Just as people will form judgments and ideas about you as a person based on first impressions, the same holds true for your company. It is always best to put your “best foot forward,” and this is true whether we’re talking about your personal life or business. Periodically, it is prudent for every company to step back and evaluate its initial point of communication with customers and clients.
In today’s digitally interconnected world, it is critical that customers and clients feel as though they are not just being listened to; they really want to be heard. Emails must be responded to promptly. This is true regardless of whether the email is from a customer requesting more information about your goods or services, or if it’s a message with a question or complaint. If your company is unresponsive, this fact can quickly spread on social media.
Of course, customers and clients still pick up their phones and make calls. While many people’s first impressions of your business are increasingly likely to be via your website, there is no denying the importance of the phone call experience. When callers reach your business, it is vital that they receive a professional and warm reception. Whether the point of contact is a live person or a message, the experience should be a trouble-free and low stress experience.
Far too many businesses overlook this variable, but you can be quite certain that not all of their competitors are doing so. If you have a navigation system, it should be easy to navigate. If possible, there should be an option to talk to an operator so that callers don’t get lost within a labyrinthian phone maze filled with dead ends. Callers might not remember a positive phone experience, but you can bet that they will remember a stressful one.
When a team member greets a caller, the response should be pleasant and should include some version of “How may I help you?” Every operator should know company basics, such as your times of operation and the key names of your personnel. They should also demonstrate a willingness to help. Your team members should understand that their job depends on the success of the company and that they are on the frontlines of maintaining a positive business-customer relationship. Professionalism is a must, and team members should never lose sight of this fact.
Finally, your key management executives should invest the time to experience your company’s sphere of communication. What is it like to call your company and interact with team members? What improvements could be made?
In this very digital era, it is important to remember that there is still no replacement for human interaction. When a caller reaches out to your company for information or assistance, it is best to use technology judiciously. Try to opt for the human touch when possible. While the person answering the phones at your business might not be the highest paid person on your payroll, always remember that their job is an essential part of your company’s image.
When buyers are looking to make a purchase, the most important step they can take is to perform due diligence on both the business and the seller. Yet, it is important to note that a large percentage of sellers fail to do their due diligence on buyers.
Deals fail all the time. Sadly, this means that all parties lose a tremendous amount of time and effort. Additionally, sellers not only waste time, but often lose money due to business disruptions during the process of working with a prospective buyer.
Let’s dive in and look at a few warning signs that you should look for when dealing with a buyer. The sooner you spot these red flags, the sooner you can avoid potential problems.
There are several key questions that sellers should ask. The list includes:
-What, if any, other businesses have you considered to date?
-How much equity will you be committing?
-Do you have any experience with my kind of business?
It is important to look for warning signs early on, as this is the way that sellers can avoid wasting considerable time. It should also be noted that sellers shouldn’t be afraid to listen to their gut instincts. If you feel that a prospective buyer isn’t serious and may only be window shopping (or if you feel that the buyer is looking for a far greater deal than you are willing to provide), then simply move on. When you cut your losses early on, this can free you up to focus on prospective buyers that are a better fit.
What if your intermediary informs you that there has been no communication from the prospective buyer after they received the memorandum? Simply stated, this lack of communication could mean that the prospective buyer has changed his or her mind, or was never that serious in the first place.
Another red flag you might see is when the process is turned over to a junior member of the prospective buyer’s management team. In other cases, the prospect may fail to provide details or information concerning their financial capability to successfully complete the deal. If any of these three red flags pop up, you should consider being proactive. You and your broker might want to reach out to the prospective buyer and ask to meet to discuss the situation.
Warning signs can also occur just prior to closing. Even after the letter of intent has been signed, there is still room for problems to arise. An inexperienced attorney representing the buyer, one that simply doesn’t understand what is involved in a deal, can spell doom for what could have otherwise been a good deal. The same is true for an over aggressive attorney. One potential remedy for this situation is for your own attorney to intervene and discuss the situation.
Spotting warning signs is about more than not wasting everyone’s time. When you can observe these indicators and act effectively to address them, it can help keep deals on track. Working with a business broker or M&A advisor is an excellent way to not only spot red flags, but also to know how to respond appropriately. The end result will be more successfully completed deals.
