Exit strategy pinned on noticeboard
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5 things you need to do before you sell your business

There are few businesses, and even fewer business owners, who last for ever. Whether you’re considering retirement or you simply need a fresh challenge, you will need a well thought-out plan for handing over the reins.

Better still, if you’re a start-up, you’ve got the opportunity to design an exit-friendly model from the outset. The sorts of features which make a business easy to buy can be built-in from day one, and starting with the end in mind is a really smart way to ensure future wealth.

For example, I know ventures that have been founded deliberately to antagonise a competitor, provoking them with loss-leaders or guerrilla marketing to make an offer to “take them out”. Less aggressive, yet equally effective strategies can include:

  •  Become an essential supplier to a bigger firm. They may worry about what would happen if you ceased trading, and buy you out to secure their own future
  • Offer complimentary products/services to those of your target purchaser, and approach them to discuss a “joint venture”. These can often mature to full-blown takeovers
  • Choose a niche which is relatively un-crowded, so your presence is easily visible to potential competitors and suitors
  • Build your business around a handful of products (maybe only one!) which you can supply cheaper/better/quicker than your competitors

Even if you’ve been around for a while, and haven’t really thought about your exit strategy before, it’s never too late to groom the venture to attract your dream buyer.

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I’m currently advising a group of directors who are looking to sell their automotive engineering business into a market not yet fully recovered from the recession. However, I’m confident that we can give them the value they deserve from their years of hard work and applied talent, by following a few crucial yet common-sense rules –

1: Appoint an exit strategist. Early on you’ll need someone to approach potential purchasers and manage the process. It’s rarely a good idea to contact them directly yourself, as you can look desperate and give away value unnecessarily. Besides, you should be still running your business, not spending your day hawking it around! Also choose a specialist law-firm with proven experience in drafting sale agreements.

2: Tidy the books. Buyers will expect a dossier of financial information, comprehensive and neatly presented. Have your latest accounts audited at the earliest opportunity, rather than waiting until filing deadlines. Provide the most recent management accounts too, and have answers prepared for all likely questions. They will assume that if you can’t manage the numbers, then the rest of the business is in a mess too.

3: Demonstrate growth potential. Although past results are important to you in showcasing the business, they really mean nothing to the purchasers, who will only benefit from the future. You need to provide a rationale for how revenue and profits could grow under their ownership.

4: Make yourself redundant. Anyone buying your business will want to see that it can operate without you. Ensure your customers don’t depend on you personally, and train staff to undertake every aspect of your work. Write down guides to all your systems and processes, so that everything would still function efficiently if you were to take a year off starting tomorrow.

5: Give yourself time. Most businesses need at least a year to organise things as described above. If you feel under pressure to sell when you’re not ready, or to accept the first offer, you’ll rarely get the best result!

Jonny Cooper is a business growth coach and exit strategist, having sold numerous businesses including his own £10M financial firm. 

Follow Jonny on Twitter @jonnycooper 

For a free Half-Hour of Power Skype Session with Jonny, email Jonny Cooper here.

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10 reasons why Smoking is like Religion

Bit of a fun blog today, stretching my mind around two of the many human activities I find quite baffling.

Here are my Top Ten Reasons why smoking is like following a religion:

1 – If they didn’t exist, no-one would invent them. Watch Bob Newhart’s legendary Raleigh sketch here, and you’ll get the idea. Then imagine him calling home to try and explain religion to a nation evolved purely on science and reason.

2 – If our kids didn’t learn about them from us, they wouldn’t discover them later. This is a great argument both for religious education and smoking in homes or close to children to be banned.

3 – Both are harmful to health. Smoking inarguably so; religion stifling to open enquiry and rational thought. The late great Christopher Hitchens referred to religion as a mental illness, and who am I to argue?

4 – There would be fewer premature deaths without either. Sure, we’ve all got to die sometime, but that’s no reason to wantonly leave the party early. Whether you choose to literally expire through self-inflicted respiratory destruction, or get caught up in an act of slaughter in the name-of-all-that’s-holy, either is a tragic waste of precious life.

5 – Both originated from our ignorance. Religions were invented to provide explanations where current knowledge failed. The sun rose – must be a big man upstairs. Washed away in a flood – that’s him again, punishing us for being bad. Smoking was promoted long before medicine caught on to its perils. Hell, we even thought it was good for us!

