Archive for category Business Basics

Buy that business!

You have seen a business you want to buy… all good, you like what they do, you have the skills to do it, you want to know more, you get the financials and have a chat to the current owner. “Profits are up 5%on last year… The staff are not interested in taking long service leave… No bad debts… With a new person in charge, who knows what’s possible!”

Reason for selling? “Time to retire…” it all sounds so good, until you dig deeper, here are some tips on things to look for when evaluating a business to purchase.

  • Renting – Is the current price per month about to go up but no one is saying anything. That 5% profit on the previous year might dwindle fast
  • Profit – It’s up from last year… but how much was it to begin with? If it was only 2% before hand then it’s not much of a rise, unless the profit amount in dollar terms is quite high, that might be different. BUT what if the profit expressed in dollars is low? Let’s say it’s $10,000 per anum on average over the last 5 years, that’s probably not much, unless the owner is paying themselves a huge amount for some reason and then the profit could be low.
  • Cash at hand – Oh look, there’s cash in the bank, well the current owner may take that with them… perhaps ignore it as some form of bonus, but deduct it off the price you intend to pay
  • Valuation of the business – Get an accountant to have a look at the figures and have them point out any glaring anomalies. A good profit on paper, might just equate to covering the amount the owners should pay themselves, but have not been paying themselves wages. Therefore what looks good now might be a big disappointment
  • Assets – Are they really worth what is stated in the figures? Will you want to update some of the assets… It starts to get trick folks. Stock at hand, what if most of the stock is out of date or they are items people don’t want to buy any more. You might end up throwing this stock out, then there would be replacement cost for useful items.
  • Systems – All the simple processes and procedures that get used to make things easier, how do they run their database? Are there quality processes and or assessment methods in place to measure the quality of what you get, sell etc.
  • Staff – Grumpy, underpaid, wanting to get a new owner who is cashed up so they can take long service leave, cashed up so they can sue for breaches of Workplace Health and Safety issues, cashed up so they can trip up and claim compensation, the list could go on. Then you find out they have been on the wrong pay scale and are wanting pay rises. So you know all that but you figure you can turn them around and create a new culture of happy committed staff, chances are hell will freeze over first! Changing a dud cultire is like trying to turn a cruiseliner around it takes a lot of effort to do it, then by time you do it the territory you ended up at now looks totally different…. That’s right you are now facing the worng way. 🙁
  • Customers – You find them leaving the business in their droves, it turns out they loved the way the previous owner did things, now they are off to find a new supplier. The truth be known, they probably just didn’t like the new pricing you introduced, after all you wanted to up the profit margin

As you can see it can be a minefield, make sure you do your due diligence, be thorough and ask LOTS of questions. Once the deal is done, the last thing you want is BIG surprises.

Doing the hard yards to make a great start in business

Plenty of people have started in business and failed, some failed quickly, others took longer, a LOT longer…

Years of observation and working with business people has taught me a range of things, the main things are how they failed in business, in often not so spectacular ways and what to do about it.

The reasons are often simple.

Business success

It’s all in the planning

  • No plan – No structural or marketing strategy
  • Technical skills to do something but no business ‘personality’ or charisma to really sell, promote or build interest
  • Low knowledge of the purpose and function of business – Profit is one thing, providing a reason to do so is another…
  • Inability to look at the challenges and find ways to overcome them
  • Being busy and working long hours does not always mean you are being productive
  • Not enough start up capital, CASH to really give your project a go
  • Lack of operational systems for when things really get going so you can develop a valuable asset not just a business
  • Research – making and selling a gadget that is about to go off trend and fade is one thing, knowing it is fading is another…
  • Not knowing how much money you NEED to make each week to break even and then how much profit to make, then what to do with it

A seasoned business operator will look at this list and say, hey that’s just the start… and they are right. There is so much to business that this list is just a starting point.

But that’s it, it’s all about starting points. Even people in business after many years find there are new starting points, like when computers started showing up in businesses, a new starting point. A new piece of technology for a manufacturing process… same. And so it goes on.

If you want to start in business, make sure you do something about addressing the basics listed above, sure they can be daunting, sure you will be tested, but you wanted to take the risk, you wanted to make your mark so do it, but do it right.