Damon Neth is a Professional EOS Implementer of the Entrepreneurial Operating System®. He co-authored a best-selling book entitled X-Formation: Transforming Business Through Interim Executive Leadership. He also has founded five companies and acquired four other companies. Additionally, Damon Neth is an accomplished entrepreneur and a leading EOS® business coach.
EOS® is a powerful set of business tools that provide a framework that empowers companies to create a clear vision throughout their entire organization, and in the process, boost the health of the company as a whole. This article discusses EOS® and how it could potentially transform your organization.
What is EOS® All About?
EOS® is based on the book Traction: Getting a Grip on Your Business, which is written by Gino Wickman. The effectiveness of EOS® is underscored by the fact that EOS® is currently utilized by over 10,000 companies around the globe.
EOS® is a powerful set of tools that, as Neth explained, “are being used by businesses every single day to grow, transform and capitalize on opportunity and deal with problems. These tools provide strategic advantages and strategic tools that many organizations implement to become better, to beat their competition, to become stronger.”
How Can EOS® Benefit Your Company?
Through EOS®, it is possible to establish a clear vision for your organization. Neth points out that cultivating this vision is about finding clarity of purpose so that every team member is pulling in the same direction. When used from the top to the bottom of a company, the tools provided by EOS® can have a transformative effect. Discipline and accountability are key focal points of EOS®, as it is through discipline and accountability that the health of companies can be enhanced greatly.
At the core of EOS® is the concept that everyone should share the same company vision. That means that there must be good, consistent and steady communication. In order to facilitate this level of communication and understanding, it is necessary to have a transparent system in order to remove barriers, blockers and impurities. When properly utilized, EOS® creates an opportunity through which everyone can not only identify their own issues, but also find ways to solve those issues.
The most important asset that any company has is its people. As a result, it is absolutely essential to not only find the right people, but also to guide those people as efficiently and effectively as possible. As Neth explained, “You’ve got to be clear and transparent with people about what you need and about what success ultimately looks like. You want to make certain that everyone in the organization understands their job.”
In a world that is becoming increasingly complex, the role of the generalist is quickly being eroded. In its place, we discover that people’s roles within companies are, by necessity, becoming more and more specific. All of this points to the increasing importance of clarifying people’s roles within companies, and what is expected of them. Gray areas need to be eliminated as they impair team members’ understanding of their duties and responsibilities.
Communication is Key
Everyone in the organization should understand not only the role of their respective department, but also their role within that department and the organization as a whole. Once again, the key to success boils down to good communication and clarity of purpose and roles within the organization. Everyone must be rowing in the same direction, and it is through weekly measurables that true progress can take place.
What kinds of insights about selling a business might come from experts at private equity firms? This article includes advice for sellers from industry veteran Lamar Stanley. Stanley is a Director at Gen Cap America, which is a lower middle market private equity firm in Nashville, Tennessee. Since 1988, Gen Cap America (GCA) has made 60+ investments across seven committed private equity funds.
Before joining GCA, Stanley was with the Nashville based private-equity strategy group, Diversified Trust Company. Stanley holds a B.A. degree from The University of the South and an M.B.A. from The University of Chicago.
Understanding Small Business
Over the decades, Stanley has amassed a considerable amount of knowledge and expertise. He points out that it is easy for people to lose sight of the fact that many so-called “overnight successes” are actually the result of ten or twenty years of hard, thankless work. It is through these years of laser-like focus that entrepreneurs are able to bootstrap their business. Additionally, these business owners need to not only have a vision, but also the insight to bring on great people to help build their business.
The Benefit of a Deal Attorney
Stanley feels that working with a deal attorney can make a tremendous amount of difference, as it can increase the chances of a successful transaction taking place. Deal attorneys understand the deal process, which can make all the difference when it comes to streamlining the process.
“Deal fatigue” can derail what would otherwise be a good deal. This term applies to how deals can sometimes drag on for months. Working with an experienced deal attorney can help expedite the entire deal process. In turn, it can help to avoid the dangers typically associated with deal fatigue.
Preparing in Advance for a Sale
Stanley believes that it is critical for a business owner to think about selling as soon as possible. Ideally, a business owner should be thinking about selling when they start their business. He realizes that most business owners can’t hope to prepare for selling as soon as they create the business. But the point is clear, the sooner they begin the process the better. Business brokers and M&A advisors can best serve business owners by helping them understand that they shouldn’t wait until a month or week before they are ready to sell their business to get their respective houses in order.
