Hopefully you will make a New Year’s resolution which includes building a business plan and in it, your personal and business goals.  You will also do a budget to make sure you can afford to execute what is in your plans.  Hopefully you are rested and as they say, “all dressed up and ready to go.”  You are also saying “Bring it on.”  My question is therefore, you know WHAT you want to do but HOW are you going to do it?

Chances are you have a list of projects and tasks you want and need to do.  It probably does not include answering phones, sending and receiving emails, reading articles and newsletters, attending conferences, staying on top of compliance items that affect your industry but numerous day to day activities that lead most entrepreneurs at the end of the day to say “Where did the day go?”  That’s the point of a Productivity plan.

A Productivity plan is an attempt to put some system into each day, week and month.  Whether you are the President of the United States or the unemployed person looking for a job, we all have exactly the same amount of time in a day.  While we may not always be able to control who we spend our day with, we can control how we spend it.  For example, do you know how much time each day you spend on email?  Do you respond to each email as it arrives?  If so, you are not being productive.  An email is a non urgent means of communication.  If it was urgent you would be using a cell or telephone.

The goal of a Productivity plan is to plan and manage your day, first, so you enjoy it and second, so you get the important tasks done while the less important tasks wait.  Closing down your email after all the messages are read and answered in the morning and then again in the afternoon allows you to be more productive…which is what a Productivity plan is all about.

As a business owner you have been taught to mainly work in months as this coincides with a financial period and allows you to close and then open a new set of financial statements with your book-keeper or financial analyst so you can review the success or shortcomings in preparation for the next month.

What other areas can you address to remain as productive as possible?  The starting point is to make a plan at the end of each day for the following day and roll it up at the end of the week.  Deciding what tasks you need to do in your business vary greatly from one person to the next as we all work from personal habits.  This is because not only are we in different businesses but also because we are in different industries and just as importantly, at different stages of a life cycle of our business.

If you want some help with what productivity tasks to accept, look at your normal work habits and decide how they can be improved, the tasks that must get done that slows down others, and even consider what you avoid doing or spend too much time procrastinating over.  This is where you can improve your productivity.

The best option is to either write your plan in a word processing document or a spreadsheet.  Making a written record and spending the time to define what needs to be done is the first step towards success.  Another important task is to make sure you allocate a priority – A for urgent, B for needs completing within a reasonable time and finally C for non urgent.

Finally, a Productivity plan is not about measuring results.  A Productivity plan is about defining AND agreeing what needs to be done with what urgency.  Measuring the results of your Productivity plan is important as it is by doing this we can see if we are moving forward and get a positive sense of accomplishment.

Check out my You Tube channel with over 35 short videos if you would like information about selling or buying a business – http://www.youtube.com/user/andrewrogersonsac

The sales and marketing plan is a document that most entrepreneurs don’t have time to put together.  I’m not sure why that is as it’s just as important as the business plan and indeed complements it.

The business plan outlines the vision, strategic direction and business and financial goals of the business.  The sales and marketing plan breaks down the business plan to show how you are going to get there and the tactics to use to attract the right customers.

The sales and marketing plan can be as complex and as detailed as you wish to make it.  It can include a list of tactics you could deploy, it can list and detail only specific tactics you plan to use or a combination of both.  It’s important, though, that you understand how each idea is to be used but you have some idea of the expected results each tactic should bring to the business.  There is an old adage in business management: If you cannot measure it you cannot manage it.  There is also a famous quote that says “I’m convinced that 50% of my marketing is effective, I just can’t tell which 50%.”

There is also another saying that says “I can’t afford to advertise.”  If you cannot afford to advertise then you probably cannot afford to be in business.

Some of the key items you want to see in your sales and marketing plan includes a profile of your typical current customer, what percentage of business they bring, where they come from and how they found you.  If you are planning on growing the business by either more of the same type of customer or a different customer demographic, this needs to be defined, measured and made sure it makes good business sense to target.   Sales and marketing should always be seen as an investment and just like all other aspects of your business, needs to bring a return that you measure or you need to go and try something else or adjust your sales and marketing plan.

If you are looking for different sales and marketing tactics there is simply no shortage of them.  Here are a few suggestions.  Each one needs proper consideration and research to make sure it’s the right strategy for your business.  These tactics include obvious things like your business cards, office letterhead and stationery, email signature, coupons or flyers as well as things like your website, blog, monthly electronic newsletter, networking, taking someone out to lunch once a week, social networking media such as Facebook, LinkedIn and Twitter.  Other strategies could include TV advertising, seminars to educate customers about your service, trade shows, hiring a Public Relations expert, joining local associations such as the Chambers of Commerce or other local business or trade association groups.

