokers will want to examine your books for the last few years.  The odds are excellent that before anyone buys your business, they will look very closely at every aspect of your financials, ranging from your sales history to your operating costs. 

Mistake #2 Failure to Innovate

The next potential mistake that business owners need to avoid is a failure to innovate.  House notes that a lack of tech-savviness could make your business less attractive to prospective buyers.  The simple fact is that virtually every business is now impacted in some way by its online presence, whether it is the quality of that presence or lack of it altogether. 

For House, a failure to maintain an active online presence could be associated with a failure to innovate.  Even if your company is innovative, if you do not maintain a coherent and robust online presence, this could portray your company in a negative light.

Mistake #3 Unstable Workforce

House also feels that having an unstable workforce could spell trouble for your business’s value and negatively impact its saleability.  Most prospective buyers will not be very eager to buy a business that they know has a lot of employee turnover.  In general, new business owners crave stability.  Attracting and keeping great employees could make all the difference when it comes time to sell your business.

Mistake #4 Delayed Investments

The final factor that House notes as a potential issue for those looking to sell their business is delaying investments and improvements.  House states that it is important for owners to continue to invest even if they know they are going to sell.  Investing in your business can help it expand, grow and showcase its potential future growth.

Another excellent way to prevent making mistakes that could interfere with your ability to sell your business is to begin working with a business broker.  A top-notch broker knows what mistakes you should avoid.  This experience will not only save you countless headaches but also help you preserve the value of your business.

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Whether you are looking to exit your privately held business, represent an acquisition-minded corporation, value your business, or are personally interested in owning or building value in your own company or franchise, Colonial Business Brokerage offers the professional services that successfully bring buyers and sellers together.

Copyright: Business Brokerage Press, Inc.

World Image/BigStock.com

The post Key Mistakes that Could Impact Your Sale appeared first on Deal Studio – Automate, accelerate and elevate your deal making.