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11 Steps to Business Failure in 2011

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The Internet is a fantastic source of knowledge and information.  How to be a better person, how to make more money, how to make body parts bigger/smaller/ better?  And there are many list available on how to be more successful.   We all aspire to be better.   I had started and owned a business for 20 years and had years of triple digit sales growth and solid double digit sale growth.    Even while  running and growing a business one tries to determine what you are doing right and wrong.

How To Avoid Business Failure?

Find something that is working and try to make it repetitive.  Find something that is not working and try to eliminate it before it brings further undesirable results.

I have a good friend that is an attorney and we would discuss business and he accounted his success to the fact that he consistently and diligently returned phone calls.  To that I say What?  Something so simple as just returning a phone call made you better than your counterparts?  And the answer to that is yes. Not everyone does return phone calls or emails .  So you can be better than the next guy by just returning phone calls.

To me this business practice is just a given, but I find to others it is more of an “optional service” that they provide.  Sometimes the difference between success and failure is not some long winded algorithm or new gee-whiz technology, it is focus on the basics and do them right and do them consistently.  Currently I am  a business broker based in Florida and work with small business owners in the process of buying and selling businesses.  I consistently find so many of the business issues I have had as a business owner are shared by so many other business owners.

Avoid Business Failure

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Tips For Steering Clear Of Business Failure

Do you want to have a better business?  Do you want to improve your business?  Then review the below list.  If you are wondering what may be the fast track to business failure then use the below as a guideline:

  1. Dont keep good track of your numbers and dont feel the need to really understand them.  That job should be for others.
  2. Dont return emails phone calls timely
  3. Continue to delay your involvement with Internet marketing, social marketing and  website optimization
  4. Dont  pay attention to existing customers and clients
  5. Be willing to treat customers and employees improperly, as long as you the business owner benefit, and when you do something wrong to others that benefit you- assure yourself that its “just business”.
  6. Dont take any time to review where you are spending your advertising/marketing dollars.  Assume that even though you have not been getting results from your current efforts that if you do nothing long enough results will occur… eventually.
  7. Dont embrace technology, continue to fight it and close your mind to “new ways”.
  8. As a business owner dont take any time planning for a business exit strategy
  9. Minimize the value of input from employees.  You are the boss and because of that fact your way is the only way.
  10. People say “either your business grows or your business dies”- dont believe that. Believe you have enough customers right now and that is good enough.
  11. Dont worry about any long term planning. Long term planning is really a waste of your valuable time.

Like most list, this list as well can go on and on.  Want to run a better business in 2011?

Its not Who You Know its Who Knows You

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Our business world revolves around the type and number of business contacts and relationships we have nurtured.  Quality business relationships play a large part in a successful business. I am a business broker based in Florida and and I strongly value the business relationships I have. I don`t necessarily want to know more relevant people, I want more people to know me. As we network and strive to grow our business, its important to remember its not who you know, its who knows you.

Establishing The Right Relationships

We use various means to establish those relationships.  When we make it our goal to grow our businesses by “getting out there and meeting more people”, that effort can be somewhat miss-guided.  For every business person the needs are a little different.  I help people buy and sell business.  I strive to speak to more people that are considering buying a business.

I also prospect and market to reach small business owners that have an interest in selling their business.  In some businesses the largest asset may be the production equipment, in others it may be their building they own, in my business as a business broker my largest asset along with my experiences may be my business relationships.

Actually to me the concept of Business Relationships has changed significantly over the last several years with the evolving of the internet and social media. And the definition of a business relation has become somewhat blurred.

“On Facebook I have 1800 friends”, “on Twitter 12,000 Follow Me and I follow 14,000” “On Linked-In I have 2200  Contacts”.-  I actually dont have these sort of numbers but many of us know people that do.  The real fact, at least for me, is that if I have to use all my fingers and toes to count my real friends I consider myself fortunate.

Business Relationships

Photo (c) sheranescloset.com

Does Knowing People Mean That They Know You?

Do the 1800 Facebook friends know you ?, Do the 14,000 on Twitter know you?, Of the 2200 Contacts on Link-ed In , how many are going to shoot me an email when they want to Buy a Business or Sell a Business in Florida, or buy printer paper, or get my lawn service, or whatever my business offers?