Just like your business plan, the sales and marketing plan needs to be a living and breathing document.  It needs to include projections and just as importantly, the results from any activities undertaken so you can tweak and constantly improve what you are doing.  Don not forget your sales and marketing plan should include how each person in the business answers the phone right through to the book-keeper.  There is no reason your book-keeper and clerical staff cannot answer the phone and offer a monthly special to see if they can bring in new business.  It’s a little unconventional but sales and marketing is about getting results, not whether something is conventional or unconventional.

As always, if you have questions about seller finance or more general questions about buying a business, please give me a call on 916 570-2674 or send an email to me at Andrew@RogersonBusinessServices.com

Owning, running, buying or selling a business is a major step for all entrepreneurs.  It comes with obvious financial risk which everyone understands and is one of the key focus and responsibilities all business owners.  It also prevents many would-be-entrepreneurs from starting their journey to own and operate their own business.  However, an element not all business owners understand or acknowledge is that the business ownership comes with many emotional risks that play just as an important role as the money itself.

Emotional risks constantly challenge all business owners.  The obvious one is success or failure.  For most entrepreneurs, once they come to terms with the financial risk, they must come to terms with the fact there is a possibility the business will fail.  The fear of failure links with the real concern about what to say to family and friends.

Another emotional risk which is part of an entrepreneur’s journey is handling the ups and downs which inevitably lead to burn out.  Every entrepreneur hopes there are more ups than downs and that the ups are greater and longer than the downs.  This means not only emotionally handling these situations but more importantly, building and using different tools and resources so they are available when needed.

A further emotional risk is having the self-confidence and self-belief that you have the skills, tenacity, and acumen to handle most if not all situations as they arise.  It is a given that the capitalist system goes up and unfortunately and inevitably goes down.  Each phase of the economic cycle requires using a different set of tools and approaches.  Similarly, each individual business has its ups and downs.  Generally they follow the economy but this is not always the case.  Many new businesses emerge and come to life in a recession.  A new entrepreneur sees a need or identifies a trend and takes the idea to the market.  The market embraces the idea and so the business moves forward and grows.  If the idea is strong enough, it attracts others who also embrace the idea and so competition pushes and refines the idea; another emotion an entrepreneur needs to handle.

So being an entrepreneur comes with different emotional risks.  There are many more than the ones I have identified above.  However, to help an entrepreneur understand and manage the emotional risks, it’s my suggestion that the first main action the entrepreneur puts together is a life plan.  What is a life plan?

A life plan is a very broad and simple document that answers some basic questions.  They will vary with the individual and their situation.  Part of the reason for writing your life plan is so you can share it with the important people in your life and also as a place for you to come back to on an annual basis or as needed to remind you why you decided to become an entrepreneur, including your motivations.

From my perspective, this is critical.  We often decide to do something major in life at a certain point for reasons that make sense at that time.  However, our lives are constantly evolving and changing due to many external pressures, almost all of them outside our control.  To therefore have a document to look back at and jog your memory why you decided to become an entrepreneur can also help you decide in the future if your objectives have been met and it’s therefore time to try something else in your life.

Alternatively, it can be sustaining and invigorating to remind you why you decided to become an entrepreneur and allow you to refocus on that.

Just to repeat an earlier point, it’s important to share your life plan with those who are close to you.  Don’t share it too broadly as it may become a document others judge or hold you accountable.  It’s not a document of accountability, it’s a place to keep your thoughts so you can be comfortable with the decisions you are making.

Some of the thoughts to keep in your life plan can include what’s personally important to you and what you hope being an entrepreneur will allow you to do.  If it’s to support your family and allow you to also contribute to local society, include those thoughts.  If values are important to you, what values will you bring to being an entrepreneur?  What are your priorities and how do you intend to manage those priorities when they come in conflict with other priorities?  What should happen with the business if something happens to you?

The ultimate goal of creating a life plan is so you can become at peace with your decision to become an entrepreneur.

As I’ve mentioned, our lives are constantly evolving and changing.  We adapt every day to change.  Being able to easily and readily adapt to that change will be the main ingredient to your success as an entrepreneur.  Understanding why you decided to start that journey in the first place and being able to remind yourself about this will help you make the many decisions along the way and keep you grounded.  There is also great value in keeping your life plan up to date, at least on an annual basis.  Once again, it will provide a sanctuary for your thoughts in case you have to confront a major event or changes in your life such as a serious health issue, death of a loved one, divorce, birth of a child, a major change in the economy or any other unknown situation.