6 – Now we know better. The corollary to number 5. 21st Century Medics unanimously agree that smoking is among the easiest and surest of slow suicides yet discovered. Scientists are equally aligned that most things previously given a mystical status are now fully explained by science.

7 – Both are financially ruinous. I know people who spend more on fags than they do on a mortgage payment, for God’s sake. And no-one could make an argument of fiscal responsibility for the Vatican, hoarding looted treasures worth enough in cash terms to rid the world of all known diseases. Probably. If all the churches in the UK were converted into social housing, we’d solve the new homes shortage at a stroke. Maybe.

8 – They waste good people. Smoking, as we’ve agreed, truncates lives and thereby loses any future intellectual and social benefits those people may have yet had to bring. Organised religion is a huge sap of talent. I know several intelligent, intellectual and compassionate priests who could have contributed positively to our society in many other more useful ways.

9 - Both are widely practised, yet wrong. The argument that if enough people say or do something, it must be right, has never been disproved more effectively than through smoking and following religion. No-one needs to re-read the list of tobacco-related diseases to know that for sure, and here is a great rationale of why the same applies to religion.

10 – We’d be better off without them. You won’t find many people outside of the tobacco industry and HMRC arguing any positives for smoking. Even the smokers I know agree it’s plain silly. As for religion, John Lennon summed it up as perfectly as a man ever has.

So there you have it. Now you all know that I’m anti-smoking, and an unrelenting apologist for scientific reason!

Smoking Priest

 

Jonny Cooper: Is it important…or just urgent?

Ever get the feeling you’re overworked, always busy, stressed and yet often seem to accomplish very little?

Do you frequently leave work with a pile of stuff you really should have finished today, still to do tomorrow?

If so, you probably need to examine one of the fundamentals of time management, namely the difference between urgent and important tasks.

Urgent tasks are those which need doing now, whereas important tasks are those on which you need to spend most time.

Here’s a simple 4-box method of analysing your workload and deciding what to do first…and last!

Box 1: Urgent and important: Bills to be paid now, health or family problems, customer complaints; try to look at the root causes of why you are getting dragged into these situations. This will often feel like crisis management and should be pretty rare with proper planning. Finding space in your diary well in advance of deadlines will eliminate the stress from many of these tasks, and should move them into Box 2.

Box 2: Important but not urgent: These are jobs which must be done, but not necessarily today. Replying to most emails falls into this category, and you should avoid the knee-jerk tendency to answer all your messages right now. Most of your work should be concentrated here in Box 2, meaning you get through lots of essential tasks, without the pressure of a deadline.

Box 3: Urgent but not important: Plan to give these as little time as possible. For instance, answer priority emails and phone calls as briefly as possible, and delegate tasks to others whenever you can. This is the box where most work tends to be concentrated; probably because focussing on a series of trivial actions can seem like you are accomplishing great things.

Box 4: Neither important nor urgent: These are jobs which you really should be delegating, or simply leaving undone. You might find that if you leave things to simmer here for a while, they will either slip into Box 2, or become irrelevant. Surfing the internet for nothing in particular is a classic time-hungry example of a Box 4 task.

Thinking about what you REALLY need to be doing, and when, truly can make a difference in your personal effectiveness, wealth and happiness.

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Here’s something that’s urgent AND important! I’m offering a free half-hour of power to my loyal readers.

If you send me an email telling me how you’d benefit from a 30 minute’s business mentoring by me, I’ll do it FREE, wherever you are in the world, via Skype or ‘phone at a time to suit us both. jon@jupiterdawn.com

10 Lessons in Business from School

As the schools closed down for the summer, I got to thinking how many similarities there are between a well-run school, and a well-run business.

In fact, I thought of 10 ways right here.

(And before you get the wrong end of the analogy, I’m not suggesting you close your business for 6 weeks…)

1: Curriculum – This is your business plan, something you set out in writing at least annually. It should contain specific, time-sensitive goals and measurable targets.

2: Timetable – The only way a school can function is by everyone knowing what they are doing, and when. Plan your work schedules in advance, and start and leave consistently at pre-arranged times to keep your work-life balance on track.