Regards

Steve Gray

Juggle that business

That’s right juggling…

Juggling business resources

Juggling your business resources

When you know that the business has so many elements it’s almost impossible to juggle them all, you start to realise there must be an answer to being able to juggle at least SOME of the elements.

For those with a big enough business or the resources to do it, you might simply delegate those things that require more time to make sure things are done right. Not all of us are that lucky.

For those who are starting out, or those who want to keep the business alive and happening even though you have a small crew, this planning document is for you.

Download the free PDF file, it’s at the end of the article… It’s just two pages of planning material that you can copy to your heart’s content, then USE IT to get your planning act together. You know what they say… “Work on the business not just in it.” When you realise that’s a truism you want to aspire to, then drag this out and make it happen.

Ok, so it’s a planning calendar with a sheet of questions and query points to get you started. The aim is to get you thinking about the three key areas that make your business tick, then plan to work on each area. If you get stuck you can refer to the questions on the list, then develop  some starting points to go from.

Enjoy and drop me a line to let me know if it works for you or could be altered to make it better!

Planning guide

Regards

Steve Gray

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Ignorance in business

If you’re incompetent, you can’t know you’re incompetent. The skills you need to produce a right answer are exactly the skills you need to recognize what a right answer is.

—David Dunning

Is ignorance killing us?

Ok ignorance can’t kill us per se, after all they say that “ignorance is bliss” and while that old cliche stays to haunt us I need you to think about the issue a little deeper.

Ignorance, or lack of knowledge, might well ‘strangle us to death’, in business this can certainly be the case. People who have not taken up technology as an aid to doing business, may well have survived the early years of computers, but now the grip is much firmer from the competitors who did take it on, thus they lose out to those with the ability to use social media, research more effectively and generally find information to cause their business to grow.

But let’s get deeper and move away from the obvious to the details of the challenge, let’s take a look at what should happen and what does happen

Utopia

In an ideal world a business would have effective startup capital behind it, the research would be thorough, the implementation phase would be solid and the business idea would move into action with ease, the customers would buy, become raving fans and more business would come your way. To top that off you make useful profit margins to grow the organisation and do some good along the way. The team you hire will be using best practice principles and be doing the utmost to ensure the values and beliefs of the organisation are upheld. To top that off you make an even better profit and do some more good.

Reality

Many businesses seem to fail the research bit, been there and done that myself, and many also start without much capital. Sue others have done it but it may not make for the easiest start up. Implementing a flawed plan with an awkward product or service might also add to the woes of the business, did no one read the E-Myth? Oh and you wanted to make a profit, phooey to that, because you probably now realise that making ends meet is hard enough.

The difference

Both models can happen but mostly the reality model seems to be the order of the day, as proven by the number of businesses that fail in the first 12 months, followed by the number that don’t do well after startup. The difference is the knowledge, followed by the implementation phase.

What do you do?

For me it would have been more research in the early days of the business I wanted to run, it was a franchise and I had a bunch of people I could have sat with and discussed the nitty gritty details, heck I could have even gone out on the road with them and discover first hand what the reality would have been like. I could have saved myself over $40 thousand dollars in the losses in the first year or two and probably the same in lost income over the next two years.

For start ups the notion of starting is often an emotional charged series of events where the business you want to go into will look fantastic, the logic will probably only look like a stumbling block and “who am I to compare against the competition, they are doing things wrong anyway…” well it might seem like that but the reality can be very different.

I have created many articles in here to give people solid starting points that can hopefully lead to some degree of success rather than falling on a sword and dying a slow painful death.

Please avoid death by ignorance, it can be so messy and end up costing a fortune.

Regards

Steve Gray

Areas All Business Owners Should Invest In With 2015 Looming

With the announcement that the iPhone 6 from Apple has been released, plenty of people around the world are investing in this latest piece of technology. The iPhone has become a major part of our everyday culture, and most people know what it does and the benefits tobe gained from owning one.  So as the final quarter of 2014 swings by, many individuals will be investing in the update to a must-have gadget.

But as a business owner, you have a lot more to think about than just the latest gadget. The only constant in life is change and this is especially true in business. Keeping one step ahead of technology, all eyes turn towards 2015 and the inevitable change it will bring to the business industry. So where should you be investing to stay ahead of the competition next year?