Owning and operating a business is a serious matter.  However, life is about fun, making mistakes, learning, growing and moving forward.  When owning a business loses its fun and no longer seems to fit in your life plan, it should be enough to tell you that it is time to do something else.

If selling your business is an option you are considering, this link will provide a simple summary of the steps..  If you would like more information then this link will allow you to buy and download a copy of my book Successfully Sell Your Business.

If you own a business and receive an unsolicited offer to buy your business please be careful. If your business is currently for sale be even more cautious. There are con artists that have developed a clever process of taking your business from you and leaving you not only with absolutely nothing, but totally destroying your business and leaving you in debt.

Here’s a basic breakdown of their process.

Their easiest target is to contact the owners of businesses for sale, usually via listings on the internet and identify themselves as acting for a private party or a small investment group. They are looking for businesses generally that have at least a $1,000,000 selling price.

If the business is for sale by a business broker or intermediary, they will try to build a strong relationship with the seller. If they feel the broker or intermediary is an impediment to what they are doing, they then try to get the broker or intermediary out of the way by saying to the seller that the broker or intermediary is a hurdle to closing a deal.

Once they have a good relationship with the seller, they then make a strong offer with the condition they finance the deal over a short buy out period (say 6 to 10 months.) The offer will include a small downpayment, say 10% down AND as a stock sale (not an asset sale.) Under this scenario, the seller holds all the stock of the corporation as collateral, and of course, the sale includes the cash, Accounts Receivable and other items on the Balance Sheet.

Once they pay the seller the 10% deposit, they then require signature rights to the business bank accounts, credit cards and other assets while the seller “trains” them in the day to day operation of the business for the agreed two to four week training period.

Once the training is complete, they then clean out the cash, run up the credit cards, factor the Accounts Receivable, may sell off some or get loans on the fixed assets (vehicles, etc.) and do not pay any payable/liabilities. They even sometimes fire employees, usually never paying any of the businesses (or employee’s) payroll taxes or other taxes. Then, they disappear in a month or so having cleaned out the company by taking everything as cash.

Bottom line: These scams really do exist. It’s another reason to make sure your business broker is part of a State Association such as the California Association of Business Brokers or association such as the International Business Brokers Association. If you are planning to sell your business, please give me a call so I can help you. If you want to know how to find a good real estate agent, the California Department of Real Estate has a very good document to read that you can see by clicking this link: http://www.dre.ca.gov/pdf_docs/re16.pdf

One of the companies I use for SBA 504 loans in Sacramento called GSCDC dba Capital Funding, just sent through a messaging saying:

“SBA has released their guidelines for the “Refinancing Program.” We expect to have an influx of applications. Remember, this is only a two-year program. We have highlighted the guidelines for your review below:

• Federally guaranteed debt is not eligible for refinancing (7A, SBA-504, USDA).
• Existing loan(s) to mature on or before December 31, 2012.
• Project costs up to $18,000,000 are eligible.
• Loan to be refinanced must have been used for SBA-504 eligible fixed assets (real estate and/or equipment).
• Property must be owner occupied (51% or greater).
• Payments must be current for at least 1-year prior to SBA submission. If refinancing for an existing lender, payment transcripts for the life of the loan is required. The existing loan must be at least 2-years old.
• Financing up to 90% of current appraised value or existing loan balance, whichever is less. Debt in excess of 90% would have to be paid down, written down, subordinated, or additional collateral provided. Subordinated debt will require at least a 3-year standby agreement of P&I.
• Standard SBA-504 loan structure:
  • Bank…Minimum 50%
  • SBA…Maximum 40%
  • Borrower…Minimum 10% cash or equity”

If you think it may make sense to refinance your 504 SBA loan, give me a call and I will introduce you to a company that can help.

A business that is available for sale is often handled like selling a residential property or house – except they are totally different. In some states in the United States, for a professional third party or a broker to represent the seller of the house they are required to have a real estate license. That real estate license allows that person to sell a house, a commercial property, and in some cases, provide mortgage loans and assist in the transaction of selling a business.

As I mentioned above, however, all have similarities but there are major differences. When selling a house both seller and their broker want everyone to know the house is for sale whereas with a business, the sale is kept confidential to protect the business, the employees and other parties.
Here are 5 tips to help an owner thinking of selling their business.

First, most businesses rent their facility. However, if the business includes commercial real estate it should have a separate value and not be included in the purchase price of the business. It doesn’t mean the same buyer cannot buy both, it means that a separate value should be struck for the real estate in its own right and a separate value done for the business taking into account the fair market value of renting or leasing the real estate. It is wrong logic to value the real estate, value the business and not allow for fair market rent and then add both together to arrive at one listing price for everything.

