How Much is My Business Really Worth?

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What Is My Business Really Worth?From a financial point of view, considering what your business’ real cash value might be is a valuable exercise.  It’s always worth understanding the reality of our business world so we can act responsibly and lead wisely.

There have been thousands of books and articles written on the subject of business valuation, so I’ll leave the in depth explanations to those authors.  The simple calculation you can do to look at your value right now is this:

Income -(minus) Expenses x(multiplied) by a factor of anywhere between 2 and 6 based on your industry.

As a small business owner in most cases you’re really looking at what you draw as a salary and profits out of the business.  So if you did $500,000 in sales last year, and your net profits and salary totalled $75,000 your purchase value could be anywhere form $150,000 to $450,000.

What Factors Make My Business Sellable?

If you walked into the business down the road from you and it was for sale, what would you look for?  There are a two things that I would look for before I would consider purchasing a business.  Without these two items clearly in view I wouldn’t even ask for a full financial statement, or take any other steps towards purchasing the business.  If these pieces are in place it makes it much easier for you to court interested buyers.  Even if you aren’t looking to sell taking this approach will make it easier for you to get financing, and grow your business in other areas.

1. Do You Have Solid Systems in Place?

If you can’t immediately answer yes and bring to mind the systems that help your company operate smoothly then it’s time to look at implementing a systems approach to everything.  Anyone that I have ever seen implement systems into their business benefits in the short term and long term.  When you research and develop systems for each area of your business you build your business’ value as well as the value of you and your team.  Systems thinking and implementation is often the difference maker between struggling to make it and succeeding as a small business owner.

2. Can You Identify Profit Centers in Each Department?

Instead of just looking at your business as a whole, consider what each different department or segment does individually.  If you have a product division and a service division then you should be able to justify each divisions existence based on it’s individual profit and loss sheet.  If one of the divisions only exists to boost your core business and does not make a profit, be clearly aware of that.  This question really ties back into the first question about having systems, but it’s an important thing to consider as your grow and stabilize your business.

When I can have an intelligent discussion about these two questions with a small business owner, systems thinking and profit centers, I know that they’ve been planning and implementing growth strategies for a long time.  Personally I always have to consider my own actions on a daily basis to be sure that my daily objectives line up with my long term goals in the area of growth and stability.

We have just scratched the surface of business valuation today to help you begin thinking about it.  What are you doing to implement systems and more focused profit centers in your business?

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Stop Hiring Weak Sales People Now

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In just a few minutes I can remember over a dozen sales people that I have hired in the past 10 years.  There are probably more than that, but ones I remember at least tried hard to produce results for me.  I have two left that I work with that continue to produce amazing results for me.

Looking back at how I approached hiring sales people as a small business owner I’ve finally learned that it wasn’t the people I was hiring that failed, it was me.  Since I am the leader of my company I am responsible to give my sales people the tools they need to do their job well.  If I’m not doing my job well, how can they succeed at theirs?  After many years of trial and error, I’ve finally figured out a method that is working incredibly well for me.  The approach we’ll cover today should be a fit for any company that is doing under 10 million dollars a year gross.  When you surpass 10 million dollars a year you should modify the approach as needed.  The principles will still apply, but the methods will need to be updated some.  Put this approach in place today so you can stop hiring weak sales people and start seeing results.

Sales Failures

1. Why I Failed with My Former Sales People

  • I Didn’t Give Them Solid Leads
    • If you have not yet found and fine tuned a lead source for your business that produces 50+ leads per week, then you don’t have what you need to hire a sales person.
    • When you rely on new sales people to generate their lead list and sell you are expecting too much.  Only one person out of every thousand can do that successfully.  Lead generation IS NOT sales.  It’s a different department.  Don’t fool yourself.
  • I Didn’t Train Them
    • When you don’t require thorough and appropriate training for new sales people you are setting them up to fail. Two days hanging out with the boss is not training.  Please don’t let yourself think something so foolish.
    • Training has to be documented and tested.  It takes hours of thought, writing, and preparation.  It also takes time from someone who doesn’t have 30 other objectives in the day.  If you are as busy as I am then you don’t have any business training your new sales people.
  • I Thought They Could Close Like Me
    • I don’t know where this ludicrous idea came from, but I used to think that I could bring someone in, have them hang out with me for a few days, and then send them out to close millions of dollars in new sales.  Wow, that has to be one of the stupidest thoughts I’ve ever had.
    • How can you expect a new sales person to step out and have the years of experience, the drive, and the tools that you do to close?  You know the rules, they don’t.  You know the tactics that help you close, they don’t.  You are confident and comfortable, they are not.

Turn Around Your Sales Team

2. Fix the Problem and Build a Winning Sales Team Today

I could go on for days about the stupid mistakes I made when I first hired in sales people, but that won’t make you or I any more money.  Let’s focus on what can make you more sales and more money today.  If you take action and apply these steps I can personally guarantee that you’ll see results much faster.