As we strive to network and expand our sphere of relationships I recently got reminded of the actual goal of this effort , or rather what the end result of this effort should actually be.  Very often I think thru my networking efforts, I want to meet people, when really what I want to do is have people meet me, get to know me. I know who President Obama is,  I don`t really”know” President Obama.  So I know of President Obama- does that help my business -no.  But what if President Obama knew me or knew of me?

I know of Bill Gates-Microsoft.  So what?  What if Bill Gates knew of me?  But from a practical standpoint, knowing the president of the small business right here on Main St is nice, but meeting him and striving to get him to know me, and when he and his friends are talking and one strikes up the all to common conversation of ” Do you know anyone who…..”   can help me buy a business in Florida, this small business owner can say yes, I know this great business broker and his name is…

7 Ways to Improve Your Business that Cost No Money

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It is the norm for Small businesses, startup, new ventures to struggle due to limited financial resources.  There are so many efforts that can improve your business and produce results that are little or no cost.  We all want results, but at what cost ?  Did that $1000 investment or expense produce $10 results?

Part of my profession as a business broker involves consulting with both buyers and seller of business.  I also provide consulting services to businesses outside my role as a business broker in Florida.  Rarely do I experience a discussion based upon “I have too much cash flow to deal with”.  Small business owner  and entrepreneurs are constantly seeking ways to improve thier businesses with limited resources.  Below are a list of several tactics and efforts a small business owner may take that cost little or no money and therefore the Return on Investment ( ROI)  is extremely high.  There are many other practices and efforts that can be utilized outside of the below short list, hopefully this list can change the line of thinking of a business owner from “I wish I could do something but I don’t have the money” to:

What Can I Do To Improve My Business With Limited Or No Money

1.Look at your company from the perspective of a customer.   Can you do that?, can you pretend you are a customer trying to do business with your company.  You send an inquiry via email, you place a call into your company- what happens?.  We all have dealt with companies that customer service seems more like “How to effectively get a customer off the phone”  instead of ” I wont let you hang up the phone until I know I have completely helped you to fulfillment”  IS it a pleasant experience to do business with your business?

2. Attempt to surround yourself with more beneficial  synergistic strategic partners-

As a business broker I have various strategic partners that allow me to best assist my clients.  These professionals include, Attorneys, Accountants, bankers and Financial people.  Not so long ago I relocated to a city 5 hours away.  Among other things, I needed to develop a new “team” that I could rely on that help me help my clients.  I researched banks that do a lot of SBA loans to small business, migrated thru the company website, found a point of contact that I had an interest in meeting with, sent an email, and got an email back saying “going on vacation back in 2 weeks, call me then”.  I proceeded to pursue a relationship with someone that would call me back., passed over this prospective strategic partner and found someone that I feel may develop into a mutually beneficial business relationship. My clients will benefit from my valued strategic partners.

3. Use the Internet more

Improve Your Business

Photo (c) highachievingwomen.biz

  • post a blog- how much does that cost?
  • post a tweet about  a sale, a special or event- We’ve all heard/read that this can be a good idea- just do it.
  • check out a site such as Fiverr.com and see if someone can do something for you for $5.  Are there other sites that facilitate low cost solutions? Can you afford to make a $5 error?
  • Try something you haven’t tried- a video, guest blogging, join more related forums or user groups, start a group.

4. Educate yourself– take some time out of your day to read other related blogs info on your industry or specific area of focus. Commit yourself to learn your own financials better than you presently do.  Again the ROI on your time invested in this can be quite high.

5. Go to a network meeting– there are several available in most communities that are either free or cost a couple bucks.  How much could you benefit from making that “right contact”.

6. Consider a Freelancer–  Are there some functions/task that you currently are having performed that may be done more cost effectively thru an outside source such as a free lancer.  Open your mind to it.

7. Treat all customers, prospects, employees, vendors with respect and integrity– The ROI on this no cost effort is immense

Dont ever stop trying something different.  I have utilized the above items in my various business ventures throughout the years and still utilize them on a regular basis.  If you are running a business, buying a business, or growing a business these low and no cost business practices will result in very good return on investment and usually all it takes to get these returns is to consider them and just do them.