Second, bring together a team of advisers or at least have them identified in case they are needed. The team should include an accountant and attorney while there is room for a personal financial planner.
Third, the most important components to a buyer are cash flow and potential. If the business doesn’t have a cash flow, the buyer may as well start the business from scratch and do things their way. The exception would be where the assets of the business are already in place such as for a restaurant, manufacturing site or other asset dependent business.

Fourth, an extension of the above point is to make sure that whatever price is asked, it has been properly valued. Most businesses being sold by the business owner are overpriced. A business owner becomes attached to the business and what it took to get it where it is. They therefore think it’s worth more than it is. The best approach is to have the business or its assets valued by a professional independent third party. There are different professional appraisers for different types of valuation. For example, there are different appraisers that specialize in valuing a business as opposed to valuing hard assets such as machinery and equipment versus someone who appraises intellectual property or commercial real estate.

Fifth and finally, make sure it’s clear who the buyer is and any down payment they are bringing. If the buyer says they are buying the business and have an investor, the first thing to do is ask to meet the investor. As a matter of course, it should be the investor making the inquiry as they have the money and will therefore make any final decision. Be careful how much you share until its clear the buyer has the potential to buy the business; not just dream about it.

Selling a business comes with complications. It is rarely a simple and straight forward process. One of the most important things to do is for the seller to put themselves in the shoes of the buyer. Being able to do this will greatly improve the chances of success in selling the business.

Per the Coleman Report – Today the Senate voted 61 to 37 to pass a motion to invoke cloture on Boucus Substitute Amendment to H.R. 5297, the Small Business Lending Bill.

After the vote, Majority Leader Harry Reid (D, NV) said that passing this motion was the most significant thing the Senate has done since the Stimulus Bill was passed to create jobs.
The bill is expected to create between 500,000 and 700,000 new jobs.
“We have community banks now with the ability to compete with big banks, and the ability to loan money to small business,” Reid stated.

The support of Republican Senators George Voinovich (OH) and George LeMieux (FL) was critical in reaching the sixty votes needed to pass this bill, and Reid called Voinovich’s recent decision to “break up the log jam” and vote for the bill the major breakthrough.

Senator Mary Landrieu (D, LA) also spoke and thanked the numerous senators that she has worked with during this process.
“This was the vote for this bill,” Landrieu reminded the Senate, “If sixty one senators didn’t say yes to the country and no to politics, this bill would be in the trash can right now.”

A vote on final passage will hopefully be done by the end of the week, after which the bill would then move back to the House of Representatives for a vote before going to the President.

The House could delay the process with votes and amendments, but it is expected that they will pass what the Senate sends to them.

“This is not a victory for the Democratic party; this is not a loss for the Republican party,” Reid concluded, “This is a win for the American people. This is going to help small business which has always been the job generators of our country.”

Owning and operating a business always comes with many challenges. For different reasons the current recession seems “the worst we’ve ever experienced.”  Whether that’s true or not, this particular recession is marked by how low the economy has gone, high rates of unemployment, but I think worst of all, how it’s taken so much longer than normal to work its way through the economic system.

Perhaps it’s a good time to remember that things don’t always flow smoothly and that bouncing back “to get on with it” is part of an entrepreneur’s tool kit of things to do. Here are some things to consider that will put a little spring back into your step.

1. Failure is not an option!
I think most business owners are familiar with Colonel Sanders of KFC fame? If you aren’t, search the web and find his story and read it. It is inspiring. Over 1,000 people or companies told him his idea wouldn’t fly when he was in his early sixties. Giving up wasn’t an option. If he didn’t give up, why should we?

2. FEAR – False Education Accepted as Reality.
Fear can be a part of what every business owner needs to deal with. Equally, not giving up is why we fall down but then get up again. Remember; fear will linger as long as you let it. It’s no more complicated than that.

3. Keep it real.
I think one of the healthiest approaches to the current recession is to keep it real and accept that it’s tough out there. Talk to other business owners to get their perspective, and use this quiet time to get your business ready for the inevitable return to growth. Make a list of things to do and then do it. Seeing and feeling yourself accomplish things will help sustain you.

4. Disappointments are part of the journey; not a destination.
I’m sure you’ve heard the expression – if it was this easy, everyone would do it. If things are not going as planned, look for positive options or outcomes. If you have spare time, look for someone to help that’s worse off than you; it enables you to keep your problems in perspective. Also, don’t forget. A problem is an opportunity to resolve; but it doesn’t need to be resolved immediately.