There are so many important factors involved in getting a business ready to sell. They range from customer concentration and diversifying suppliers to preparing financial statements and working capital estimates well in advance.
In particular, Stanley points to the danger of business owners having to deal with preparing their business for sale while continuing to operate the business during the sales period. What must be avoided is for business owners to essentially have two jobs at the same time, as this increases the odds of deals falling apart from deal fatigue. The sooner a business broker is involved in the process, the better.
More than likely, selling your business is one of the biggest decisions of your life. Unless you own a business, it is impossible to understand just how all-encompassing of a process it can be. With that stated, it is important for business owners to step back and seriously reflect on whether or not they are truly ready to sell. The psychological aspects of selling are not trivial. Various aspects must be taken into consideration before initiating the process to sell.
There are many reasons why it is vital to step back and think about whether or not you are really ready to sell your business. Far too many business owners believe they are ready to sell, only to discover (much too late) that an executed sale is not optimal for their plans.
Selling When There is No Other Choice
Selling a business because there is no other choice, such as situations concerning failing health, personal issues or problems with a business partner, isn’t a true choice at all. In this situation, the psychology of selling is essentially irrelevant, as you have one option, namely, to sell.
The Case of Burnout
In other cases, owners eventually hit a brick wall and have no choice but to consider selling. As burnout sets in, owners may feel that the time is right to “hang up their hat” and put their business up for sale. However, as the process evolves, even those experiencing some level of burnout can discover that they are not emotionally or psychologically ready to sell. In many cases, people make this realization only once it is too late.
Take the Time for Self-Reflection
Quite often, a company becomes interwoven into a business owner’s sense of self, sense of place in the world and even, to an extent, sense of self-worth and identity. When business owners are unaware of this fact, it can be something of a shock to their system to begin the sales process. Many people simply are unaware of the strong hold that their business has on them.
Owners need to invest some time in self-reflection and ask four key questions: Do I really want to sell? If the answer is yes, then why do I want to sell? Will I regret selling once my business is sold? What will I do after I have sold my business? Answering these questions involves far more than evaluating your business. They also involve diving into emotional issues that could be central to your future.
Are You Really Ready to Sell?
One of the best ways of determining whether you are ready to sell, and preparing your business for that potential sale, is to work with a business broker or M&A advisor. Business brokers are experts at helping business owners deal with every aspect of the process of selling a business. They can act as experienced guides that can use that experience and expertise to help you determine if you are truly ready to sell.
If it turns out that you are indeed ready to sell, a brokerage professional can help you prepare so that you can achieve the best price possible once your business hits the market.
There are many reasons why small companies are put up for sale. Some of the more common reasons can actually have little to do with the company’s general performance. For example, many small business owners discover that they need to sell for health reasons or personal concerns, such as divorce or partnership issues. While a business downturn or fear of a larger competitor looming on the horizon might prompt many business owners to sell, economic drivers are not the only issue. Owners may want and need to sell, but often it isn’t always that simple.
Many business owners are looking to retire, but are unpleasantly surprised to learn that they simply can’t afford to do so. Still yet, many business owners don’t truly want to retire or sell, but instead they just want more freedom in their lives. The day-to-day responsibilities of owning and operating a small business can take their toll. Many business owners are looking to make a change and would love to be free of this burden. This class of owner has already “checked out” mentally, and this can have profound negative consequences for their businesses.
When an owner wants out but discovers that he or she simply can’t afford to sell or retire, it will come as no surprise that there is usually an accompanying drop off in enthusiasm. Ultimately, the vast majority of owners will start to lose focus. Often, we find that they stop investing the capital necessary to continue the growth of the business, which can trigger other events, such as the loss of key staff members and/or customers. Losing a top customer to a major competitor can further accelerate the downward spiral. The failure of the business to maintain its footing and competitive advantage can lead to a more aggressive posture by existing competitors or even encourage a new competitor to move into the market.
In time, the owner may come face-to-face with the harsh realization that they have no choice but to sell if they are to salvage any of the business’s value. The best way for a business owner to safeguard against this situation is to sell when his or her business is doing well, as this helps to ensure an optimal price.
Working with a business broker, even years before one is interested in selling, is one of the single smartest moves any business owner can make. The time to think about selling your business is now, as no small business owner knows what life or the market will bring.
