5 Secret Tips That The Pros know in Business Exit Strategy
In Australia, 66% of business owners plan to use the sale of the business as their primary income source in retirement. Only 20 % of those businesses that list succeed in selling. More businesses are for sale every year.
The aim is to make yourself redundant.
Your business needs to be able to operate without you. You need to go from just being an Owner to becoming a Leader.
So learn to let go, discard things, and delegate to others and free your time and your mind.
Learn to clear your plate and trust in your team while you steer the ship and deliver on the business exit strategy.
Why is this important?
Simple, someone wants an investment, not a job. They can employ someone to run the company, and it will operate and grow while they do other things or enjoy a holiday. The owner isn’t essential and they can still get rewarded.
Get it wrong and your controlling and poorly planned ways will cost you and your Business Exit dearly.
5 Steps To Follow
Complete these 5 steps and realise a higher sale value. Get it wrong and your controlling and poorly planned ways will cost you and your Business Exit dearly!
- Define the job roles that you intend to delegate
- Use Behavioural analysis like Extended DiSC to assess your team’s behavioral attributes and identify who is the best fit for a role
- Identify the gaps between what you need and who you have. Match to your resources.
- Compare the role attributes with your prospects. Can they be upskilled, moved, and take-on other(s) roles?
- Take time to test and implement the transition…go on short holidays
Every process needs to be tested, measured, and adjusted – these roles are no different.
Behavioral Profiles
Use a tool like Extended DiSC to identify or position people with the right behavioral attributes for specific roles within a team or organisation.
Matched correctly people naturally perform well and expend little energy. If they are poorly matched it is a high energy task and things will not flow for them …so get things flowing.
Over my business life and years as a coach & consultant, I have seen many errors that these simple steps could have resolved.
For a complimentary consultation click Contact Gary – The Business Profit Accelerator
THREE THINGS TO SYNCHRONISE IN BUSINESS ECOSYSTEM
Three areas are critical to having a good business ecosystem – no surprises here!
Firstly, Operational Excellence – Have smooth and effective operations that look for continual improvement. Have a system to do this as it provides a standard, structure, certainty, and allows replication and scaling. Documenting and measure your process, systems, Quality Control, Scope of Works, Organization chart, training systems.
Secondly, Customer Relations – Have good communication and feedback with customers. Nurture them. Follow up and report to customers where appropriate. What upsell, cross-sell, and down-sell can you offer. Repeat business = profit. Retention is cheaper than new client acquisition.
Thirdly, Financial Management – Money is made in business through Sales, Marketing, and cost control. The rest is cost-based. Know your costs, break-even points, and margins and what revenue is need to meet and exceed these. Consider your billable and non-billable staff. Know your overhead, tax, insurance, and HR costs. Reconcile weekly to avoid nasty shocks at months end. Watch your outstanding invoices and, encourage early payment.
THE CUSTOMER IS ALWAYS RIGHT…PERHAPS, BUT ARE THEY RIGHT FOR YOU?
THE CUSTOMER IS ALWAYS RIGHT…PERHAPS, BUT ARE THEY RIGHT FOR YOU?
Targeting your ideal A-grade client is a must however understanding who are the B, C, and D graders. We aim to understand the cost of doing business with a customer and how profitable are they are to the business – Weigh them!
On startup many businesses take any customers they can get. As maturity develops you understand your business and certain customers provide more gross profit than others. This is referred to as the GP sweet spot and this is a great measure of your best customers. A-Grade traits include – profitable, fewer service requirements, accepting of conditions, pay on time, repeat orders, good volumes, and fans of your business. They are aligned and loyal.
Alternatively, there are high maintenance clients who are C & D grade. They are demanding, continually seek reduced prices, bad payers, never happy, and sporadic in reordering. Often your Gross Profit is a lot lower, and yes they shop on price and have no loyalty.
Steps:
*Understand the Break-Even Costs in your business.
*Assess all your clients and rate them against metrics :
Sales Value, Gross Profit, Frequency of transactions, Ordering cycles, the true cost of servicing them (billable and non-billable staff), Complaints, Returns, Credit standing.