5. Keep your Dream alive.
I’m a great believer in a written business plan. It’s a collection of thoughts that you build over a period of time and if used properly, help keep you focused and on target. If you don’t have a business plan, create one now. If you have one, dust it off and give it an update and put it to work. It will help keep your dream alive. And make sure your business plan includes some of your dreams; as that’s what helps sustain us.

6. Leap then look.
Analysis is good but perhaps not at the moment. As Lee Iacocca says “Apply yourself. Get all the education you can, but then, by God, do something. Don’t just stand there, make it happen.”

If you’re an entrepreneur but are currently unsure what the next step should be consider the following.

If your business has sales revenues of at least $1,000,000 and you are motivated to keep going but need help or advice, talk to support groups such as family and friends or trusted advisors. They can provide emotional support; which is critical. You will then need expert technical and financial help for your business and you can find trade associations a great source of ideas. Alternatively, there is the Turn Around Management Association. This is a group of professionals that will assess your business, decide if it can be saved and execute a plan with you. Each situation would be different, but you may find they will partner with you to fund the cost of their service or charge fees to get the business to the next level. The bottom line is that you have to be willing to make the time, emotional and financial investment to get the business stabilized and successful.

If your business has sales revenues between $500,000 and $1,000,000 also start with your family and friends for emotional support to decide if you want to keep going. If you need expert help or technical advice about your business and its outlook, look to trade associations or industry experts for guidance. You will almost without exception have to fund any costs yourself. Bank loans including SBA loans may be available but you will need to clearly explain the current strengths and weaknesses of the business including its financial position and build a business plan to explain why AND how the business can be saved and taken to a more profitable level.

If your business sales are less than $500,000 you can explore the last option described but it will be on a case by case basis what solutions will be available to you. The bottom line is that any solutions will emanate from you with the vision, leadership and financial resources you possess to make things happen.

If you are interested in additional steps to take, visit my website and buy a copy of my book, Successfully Sell Your Business: Expert Advice from a Business Broker.

When most business owners decide to sell and they wish to be the one to start the process, the first and obvious place to start is with a business valuation. A business valuation gives the owner a reference point as to whether the price they hope to get for the business will be reasonable and/or achievable.

Some business owners choose the selling price for the business based on what they want in order to sell. They may have a certain amount of debt they wish to retire, money they need for retirement plus an ache that makes them think there business is worth a certain amount of money. Not a good basis for trying to convince a buyer about the asking price for the business.

Other valuation techniques include the “rumor” method. The “rumor” method is the price an owner chooses to use based on what he heard his friend sell his business. Rather than a friend, it could have been a competitor two counties over or something they read in the local paper. Once again, not a good method to use to convince a buyer on the asking price for the business.

Business valuations can be simple and straightforward or technical and complicated. If the business is 100% owned by one person, has been in the same location with roughly the same number of employees for the last three years and the business has been operated the same way, then a valuation would be fairly easy to do if all financial records such as profit and loss, tax returns and balance sheets are up to date.

The above can be complicated if the business only has one or two customers. If your business has existed for 54 years but has been supplying nuts and bolts you manufacture to General Motors and they are your only customer, how willing do you think a new buyer would be to take over the business?

Consider another example. If the business is 40% owned by a father that retired 6 months ago and now his son wishes to sell his 40% interest with the remaining 20% owned by a long term employee that is also going to retire in 12 months, how easy do you think it would be to value this business?

The bottom line is that the permutations are endless. But as we suggested at the start of this article, getting a business valuation is the right starting point. Inevitably the market will determine the final price paid. But don’t forget, the price is only the start of the journey; it’s the final terms of the offer that determine the value offered for the business. Price and value are not synonymous. The business may have a price of $1,000,000 but the value could be a totally different figure. You’ve heard the expression – Beauty is in the eye of the beholder. Value is from the same family, that is, value is in the eye of the Beholder.

Be aware there are different types of business valuations designed to meet different purposes. A business valuation that may go before a court of law is much more sophisticated and analytical than a business valuation that gives an opinion of value to the owner of a business that’s thinking of selling. That is, to meet legal standards, the valuation needs to be USPAP compliant.

A service I provide my clients that are considering selling their business is a Brokers Opinion of Value. I also do Certified Machinery and Equipment Appraisals. Because they meet different requirements for different reasons the final reports are completely different and therefore have different costs. Know what you want from your business valuation and understand the final cost will vary according to the sophistication of the report.