  • Give Your Sales People Fresh Leads
    • Instead of thinking that it’s reasonable for a new sales person to call through the phone book, google search for leads, or walk around and canvas, give your people fresh new inbound leads.
    • In order to do this you’ll need to find a new lead source and fine tune and adjust it to meet your needs.  Realize that it’s normal to pay anywhere from $25.00 up to $100.00 for a new lead.  Find a source that gives you ample leads in a steady manner.
    • You’ll need to study and update your prospecting approach as well so you that you get high quality leads consistently.
    • Once you’ve located a fresh steady stream of leads, decide who in your company should handle the pre-sales department.  This person never has to talk to customers, they just need to keep your inbound lead list well groomed and flowing steadily.
  • Queue Up Each Day’s Work
    • If you have technicians doing work for you then you know that you have to write up agendas, queue jobs up properly, and hand them a weekly agenda of some sort.  Why would it be any different for the sales department?
    • Write an agenda of who they should call, and what tasks to accomplish each day.  Don’t leave anything to chance.  Give them the agenda and the tools to succeed.
    • In my case my internal sales people are responsible to call and email our new leads.  Each day they have a list to work through, and they understand what to do with extra time.  They are self motivated and achieve great results because of the fact that I’ve properly structured their days.
  • Give It Time and Measure the Results
    • At a minimum I believe you’ll need to put this system in place for at least 90 days and after 90 days measure and review the results.  It’s never reasonable to expect instant results from any new plan.  Dedicate yourself to consistent actions and then look for results.
    • Every single marketing and sales initiative that you do as a small business should have a time frame and be measured.  If something isn’t working then stop.
    • How do you measure what’s going on?  You need to have a good CRM to track your results.  I use an amazing software called Infusionsoft that can intelligently make decisions and update my email marketing and team based on how my prospect interacts with the information that I give them.
  • Adjust Your Course as Necessary
    • No matter what you’ll need to make adjustments in how you approach your sales team’s work.  The important thing you have to remember is that you need to constantly monitor results.  Not just on Friday before you hand out another paycheck.  Throughout the week keep a close eye on what’s going on so you can help make adjustments to the process.
    • Listen in on phone calls, read through emails sent out, and give both positive and constructive feedback on a daily basis.  The more you’re involved with your sale people the better results you’ll get.
    • I also find it incredibly important to listen to what they have to say about the direction that you are taking.  Even if they’ve never sold your product or service before they may have a better approach than you do.  Listen to their ideas and be humble and open to new ideas.
  • You Are the Closer
    • Faulty thinking is probably the number one thing I look for in myself and in others, it’s the first thing that causes trouble for me in business and in life.  One erroneous thought that I used to have was that my new sales people could close as much as I could on a consistent basis.  This is foolish for the reasons I noted earlier in the post and it’s something you have to put out of your mind if you want to get results from your sales team.
    • Setup up a consistent system that ultimately puts you in front of the new customer for the final close.  Because you have the highest level of skill and experience as the owner, it’s most likely that you’ll be the best closer.  There are exceptions to this rule, but in most cases when I meet the small business owner who has succeeded in growing their company it is because they can effectively sell to their customers.
    • Let your sales people know that you are closer.  Compensate them fairly for the work they do to queue up the opportunity for you, and give commissions or bonuses for each successful face to face or phone meeting that they create for you.  Just imagine what it would be like to have 2-3 brand new client meetings a week.  If you can put this method into practice with your sales people then that is what you’ll have in short order.
  • Grow Your Own Closer In-House
    • As you grow in your new sales approach and your team fills in around you you will eventually need another closer besides yourself.  I believe that this position is most frequently going to succeed when you take a skilled individual from within the company to fulfill this role.
    • Internal people have already invested time and are genuinely interested in the company’s success and also have heard a lot about or interacted heavily with your customers.  They undersand you and your customer.  That is the closer you want to represent you.
    • Train them extensively outside the company.  You’ll need them to be professionally equipped to do their job.  Just like an electrician needs certain training and certifications to properly install a circuit, you should properly train your new closer.  Ask around, find the best sales academy for them, and send them there.  Your in house person will appreciate the opportunity and work hard to deliver you results.  If things don’t work out, give them the opportunity to return to their old position in the company.

Define the Position for Your Sales People

3. Positions You Need to Create Internally for Your New Sales Team

We’ve covered a lot of ground here, so I’d like to boil it down into a few simple steps, and positions that you’ll need to create in order for this new sales approach to succeed.

Pre-Sales:

Your pre-sales team member should be in charge of building lists from the lead source that YOU have carefully and personally refined the first few times.  Don’t ever rely on someone else to define your ideal customer.