A small increase in what you charge for your goods and services can make a tremendous difference to your bottom line. The fact is that many businesses could charge more for their goods and services than they do, but fail to do so. Owners often do not realize the great value of charging just one-percent more. In this article, we’ll explore how charging even slightly more can dramatically impact your business.
Let’s consider a hypothetical example. A business owner tells a potential buyer that he or she could safely increase their prices by 1.5% and do so without the price increase causing any negative impact to sales or business disruption. The savvy buyer quickly realizes that the business, which has $70 million in sales, is leaving $1 million dollars on the table by not increasing its prices by 1.5%. A smart buyer realizes that after purchasing the business, all he or she has to do is institute this small price increase in order to achieve a sizable increase in profits.
In his best-selling book The Art of Pricing, Rafi Mohammed explores the often-overlooked area of pricing. He keenly observes that one of the biggest fallacies in all of business is to believe that a product’s price should be based on the cost of the product. In The Art of Pricing, Mohammed points to several examples. One comes from the restaurant industry. He points to the fact that McDonald’s keeps entrée prices attractive with the idea of making up profit shortfalls in other areas, ranging from desserts to drinks and more. Or as Mohammed points out, McDonald’s profits on hamburgers is marginal. However, its profits on French fries are considerable.
Mohammed’s view is that companies should always be looking to develop a culture of producing profits. He states, “through better pricing, companies can increase profits and generate growth.” Importantly, Mohammed points out that it is through what he calls “smart pricing” that it is possible to extract hidden profits from a business. Summed up another way, pricing couldn’t matter more.
All too often business owners, in the course of their day-to-day operations, fail to place sufficient importance of pricing. Any business looking to achieve more will be well served by first stopping and taking a good look at its pricing structure.
Likewise, buyers should be vigilant in their quest to find businesses that can safely increase prices without experiencing any disruption. At the end of the day, small changes to pricing can have a profound impact on a company’s bottom line.
The simple fact is that most of us want to control our own fate. This fact is especially true for entrepreneurs and business owners. However, the truth of the matter is that for most business owners, their fate isn’t completely in their own hands. For example, a variety of forces can prevent businesses from establishing their own prices.
Knowing whether or not your company has pricing power is essential and can influence a range of decisions that you may make. Let’s take a closer look at what steps you can take to control your own pricing.
What is Pricing Power?
This economic term describes the effect of a change in a product price on the demanded quantity of said product. Your company’s pricing power is linked to the demand for your products or services. If you have a high level of pricing power, you can raise your prices over time and maintain your customers.
Who Has the Greatest Pricing Power?
It is no great secret that the Amazons, Apples, Wal-Marts and auto manufacturers of the world exercise a tremendous amount of power. Part of this considerable, and seemingly ever growing, power resides in the fact that the size of these companies now rivals and even surpasses many nation states. This grand level of power is unique in human history in many ways. Along with it comes the ability to exercise an almost god-like authority over suppliers.
Today, these ultra-powerful companies commonly dictate to vendors what prices they are willing to pay, and the quasi-monopolistic nature of these companies often leaves vendors with no choice to comply. In short, these 900-pound gorillas are telling companies both large and small exactly how much they will pay for a given number of bananas.
Step 1 – Providing a Branded Product or Service
If you discover that your company doesn’t have pricing power, there are steps you can take. One step is to produce a branded product or service. In this way, you are able to offer something of greater value than your competitors. Through having a branded product or service, it is possible to create a higher perceived value in the minds of not just the Amazons of the world, but in the minds of consumers as well.
Step 2 – Innovating
Another path towards achieving pricing power is through innovation. A great example of leading the way in innovation is Apple. While few companies have Apple’s almost ethereal resources, that is not to say that you cannot find ways to innovate within your own sphere or industry. Small innovations can often have an outsized impact and help a business stand out from a crowded playing field. Innovation that leads to patent production is an excellent way to gain a degree of pricing power.
Step 3 – Offering Exceptional Service
A third option for achieving a degree of pricing power is to provide what could be called “mind-blowing” service. By providing service that is truly a cut above what the competitors can match, your company is positioned to achieve pricing power. Providing your customers with something they simply can’t get elsewhere is a key way to setting a price that is more in line with what you desire.
There are many marketplace variables that your business can’t control. The trick is to evaluate your business, your business’s potential and the concrete and practical steps you can take starting today to achieve pricing power.