3: Exams – Test your business progress regularly against your targets. Did you sell enough? Did you meet cash-flow and profitability projections? Equally, are there literally exams or courses you or your team should be taking to improve your knowledge and industry competitiveness?

4: Terms (Semesters to you Americans) – Punctuate your business year into easily measurable units. There is nothing like an end-of month target to get your sales department fired up.

5: Awards – Recognise personal as well as personnel achievements. Bonuses, promotion and team-building events can reap far more than they cost.

6: Uniform – Issue all client-facing staff with company work-wear. Whether matching ties, jackets or full outfits, it projects an image of an organisation committed to its brand values. When I implemented this at a financial services business I ran, employees also commented they appreciated not having to agonise over daily clothing choice!

7: Hierarchy – Appointing managers with the right combination of experience, knowledge, wisdom and gravitas will ensure a happy and productive classroom. Sorry, workforce.

8: Playtime – Know when to relax and spend time away from your work. No-one functions effectively after more than an hour sitting at a computer screen. Take a 5-minute break walking, talking, or meditating.

9: Eat! – Lunch is not for wimps; it’s essential. Your afternoons will be only half as useful as your mornings if you’re hungry.

10: Learn and teach – Nobody knows everything, or nothing. Be prepared to pass on your knowledge to colleagues, and listen to constructive suggestions from others.

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So…if you’d like a little more schooling yourself, or you just need someone to run some ideas by, I’m offering a free half-hour of power to my loyal readers.

If you send me an email telling me how you’d benefit from a half-hour’s business mentoring by me, I’ll do it FREE, wherever you are in the world, via Skype or ‘phone at a time to suit us both. jon@jupiterdawn.com

Elevator pitch can take you to new heights!

As a newcomer to a networking group last week, I was reminded how important it is to be able answer the question “so what do you do…?” concisely and in a way that both grabs attention and leaves a lasting impression.

Many of the attendees at my recent meeting were lucid and confident, but others I spoke with were only ever going to make a dreary and easily forgettable impact on their peers.

If you haven’t got a captivating case for what you do, and (more importantly) a compelling reason for why you do it, then why on earth would anyone believe you’re worth doing business with?

So, if your career means you regularly meet new people – and whose doesn’t? – then it’s critical to be able to create and present a personal 30-second commercial, often called an “elevator pitch” in the States.

It’s the basis of personal networking, self-promotion, and pretty much everything else you need to stand out from the crowd in an over-crowded world.

Here are my top 10 tips for making that first impression –

1: Talk benefits, not just features. “I’m a lawyer who makes sure people don’t get ripped off in property deals” rather than just saying you’re a property lawyer.

2: Be conversational and confident. Don’t hesitate, fidget or blather, and always present with a smile and a twinkle in your eye.

3: Don’t use jargon and particularly not industry-specific acronyms (OMG!)

4: Boast a little. It’s ok to start a sentence with “My key strengths are…”

5: Fulfil a need. Reminding the listener that you’re a qualified Zeppelin commander marks you as quirky and interesting, but a little redundant.

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6: Tailor to your audience. Investors want to hear how they can get returns, customers how you can solve their problems, and potential partners why you’re going to be a success together.

7: Use power adjectives such as “astounding” and “spectacular” over mundane words like “ok” and “good”.

8: Be prepared for follow-ups. If you’ve been convincing and engaging up to now, you’ll get questions. Rehearse the answers to any likely comebacks.

9: Review and revise regularly based on feedback. Conversely, if it ain’t broke, don’t fix it!

10: Test your commercial on a 7-year old first. If they don’t understand every word of it, you’ll lose half your target audience before you get a chance to finish!

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HALF HOUR OF POWER!

To help you find your own ELEVATOR PITCH, here’s a special treat for my loyal readers. If you send me an email telling me how you’d benefit from a half-hour’s business mentoring by me, I’ll do it FREE, wherever you are in the world, via Skype or ‘phone at a time to suit us both. jon@jupiterdawn.com

6-point test: Are you working ON your business, or simply IN it?

I meet many people engaged in their own enterprises, and it’s striking how there is a clear divide between those whose lives are controlled by their business, and those who have learned to control it to their advantage.