Pre-sales should then hand this list of to:

Outbound Sales:

Outbound sales people should then work through this list by calling, emailing, and visiting in person based on how your killer marketing approach is supposed to work.

Your sales people are supposed to focus on giving the closers meetings with the decision makers.  Right now that closer is probably you.  Ultimately the closer may also be another team member, but for now refine the system and focus on closing each deal yourself.

Closers:

Closers simply have to show up to the meeting with the new customer, with the lead information, sales person’s notes, and meet the customers needs with the right solution.  Try for one meeting closes, but if you can’t close in the first meeting, be CERTAIN to schedule the next meeting before you leave.

Kick anything back to sales that you need handled before the next meeting.  Then walk in and close.  It’s that simple.

Here is what the whole process looks like:

A Winning Sales Process For New Sales People

Put this plan into action to achieve steady growth and results.  If you need help, contact me.  I’ve helped others implement it before and I’d be happy to help you succeed in your sales efforts.

Two sure ways to fail-

Think and never do or do and never think.

-Zig Ziglar

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Business Goals and Accountability

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Business GoalsBusiness goals only become reality when we take the proper steps to reach them.  One of the steps that matters in a big way is how we hold ourselves accountable.  If we don’t put systems in place that make us accountable to ourselves and to others around us we severely limit our potential.  It’s fairly easy to write out your goals, and come up with objectives once you have the tools to do so.  What has been a challenge for me personally is getting others to hold me accountable for the goals I’ve set.  There are no shortcuts to success and I believe accountability is one of the keys to reaching your business goals consistently.

How to Reach Your Goals More Consistently

There are few simple accountability steps that I recommend when you want to add extra power to your goals.  When you add these tools to your goals and objectives arsenal you’ll be able to reach your dreams faster and more efficiently.

Five Accountability Steps for Your Business Goals:

  1. Make your business goals public on your blog, Twitter, or Facebook
  2. Ask your family to check up on you
  3. Tell your team at work what you are doing
  4. Schedule your accountability checkups with the people you trust and respect
  5. Hire a business coach

I know how scary it can be to involve others in your personal dreams and goals.  Don’t let that fear keep you from moving forward.  Start with someone you can trust and share your goals with them.  Ask them for feedback on your objectives.  I find that just talking through what my goals are with someone else helps me find the errors in my thought process.

Once you’re comfortable with sharing your goals with a friend or family member, you should carefully consider hiring a business coach.  The reason that I recommend paying for a business coach is because once you are paying for accountability you’ll tend to act on the advice rather than just ignore it (which we sometimes do when we get advice from friends or family).  You’ll achieve your business goals a lot faster when you have someone personally interested in seeing you succeed.

Business goals can seem overwhelming at first, but when you define the goal, the objectives, and use accountability you can succeed more consistently.

Take action today and reap the benefits of strategic accountability!

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Simple Task Management

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When starting to run a business, you develop a lot of tasks, objectives, and goals, and if you aren’t careful they can add up quickly. If you don’t write these tasks down and organize them by priority they can cloud your mind and lead to procrastination. When you trust your mind to hold this list, you may lose track of some of the tasks. In some cases the list may be all that you think about and this can be distracting you from the tasks at hand.

I recently had too many tasks cluttering my mind so I did what a lot of ‘self help’ readers do and I looked at the library, book store, and online for answers. I landed on a book called “The Procrastinator’s Handbook,” an ironic title, because it first led me to believe this would teach me how to procrastinate better. Once I started reading it, humor mixed with healthy tips emerged, and motivational quotes kept me turning the pages.

I always thought reading wasn’t one of my strong suits, mostly because I don’t like paper pages, but I love reading anything on an electronic screen. So a Kindle emerged as the solution to my issue, and “The Procrastinator’s Handbook” was on the Kindle too!  I’m not saying go and buy a kindle; I am saying if you feel that you may not like something, adapt to something you do like to get yourself through it. I realized that I was beating my own procrastination subconsciously by finding a solution to read the book.

This blog post was another procrastination of mine.  I was asked to write it two weeks ago and it was due last Tuesday.  I also don’t like to write much.  I realized if I started practicing in the simplest of forms (for me that’s a computer with Notepad open) I may get used to it and one day enjoy it and finally be good at it.

That’s the long version of my advice, the short is this:

Write down a list of tasks, objectives and goals. Organize them by priority and begin chipping away at them.  If you really don’t enjoy one of the tasks on your list, find a new approach like I did with my Kindle.  Maybe reading wasn’t the issue, maybe it was what I was reading off of.

Treat yourself, for small tasks, a cookie, for medium objectives, a movie, and for big goals, a night out. Cookies, movies, and a night out are my motivation tools. You can replace cookies and movies with with whatever you want. Now I can cross this task off my list and get a cookie.

“Time is not measured by the passing of years but by what one does, how one feels, and what one achieves.” - Unknown

Brandon Cohen

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