Email Management

The Internet and consumer technology are driving change in your customer base at an exponentially increasing rate. They are increasingly connected on the move with smartphones and tablets which have skyrocketed in popularity in recent years.

In 2015, this connectedness is set to give consumers more buying power than ever before. They will be connected to businesses and to each other via social media and review sites, among other platforms. The opportunity for you as a business owner is obvious. If you can be the business that connects with customers, you will have a distinct advantage over your competitors in the marketplace.

Investing in IT infrastructure has been a constant requirement for businesses for decades, but there has never been a greater need for solutions that keep you connected to your customers. Despite all the increased social media usage, email is still the preferred method of contact for the majority of customers. Research shows that in a world drowning in Tweets and status updates, communication via email is given higher priority by most people.

However, managing your email is not always easy. After years of outdated systems, or adding layer after layer of security, email management is often a headache for business owners.

Don’t let email management get you down. Look into Mimecast business email as they make it easy. Whether you’re talking to your customers, or communicating internally – email has never been more simple.

Social Media

Of course, this doesn’t mean that you should invest in email management only. A two-pronged strategy works best and whilst email is clearly the most important electronic communication channel, social media retains a high level of importance.

You need to invest in training for your staff, to ensure that they understand the impact of social media on the marketplace and to how create a positive contribution to your business. There are also several software solutions that can help you to manage your social media presence.

Customer Contact

2015 is set to be the year where a real, honest connection with customers is what will make the difference. The better equipped your business is to communicate with your customers, the better position your business will be in.

Think service or fail

If ever there was a case for making sure your service has to be spot on, check out the early reviews online about Lumosity, the mind game site. People have rated it very poorly, on service, on responsiveness, of not being able to get a person on the phone, the auto renewal for charges, and the list goes on.

The people at Lumosity would do well to read some of these and act fast. Not sure if they have or not, but they will need to do something to stem the tide of negativity from their consumers that all the advertising in the world will not overcome.

In this enlightened age most people I know will now check reviews for anything they want to buy, and if it’s not so hot, they will check out other options.

What gives?

Customer service is a vital part of what your business does, get good at it… No get brilliant at it.

Who cares?

Your bottom line will care that’s who! and then you will, especially if your income drops too far. Then don’t come running to me saying “business is tight, people aren’t buying” etc.

Fact is people know what they want, a business that is easy to deal with, responsive and makes them feel ok at the very least. Lumosity reviews suggest the company does little of the above. If I had read these first I would would have avoided it. However I personally find it a useful mind tool to explore and so far I am reasonably happy, I have turned off my auto renewal and have not had to contact customer service!

Get Smart

Yes there are lessons here folks, get smart about finding out what your service is like, what things need to alter and do it fast. and don’t just say “Oh that was just one grumpy customer that complained” go all out and launch an investigation to discover if things could have been done better. Chances are you will discover plenty to work on. Send in spies, have your spies ring in and ask for quotes, information etc and see how well they were handled.

Get active

Make changes if you find any issues that can be improved. Let’s face it customer service is the first and last contact point you will have with customers, the product/service you provide will simply be the ‘meat in the sandwich’.

Regards

Steve Gray

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Reputations Matter

ReputationYour organisations reputation can be a major key in making sure your business succeeds, lousy reputation and you could go ‘down the gurgler’ unless you have some sort of monopoly.

In a competitive world you are up against competitors who don’t need to run your business down, if you are already losing points by not attending to some key attributes of reputation.

Take a look at the list below, and think about if you even have a small handle on any of these pointers, let alone the whole list.

Nine Key Attributes of Reputation

  • Innovation
  • People management
  • Use of corporate assets
  • Social responsibility
  • Quality of management
  • Financial soundness
  • Long-term investment value (for those with investors of some kind)
  • Quality of products / services
  • Competitiveness – Local and or global

Want people to love your business and therefore buy more, partner with you more, get excited about what you have to offer? Then work on the key traits, learn more about them, work the list until your organisations reputation is where it needs to be.

You will also note in working on your organisations reputation that your business will flourish as you make steps into each area and develop the enterprise more.

Which one will you and your team tackle first?

Regards

Steve Gray free business tips

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