*Rate each metric with a score from 1 to 5. Put weight on the metrics that are important to you. *Add the scores and get a score for each client.
*This analysis will be telling. Most businesses do not know their client’s profitability and cost. Compare the profitability of each client to Break Even values. What is it costing you to do business with them? Are you making money? If so How much or little?
*On a distribution curve work out what qualifies as A, B, C, & D Grade clients.
*Then plot your client scores on the distribution curve.
Visually you see who are your best clients. Can you work with and elevate the B and C clients, or perhaps adjust your offering to match them? D grade clients are typically not profitable so look to pass them to your competitors.
Unweighting your inefficient client base and focusing on you’re A-Grade clients can be liberating and profitable. Previous time wasted on servicing the D Grades can now be applied to you’re A and B grade clients, doubling your strengths…opportunity cost has now become opportunity profit.
Your business has improved its flow already.
Kick Start Your Marketing
Today I’d like to teach you about the three most important start up marketing tools you need to get and keep new customers.
- In person: It’s essential you meet with customers/clients in person whenever possible. This shows you respect them and take the time to work with your clients to give personal attention to each of them.
- Follow up letter: Always take a moment to send a follow up letter about what you talked about, new agreements or partnerships made and to thank them for taking the time to meet with you. Likewise, you should always send thank you letters or small gifts to partners you find success with.
- Phone call: Use a telephone call to follow up with them to talk again about the matters you talked about in your meeting and offer any assistance you can to help their business run smoothly and more successfully.
None of these will work if you don’t have a quality product/service to back you up!
Here are the key steps for putting together your start-up marketing tools:
- Research potential customers, buyers, competitors and their preferred methods of distribution.
- Talk to potential customers. Take a hard look at your product from a customer’s perspective and see what it needs to be successful.
- Follow up with your 3-step process from above.
- Develop systems for contact follow through, quality control standards and customer service.
- Develop post-sale follow up system to keep lines of communication open is customers and build on your current relationship which increases future purchases.
“Marketing and innovation produce results; all the rest are costs” Peter Drucker, management consultant
Here’s another one I love from an icon:
“If there is any one secret of success, it lies in the ability to get the other person’s point of view and see things from that person’s angle as well as from your own.” Henry Ford, Founder of Ford Motor Company
This lesson has offered you the tools to put together a start-up marketing plan that can be used over and over again to help your customer base and business grow in a manageable way. The tools offered in our FREE test drive offer these very same things.
Stop Wasting Your Resources!
Today you’re going to learn how to find a target market of potential customers so you aren’t wasting precious resources on blitz marketing. So, the two questions you have to ask yourself are:
- What do people really want to buy from me?
- What related products are they already buying?
Once you figure this out you will know who is more predisposed to purchase your products/services. Then, you find other businesses with the same customer base who you can customer share with. Come up with an incentive and great arrangement to encourage both of your customer bases to shop at both of your stores.
The basic concept is this:
You want to find existing businesses who have the customer profile that you are looking for to market your products/services to.
Then strike up a relationship with those business owners to work out an incentive for customers to purchase from both businesses.
As a result, you have an audience to market to and they generate an added value from their current base.
So, how do you figure this out? There is a great formula from Jay Abraham you can follow with great success.
LV = (P x F) x N – MC
Here’s what it all means:
- LV is the life time value of a customer
- P is the average profit margin from each sale
- F is the number of times a customer buys each year
- N is the number of years customers stay with you
- MC is the marketing cost per customer (total costs/number of customers)
Once you know how much you need to spend to attract a new customer, you will know how much of an incentive you can offer to a business to help attract new customers.
So, here’s your step-by-step process:
- Find companies who already have the customer base you are looking for.
- Negotiate an incentive for them to share that customer base with you.
- Focus your marketing resources to this group of predisposed customers.
If you need help working through this process, check out our FREE test drive for the most comprehensive system of marketing tools and resources.