Most Important Step to Starting,Running, Buying, or Selling a Business

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You are looking to Start a Business.  You are Running a Business.  You are Buying a Business.  You are Selling a Business.  What is the most important step in any one of these ventures, And no the answer is not having unlimited deep pockets. To start, run, sell,or buy a business you need to understand that business.  You need to understand not only the operational side of your business, you need to understand the financial side of your business.

I am a business broker in South Carolina and work with businesses in both South Carolina and Florida and I help people buy and sell businesses. (and current and former business owner)   I recall a very busy week of helping an out of town business buyer visit several different businesses.  Our intent of visiting these multiple businesses was an effort to understand the businesses. To buy a business you have to understand the business.  A small business owner truly needs to understand the financial health of their business.

Running Your Business Successfully

Many, Many Many small business owners DO NOT understand the financial side of their business.  Do you feel as an entrepreneur you need to understand the difference between a debit and credit or if you buy something if it should be a capital purchase or an operating expense.  So many small business owners and entrepreneurs run their business using their gut as their guide, they can feel if their business is going good or bad.

Other small business owners look at their checkbook- if there is money in that things are ok. On the other side you may have a very successful business, you buy several new trucks and new equipment with cash every year, you have very little money in the checkbook and “feel” you have an unsuccessful business. You could be very wrong.   And yes it is also very easy to hire a CPA and or accountant and send all the monthly records to them, count on them to sort thru them and have them generate a report for you to maybe glance at and file away.

Your CPA or accountant is a great place to start the learning process. The more you know, the more effective they can be to you.   Your  Balance sheet and your Income statement tell your companies story.  You may feel your company is healthy, or improving, or getting better, or getting worse- your balances sheet or Income statement (Profit/Loss Statement) will tell you in a factual manner.

You need money for your business- you go to a banker or financial institution to get money, do you think they will listen to you tell them about your business and loan you money based on that.  they will use your company financials to make that business decision.  A few years ago banks I had worked with strongly considered your balances sheet to make loan decision.  Now-a- days both Balance Sheets and income Statement both are a strong part of that evaluation.  Why is that?.  Understanding the “whys” about your business is important to your business.

In the preceding scenario a business may have a strong balance sheet due to significant assets like real estate owned or equipment owned by the company.  But in current economic conditions the companies Income statement show  that the business sales are down 25% and and shows losses for the last year- lending may not occur.  The banks may not be all that excited about the fact that you own real estate thru your company.

The business buyer I was working with flew in town for 3 days for him and I to visit businesses.  Most of the small business owners we visited had good businesses.  Without divulging any confidential information, they all showed cash flow in excess of $200,000 per year.  They (the respective business owners)  all said they didn’t really understand the financial side of the business, but “here our our records for your review”. (after confidentiality agreements were signed) They could speak for hours about their customers, employees, procedures and ideas.  Questions regarding financial information were usually answered with  1 or 2  brief sentences.

Buying A Business – The Right Way

The buyer I was working with was a very educated buyer, a President of a publicly held $40 Million company , and 30+ years of experience.  He had looked thru maybe 30 businesses to narrow down visits to less than a handful.  He and I both knew that to buy a business, he had to understand the business. We spent hours discussing the financials of the businesses.

You as an entrepreneur that is starting a business or running a business may someday want to sell your business.  Understanding the true financial condition of your business is the 1st step to improving the financial condition of your business.

Buying a business is a very effective way to expand your customer base and Revenues. knowing how to read and understand the financial statements of others could be the difference of a business acquisition that is a success or a failure.

And when an educated buyer approaches you about buying your business, you provide the business buyer your Balance Sheet, your Income Statement, and your explanation and understanding of the true financial condition of your business may be the difference in someone buying your business at a good price or passing your business over to pursue other businesses to buy.

Negotiating from a Business Owner Business Broker Perspective

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As a Small business owner or Entrepreneur, we find ourselves always negotiating.  We negotiate with our vendors for better prices/terms.  We negotiate with our spouses to spend just a few more hours at the office before we come home for dinner.   I believe everyone’s views and methods of  negotiation are as different as our taste in music.

