Monthly Archives: June 2012
PITFALLS OF SMALL BUSINESS OWNERS
BY RICK J. KREBS, BUSINESS BROKER
As a professional business broker I have the opportunity to see many different businesses. There are a few common threads of success and of failure. This article is about these common success factors or common failure factors.
BUSINESSES DIE FROM CANCER, NOT FROM A HEART ATTACK
What I mean by this is a business usually doesn’t die quickly. It dies slowly and painfully. The business drains energy, dollars, and resources from the owners until they finally sell it or close the doors. At the end a once-thriving business has the look and feel of a muddy swamp. You can see and feel the dread in the hearts of the employees and owner. A business like this does not sell easily. Buyers sniff out the problems quickly.
THREE COMMON MISTAKES SMALL BUSINESS OWNERS MAKE
- Marketing. In times of economic uncertainty business owners will look to trim the marketing budget. This is exactly OPPOSITE of what a business owner should do. Businesses that succeed are consistently marketing their product or service. I”m not saying to waste marketing dollars. I’m saying that in the businesses that are successful I see a consistent target marketing campaign. Day in and day out the owners continue to market to new customers. Marketing must be consistent and independent of the business itself. Often outsourcing the marketing function works well in a small business or in a larger business a marketing department is essential. If a business is not growing it is dying. Marketing is essential to success.
- Cost Control. Businesses that succeed have trimmed the fat from their Income Statement. At the top of the list is the lease. Poorly negotiated leases can literally sink a business. You have to have good lease. I like leases that fluctuate with sales. It is also a good idea to put a provision in a lease that reduces the lease based on vacancy rates in the building or nearby stores. I recently saw a small store that had business tied to a large anchor that was part of the mall. The anchor moved and all of the surrounding businesses suffered tremendously. Some have gone out of business already. They negotiated a high lease thinking the anchor would not leave. When the anchor left the area, it turned into a ghost town. Smart business owners critique the Income Statement line by line and find the “fat”. They trim the “fat” and are constantly looking for ways to save money. WalMart is a perfect successful example of this. They have weekly meetings and offer prizes to the employees who find ways to save the company money.
- Competitive Advantage. Successful businesses have at least one thing they do that gives them the edge over the competition. They stand out from competitors. This one thing gives them the edge. I’ve seen this be software, technology, service, a product, a vendor, patents for manufacturing, a process, etc. Get an edge and work to keep that edge in business.
Attitude – too good to not post
“The longer I live, the more I realize the impact of attitude on life. Attitude, to me, is more important than education, than money, than circumstances, than failures, than successes, than what other people think or say or do. It is more important than appearance, giftedness or scale. It will make or break a company… a church… a home. The remarkable thing is we have a choice every day regarding the attitude we embrace for that day. We cannot change our past.… We cannot change the fact that people act in a certain way. We cannot change the inevitable. The only thing we can do is play on the one string we have, and that is our attitude…. I am convinced that life is 10 percent what happens to me and 90 percent how I react to it, and so it is with you…. We are in charge of our attitudes.” John Maxwell
The Importance of Attitude
Take Control of Your Attitude
Your happiness is in your hands.
We all have tremendous potential. Each of us has the ability to put our unique human potential into action and to acquire a desired result. But the one thing that determines the level of our potential, produces the intensity of our activity and predicts the quality of the result we receive is our attitude.
Attitude determines how much of the future we are allowed to see. It decides the size of our dreams and infl uences our determination when we are faced with new challenges. No other person on earth has dominion over our attitude. People can affect our attitude by teaching us poor thinking habits or unintentionally misinforming us, or providing us with negative sources of infl uence, but no one can control our attitude unless we voluntarily surrender that control.
No one else “makes us angry.” We make ourselves angry when we surrender control of our attitude. What someone else may have done is irrelevant. We choose; not they. They merely put our attitude to a test. If we select a volatile attitude by becoming hostile, angry, jealous or suspicious, then we have failed the test. If we condemn ourselves by believing that we are unworthy, then again, we have failed the test.
If we care at all about ourselves, then we must accept full responsibility for our own feelings. We must learn to guard against those feelings that have the capacity to lead our attitude down the wrong path, and to strengthen those feelings that can lead us confi dently into a better future.
If we want to receive the rewards the future holds in trust for us, then we must exercise the most important choice given to us as members of the human race by maintaining total dominion over our attitude. Our attitude is an asset, a treasure of great value that must be protected accordingly.
When you have the right attitude, you can do the remarkable.
When you recognize your gifts, you can change anything for yourself that you wish to change. If you don’t like how something is going for you, change it. If something isn’t enough, change it. If something doesn’t suit you; change it. If something doesn’t please you, change it. You don’t ever have to be the same after today. If you don’t like your present address, change it—you’re not a tree!
Having the right attitude is an essential prerequisite for success and happiness. The right attitude is one of the fundamentals of the good life. That is why we must constantly examine our feelings about our role in the world and about our possibilities for achieving our dreams.
It is our emotional nature that governs most of our daily conduct in our personal and business world. It is the emotional aspect of our experiences that determines our behavior. How we feel about life’s events is a powerful force that can either freeze us in our tracks or inspire us to take immediate action on any given day. With the right attitude, human beings can move mountains. With the wrong attitude, they can be crushed by the smallest grain of sand.
Jim Rohn is a legendary business philosopher, entrepreneur, speaker and author whose works include the best-sellers The Five Major Pieces to the Life Puzzle and 7 Strategies for Wealth and Happiness, as well as numerous audio programs.
Business Sold in 45 Days…now is a great time to buy or sell a business
I just sold a business in 45 days after we started marketing it. Normally a business takes 3-12 months to sell. Buyer appetite for good businesses remains high. Most of the deals that I see now either are all cash or have some seller financing due to the SBA tightening their guidelines.
Common mistakes made by Sellers
I recently had good buyers walk away from buying a business because of two common mistakes by Sellers.
The first mistake is NOT having good financials readily available. When you bring your business to market it is imperative that you have your financials in order and readily available. Buyers who are real buyers ready to pull the trigger on a deal will want to see a good set of financials. When there is a delay in delivering the financials, the Buyers get nervous. They begin to think that something is wrong or the Seller is hiding something. Sellers need to get the financials in order ASAP when they are considering selling their business. Compiled financials by a CPA are the minimum type of financials you should have when selling your business. Reviewed or Audited financials are even better.
The second mistake Sellers make is to change the deal after it is agreed upon. Once you have a deal made with the Buyer you can’t change the terms of the deal. Buyers tend to be excited at first, but that excitement can quickly wane when a seller starts “jerking them around”. Buyers can quickly get skittish and disappear when they don’t feel that they have been treated fairly. You have to be fair. You have to be stern. You have to be honest. If you are not those 3 things, you will either not be able to sell your business, or you will not get the money you need, or worse, you may end up in court afterward.
I have done business with Rick in buying a business. He was just wonderful as a broker. He did everything and more as a broker to make sure the deal was a great fit and made it very smooth and easy for me to go through the complex process of buying the business. He went out of the way to make sure I was comfortable and clear about the whole process.