Archive for

Most Successful Family Business Secrets

Corporate America is in essence made up of family businesses. After all, is that what our capitalist economy stands for? What makes America proud is that we offer free enterprise for all those willing to put forth the effort and hard work. The truth is, behind every successful family business, mom and pop type business is a number of methods and process that work.

We have all heard about bigger chains taking over and pushing smaller family business out of business because they can’t compete with lower prices. Nonetheless, there are many large corporations that started off as a small mom-and-pop business, only to grow to be a leading giant in their industry. Small business owners often never imagine they would grow to become internationally or national giants. True transformation into an empire takes years of trial and error, but something went right. Read on to find out the most successful family business secrets.

Great management is the core to smooth operation of any business – whether small or large in scale. Businesses run on upkeep and routine of processes in place, including the management of people and transactions. Often times, small businesses mean that a small number of people play many different roles at one time and it seems like in order to survive, a necessary trait is to multi-task and be efficient with time. Therefore, one of the biggest secrets to successful family businesses is doing much with what you have, and being equally as frugal and efficient with your resources.

Communication is also crucial. With the busy environment and lots of things going on daily, keeping proper communication with who you’re working with is key. Often times, family businesses work with their relatives or direct family members and to ensure that everyone is on the right track, a business owner should not let close relationships with their workers get in the way of management processes that must be in place.

Maintaining a great reputation is absolutely essential in running any kind of business. Even more so, for smaller family businesses because people don’t recognize instantly their business identity or brand. Customers must make up their own mind about your business themselves and not go on preconceived notions. Therefore, creating a great reputation and relationship with your customers in vital to survival in a small mom-and-pop business.

A way to maintain great reputation is providing high quality service. Another secret to your small business being successful is that you keep your customers and keep them coming back. We all know that word of mouth is the strongest marketing machine so if you can get your customers to not only be loyal, but recommend your business to others, it’s a great indication that your business can only lift off.

Lastly, a secret to running a great family business is to make sure your business is covered with a great business insurance policy. You never know what may happen and it’s better to compare business insurance quotes to make sure your establishment is not liable for any mishaps that may occur.

5 Things to Remember When Preparing Your Business for Sale

If you are determined to receive the best price for your business when it’s sold, it is important to prepare your business for its eventual sale.

The five key aspects of the preparation process are.

1. Stop Running the Business

Many buyers have been conditioned to think that a business cannot perform without the original owner. Many prospective purchasers are afraid that once the current owner leaves, the company will underperform and this fear prevents many businesses from ever being sold.

When preparing your business for sale it is a good idea to reduce the amount of time you spend running the business on a day to day basis. Most small businesses are built around the owner/manager which is why prospective buyers feel the business will falter once it has changed hands. If you can show that the business can operate profitably without you then you have a business with value that should sell for a premium.

2. Hire Managers

Buyers like stability and they dislike risk. One way you can decrease the perceived risk of acquiring your business is to put good managers in place. If you are able to hire managers and build in a chain of command that removes you from the day to day running of the business, while ensuring it still runs efficiently, you have taken away a significant stumbling block for many buyers.

A profitable business which comes with well-trained managers who know the business well, and are willing to continue running it from the day one, is an attractive proposition that many buyers will not pass up on.

3. Put Business Systems in Place

During the preparation period, aim to have all your business processes documented and working in a defined system. All business practices should be well-defined and each member of your organisation should have a clear role with a well understood job specification. Use the preparation period to build in systems which explain and document how each process of your business works and all employees should be well versed in how these systems work.

Building in systems is important as it will improve a buyer’s confidence and this will lead to better offers. A business that works smoothly and efficiently, with clearly defined processes and systems, is a positive for many buyers as this reduces the amount of time and resources they have to spend understanding and fixing inefficient practices.

4. Legal Issues

It is very important to settle any legal disputes or issues that may affect the sale of your business as any buyer worth their salt will conduct some form of due diligence if they are serious about purchasing your business.

Many deals have collapsed due to legal issues or disputes that the vendor has failed to sort out or disclose. If you are able to solve these issues prior to negotiations and due diligence you have paved the way for a successful sale. Issues such as lease agreements on property and equipment, outstanding payments or court settlements and other potential liabilities should be tackled prior to the negotiation period as these issues are notorious for collapsing deals.

It’s also a good idea to turn any verbal agreements you have with key suppliers and customers into written contracts. Prospective buyers want to feel confident that all the key aspects of the business are tied down and enforceable by law.

5. Housekeeping

It is important to pay attention to your premises and ensure that all equipment and stock is up to date, that your office looks neat and professional and all unsold or out of date inventory is moved on. First impressions of your business count so it’s important you make a good one.

You should also use this period to begin looking at your company accounts. Many small businesses are set up to minimize tax but this method of accounting leads to lower valuations as many offers are made by applying a multiple to yearly profits. If you are able to adjust your accounting methods or at least build in a framework that shows the business’ true profitability this will eliminate much of the time wasted haggling over the business’ value.

It is a good idea to look at the situation with your debtors and reduce the amount of bad debt on your books. Buyers are weary of purchasing businesses where it seems the level of bad debt is too high or businesses where the customers take too long to settle accounts. You should use the preparation period to reduce the amount of bad debt and possibly restructure how certain accounts are paid.

If you are determined to receive the best possible price for your business it is important that you take the time and effort to prepare your business for sale otherwise you risk leaving money on the table. A poorly prepared business is rarely sold so it is important not to cut corners during this period.

If you thinking about selling your business contact today

Why Business Valuation Is Crucial For Present Business Needs

There are many important reasons why obtaining a business valuation for future planning and growth makes sense. What about present business needs, vision, and direction? One of the strongest cases made for getting a valuation for the here and now comes from the Value Matters blog. The point is made that by the time circumstances arise that require a business valuation, it could be too late to truly benefit from the full array of benefits that come from having a valuation performed.

Obtaining a business appraisal on your company today instead of the future allows for full utilization of all of the information and data revealed by the valuation. Circumstances that require a business valuation include obtaining financing, retirement or exit planning, selling the business, divorce and bankruptcy, and forward planning.

Performing a business valuation on your company now rather than when circumstances crop up also puts time on your side to properly to strategize and implement new polices born of the information contained in the valuation. This is because the valuation analyzes all of the assets, liabilities and intangibles of the organization and then crafts an easy to read assessment that the business owner can rely on when making business decisions or as objective and accurate documentation of the business’s worth.

A column by Steve McKee in Business Week highlighted several questions business owners must consider in regards to their own business in order to assess its overall health, performance, and value. The first question asked if the brand was in a growing sector. The answer to this question assesses both the brand and the industry. Growth in the industry could reflect potential growth for the business. Evaluating the growth in your company’s industry also requires an assessment of outside factors that impacts your business such as the economy, culture and demographics.

Another question posed included an understanding whether consistent share gains are being made by the brand or not. A brand that is healthy will be capturing market shares from competitors in a manner that is sustainable over the long-term.

How dominant is the brand’s competitive position? If a business owner cannot state that their brand holds a dominating position in a specific industry, at least within their specific region, a new strategy should be formulated in order to achieve that hallmark.

What are the tangible differences between the brand and competitors? Mr. McKee stated some excellent marketing advice: “Don’t be better. Be different.” If one business is the same as another, there is not much reason for customers and clients to prefer one over another. Standing out because of differences clients and customers want and need is what will make a significant difference in a company’s overall profitability, sustainability, and health.

Obtaining a business valuation for your company provides a framework for evaluating such questions presented above. The information uncovered from a business valuation will facilitate greater profitability, vision, and company direction both short-term and long-term.