Negotiating When Buying Or Selling A Business

My profession as a business broker certainly involves negotiations at most every step of the long process of buying and or selling a business.   Someone “needs” to sell their business, he “needs to sell at this price”,  according to all the other Business For Sale , his price is 3 x what other like businesses are asking, I find myself “negotiating or discussing” the merits of his target price.  My previous position as an owner of a small business with 25 employees and handling manufacturing, transportation, multiple office locations, and distribution required constant negotiation. I used to formally review my employees on an annual basis.

They generally expected a raise.  Before the meeting, I would calculate what the company could afford, set a range and meet with the employee.  I never viewed this process as a meeting that allowed negotiation on wages.  I viewed it as a means to allow di-directional feedback, but the wage increase was not an arbitrary number.  Very often employees would ask for more, I think just because they thought that is what they were supposed to do- which is fine with me.  They viewed this as a negotiation, I viewed it as something else.- This was just part of my personality or philosophy on negotiation.  I had fantastic long term employees and we would later negotiate days off, holiday pay and other items, but raises were not a point of negotiation.   Again, I think we all have our own unique views and ideas on negotiation.

Very often how ones negotiates may be a matter of his or hers personality.  Other time “someone told me or taught me” how to negotiate and that becomes the norm.  Currently as a business broker I do have to negotiate terms and conditions of me helping a business owner sell a business.  The line between negotiation and discussion does become blurred and for me I think it is fine to have business negotiations and business discussion become one and the same thing.

My Negotiation Tips For You

1.  I find I don`t get so caught up on the concept of negotiation and semantics.  I find that we have a business decision to resolve, we have 2 parties seeking to resolve it, and the 2 parties work together to seek resolution. Put yourself in the position of having options and the process has the potential for the best results.

2.  Its not always about price.  I have been through the process of negotiating  leases on a facilities, annual purchase orders with major suppliers, and larger purchases of capital equipment and many other “negotiable situation.  Very often the person that I am trying to reach agreement with is very strong and firm upon the price they believe is needed.  And in many situations I have been willing to accept the price desired by the other party, BUT I make absolute sure the other party hold true to every other term and condition within the agreement.

So my position is ok let us go with the price you desire, but it is mandated that delivery date, guarantees, support, followup and every other item involve with this matter is followed completely.  At times I feel that such value can be added thru the other terms that the actual price is really a value to both parties.  Or as it relates to my current profession as a business owner selling a business, I will give you a $50,000  price reduction, but I want a personal guarantee on the buyer, I want 8% interest instead of the 7% interest the buyer is offering for me to finance my business, and I want the owner to stay on as a free consultant for an extra 3 months.  SO the person buying the business gets the reduced price, and the seller gets some real added value.

Negotiation And Business Price

Photo (c) thesologuide.com

3.  One more point about price.  How many times have we been working thru a deal and felt the need to drive the price down to a level that the seller is willing to accept but not really happy with.  Then a week later when we want this little extra help or assistance or concession and we hear “We’re already losing money on this deal and we really cant help you with that”.

4.  Really a good deal is a deal that is good for both parties.  Sometimes one party can leave the “negotiating table ”  knowing that it is a great deal for him/her, and knowing that the other party is “taking a hit”.  How does that help sustain an ongoing relationship.  There are businesses that are ok with the “one and done” concept and have little regard to the effect on the other party.  I think our globe is fairly small, and getting smaller and I aspire, plan and count on all business relationship being perpetual.  Again the example about buying or selling a business.

If you are selling a business and you want a price that is higher than the actual business can justify, and if you provide some seller financing to the buyers, what is going to be the result of you getting this inflated price.  Very likely it results in the buyers of the business, not being able to make payments to you, going into default, and you having to deal again with the business that you originally sold because you had not longer wished to be dealing with it.

5.  Dont mistake negotiating with wishing or hoping.  If you know the terms that you need to attain to make the deal make sense to you,  be prepared to walk away from the deal. Are you making an offer and hoping /wishing the other party takes it because you know you want or “need” this product or service?  Be prepared to walk away form the deal, again try to put yourself in the position of having options.  If someone is wanting to buy a Towing Business and makes a bottom line offer to someone selling,  it helps the potential buyer knows that there are 3 other similar towing businesses for sale in the area and is fully prepared to pursue these other options.