The post 3 Steps for Achieving Pricing Power appeared first on Deal Studio – Automate, accelerate and elevate your deal making.
John Warrilow is the founder of The Value Builder System and accomplished author. While not a business broker himself, Warrilow has gathered considerable knowledge and expertise on the industry. His previous book Built to Sell was listed as one of the best business books of 2011. In this article, we will explore some of the key points in Warrilow’s latest book, which is entitled The Art of Selling Your Business: Winning Strategies and Secret Hacks for Exiting on Top. This book was released on January 12th, 2021 and is proving to be invaluable for business owners.
Selling When the Time is Right
One key focal point of the book is that business owners should skip trying to find the perfect “magical time” to sell their business. Additionally, Warrilow notes, “I make the strong recommendation in the book that the best time to sell your company is not during some mysterious macroeconomic environment. It is when someone is willing to buy it and you get an offer. And that is because at that point, you’re in the position of strength.”
The DIY Approach
This book reinforces the fact that business owners truly need to work with an intermediary if they are to achieve optimal results. Warrilow even includes his six reasons for why every business owner should hire a business broker or M&A advisor.
Many business owners think that they can simply handle selling their business on their own. But the simple fact is that business owners usually have no experience in selling a business. Add this to the fact that selling their business is likely to be the most important financial decision the business owner ever makes, and it quickly becomes clear that business owners are doing themselves a considerable disservice when they opt to handle everything on their own.
A Business Broker vs. a Lawyer
As Warrilow points out, oftentimes business owners think that rather than working with a business broker or M&A advisor, they can turn to a trusted lawyer who has served them in the past. But this thinking is flawed when it comes to successfully selling a business. As Warrilow states, “a lawyer, almost by default, is going to be very conservative as everything exposes a lawyer to risk. And that is why using a traditional attorney is almost always a mistake.”
If you are planning to sell your business now or in the future, a book like Warrilow’s The Art of Selling Your Business: Winning Strategies and Secret Hacks for Exiting on Top can serve as a uniquely valuable tool in your toolbox.
The post John Warrilow’s The Art of Selling Your Business appeared first on Deal Studio – Automate, accelerate and elevate your deal making.
No two companies are quite alike, and this also means that there are many reasons why companies can fall into trouble. While the number of variables involved in operating a company are practically endless, there are a handful of reasons why companies can fall on hard times. Let’s take a closer look.
Companies that lack focus can often run into considerable trouble. Not understanding their customers and what they need or want can lead to endless problems. It is vital that companies frequently stop and assess who their customers are and whether or not they are properly servicing their needs.
Not too surprisingly, many companies can run into trouble because of poor management. Management problems are not one-dimensional, but instead take a variety of shapes. Management that isn’t focused, is incompetent, or simply doesn’t care about the business can translate into a business’s premature death.
Under the umbrella of “management problems” also falls such missteps as poor financial controls, quality control problems, operational issues, and/or not keeping up with technological advancements. At the end of the day, many of the problems on our list have at least some management issue missteps at their heart.
Loss of Key Employees or Clients
The loss of a key employee or a key client can spell serious trouble. Of course, no management team can predict every eventuality. However, when there is a loss of a key employee or client, and there is no plan for replacement, then management does shoulder at least some of the blame. The savviest companies take steps to ensure that there are ways to replace the most important employees and clients.
Failure to Compete
More than one business has been buried by the competition or failure to see a new wave of competition coming. For example, countless mom and pop video rental stores were absolutely bludgeoned by the introduction of Blockbuster Video a generation ago.
While it is true that sometimes market forces are so aligned against a business that survival is almost impossible, that is normally not the case for most businesses on a year-to-year basis. The most effective and competent management can see the competition out on the horizon. Or at bare minimum, they have an emergency plan in the event that the competition becomes more intense.
All too often by the time a business realizes that it is in trouble, it is already too late. If the problems can’t be fixed, then it may be time to consider selling the business. But such decisions must be made quickly in order to prevent additional bloodletting.
Optimally, a business is sold while it is doing well. Regardless of whether a business is thriving or experiencing difficulties, a business broker or M&A advisor can be an invaluable ally in helping a business reach its full potential.
The post Why Businesses Get Into Trouble appeared first on Deal Studio – Automate, accelerate and elevate your deal making.