The first group are often no more than employees who happen to be their own boss, whereas the latter enjoy the freedom and wealth which flows from being in charge of a successful venture.

Here’s a 6-point self-test to decide which group you fall into –

1: Are you working more hours with fewer holidays than any of your staff? If yes, the business is running you, and you are merely working IN it. Get to work ON it, and you will find ways to accomplish your goals and still have time for a normal social and family life.

2: Does everything go wrong when you’re not there? If yes, you need to create systems and processes which function entirely without your input, and then delegate their operation to others. Success in this area is a sure sign you’re getting to work ON your business.

3: Are you constantly juggling cashflow to pay unexpected bills or last-minute demands? If so, you have probably been focussing on small urgent tasks instead of sitting back and planning the big important things, and are too busy earning a living to make any money!

4: Do you have customers who will only deal directly with you? Worse, do you believe they will only ever deal with you?  If that’s you, you need to be working ON your business, and educate your customers to buy from others in the company, leaving you free to focus on strategic planning and growth.

5: Is your office door “always open”? Does all your staff come to you for advice and clearance on everything? If so, you need to break the dependency culture and empower them to think for themselves. You’ll get far more out of your people, and free up your time to plan for the future.

6: Do you work to a business plan, with clear, measurable goals? Do you review and amend it regularly based on actual results? If you’re not planning where your company is going for at least the next 3 years, that’s a clear marker that you are only working IN it, not ON it!

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HALF HOUR OF POWER!

To help you work smarter, and ON your business, here’s a special treat for my loyal readers. If you send me an email telling me how you’d benefit from a half-hour’s business mentoring by me, I’ll do it FREE, wherever you are in the world, via Skype or ‘phone at a time to suit us both. jon@jupiterdawn.com

Hourly rates? Their time has surely come…

6 reasons professional firms should dump hourly billing right now!

I was personally reminded today of the perils of time-costing so beloved of solicitors, accountants and many consultants. I received an unfathomably large bill from a lawyer who did some property work about 3 months ago. I was aghast, but immediately grasped the problem.

He had billed me for what the job was worth to him – the supplier, not what it was worth to me – the customer!

I have approached his firm with a proposal to help him move from hourly billing to value pricing. The proposition that “time is money” is over 250 years old, and attributed to Benjamin Franklin. However, clocks don’t write cheques, and you don’t attract and retain clients by selling hours.

You sell solutions, service and value.

For the benefit of any designers, SEO dudes, consultants, advisers, laywers or accountants currently charging clients by the hour, here’s why switching to value pricing could transform your business:

1: Pricing a job at outset gets any objections from clients on the table before you start; far better than arguing over the bill at the end!

2: Clients feel special, as you are calculating a bespoke value for their work. Hourly rates, by contrast, are applied at the same level for everyone, irrespective of the value you are adding to their business.

3: Sharing risk by quoting fixed prices projects experience and confidence in your delivery and performance. Clients will feel that you must know you can do the job, otherwise you wouldn’t have committed to it.

4: Clients will appreciate that you are not about to rip them off. Can you imagine how you would feel if an airline charged by the mile for your ticket? Maybe the pilot would deliberately take the long route to rack up the costs!

 5: Value pricing forces internal efficiency. Fixing revenue ensures you will delegate and review work flows so you can offer service whilst ensuring you meet your own profitability aspirations.

6: Annual price increases are easier to factor in, as each job is costed individually. No firm likes sending out notices of hourly rate hikes, and no client likes receiving them.

In summary: value pricing encourages trust and nurtures long-term relationships with satisfied clients, leading to mutual profitability and success.

It’s time to ditch the clock and focus on value!

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HOURLY RATE: ZERO!

And now, here’s something of incredible value to you,  OFFERED AS A GIFT! Especially from me to you, as a loyal reader, I’m going to give you a HALF-HOUR OF POWER directly with me by Skype or phone. That’s right dudes and dudesses, wherever you are in the world, you can talk to me for 30 minutes about your business, and where you want to take it. Who knows, I might even be able to help!

Simply comment on this blog telling me in 140 characters or less (now there’s an idea…) what we’d talk about and why.  We’ll exchange contact details and get busy!

Here’s to your success,

Jonny