Business Vital Signs Part 3

Planning! – Performance! – Parachute!

…a quick recap.

Thank you for returning for part 3 of 3 of “Business Vital Signs”. The 3 parts are:

  1. What is your business plan before you open?
  2. What are you doing to maximize profits while you operate?
  3. What is your exit plan?

Well, what IS your exit plan? Don’t feel bad nor be surprised if you have not put much thought into your “exit plan”. A quick scan of Google reveals the majority of businesses do not have an exit strategy at the time they desire to sell and that number is much higher when they open the doors.

Why would it be important to have an exit strategy / plan before you even open your doors or accept your first dollar? First and foremost, this puts you in the frame of mind that you should be working “on” your business and not just “in” your business. Yes, we completely understand many small business entrepreneurs ARE the face of there company or an integral component for the success of the day-to-day operations BUT at some point, you should have a growth plan that includes your migration from working as much “in” your business to a larger role of working “on” your business.

Below are several key factors to keep in mind when developing your “exit strategy” for your business:

  1. Planning – As Dr. Stephen Covey famously stated; “Begin with the end in mind”. This is where the planning of your business takes on its most important roles. Business planning before you open and forecasting your year-over-year accomplishments is key. Do NOT be afraid to put your finger on the calendar 5, 7 or 10 years in the future and write down that date. If it isn’t written down – it does not exist!
  2. Your Health & Your People – After your best laid plans are laid; one of the most important things to consider will be your overall health and to what extent you are involved along the way regarding your business and the day-to-day activities. IF you are an integral part of the day-to-day activities then you had better invest in your wellness early and be sure you are fit to not quit! Long days today should be the building blocks to working smarter versus harder. Building value within your business always begins and ends with your people and you are one of your people. Be sure to have an adequate succession plan in place that helps guide you through the people parts of growing your company year over year because if you don’t have your people in place at the time of your exit then your business will lack serious marketability.
  3. Building and Maintaining Value – All fiscal decisions carry consequences. Driving top-line sales while managing expenses may help your bottom-line BUT this isn’t the ONLY way to build and maintain value. A few other things to consider:
    • Your Online Presence – YES! Your digital online presence is an appreciating asset. Businesses “today” must have an effective digital online presence. Your brand, reputation and exposure are all reflective here. A business with an incredibly well-built and maintained online presence is worth more comparatively to a similar business at the time of sale that does not have an effective online presence!
    • Reputation – Believe it or not another intangible is your business reputation. It cannot be measured like a bank account or real estate BUT it can be a deal killer in a New York minute! Be ever mindful of your reputation on the ground as well as online.
    • Acquisitions – There’s an old saying that comes to mind; “finance appreciating assets and pay cash for depreciating assets”. There are times when it is cheaper to use other people’s money “financing” to better manage cash flow and then there will be times when it is best to buy outright that “thing” needed within your business at some particular time. When it is time to sell you will want a good balance between assets and cash.
    • Product and Service Development – Staying current with your product / service offerings will be crucial to your viability within the marketplace you serve. Outdated products or services that don’t solve problems for the consumer will affect your value not just along the way but certainly when you are ready to sell. Be sure to revisit your product offerings and your services at least once per quarter.
    • Strategic Alliances – There will come opportunities over time to develop strategic alliances with vendors and even others within your market space. For example, you may not serve a particular market segment as well as a competitor, so you must weight out your barrier to entry versus a potential collaboration effort. Often times this is where M&A seeds are planted which develop over time. Retaining a good business law attorney will be essential to protecting your interests.
  4. Focus and Flexibility – It is hard to walk and chew gum at the same time! The successful entrepreneur will master maintaining incredible focus on the target down-field 5,7 or 10 years AND demonstrate incredible flexibility to make minor and sometime major course-adjustments that are keeping you on course toward your exit strategy. Combining focus, with energy and the ability to “govern your passions” to think first and be flexible will pay many dividends down the road.

ShaBro Alternative Office Solutions loves to put plan to paper and then into ACTION! Budding entrepreneurs need planning and an exit strategy and so does the seasoned-business veteran wanting to sail off into the sunset someday. Do not wait until you “have” to sell or worse! Call us today to learn more about how we can help you develop an effective Business Exit Strategy.

Business Vital Signs Part 2

  1. What is your business plan before you open?
  2. What are you doing to maximize profits while you operate?
  3. What is your exit plan?

Welcome back for part 2 of a 3-part series where we discuss business planning, performance and exiting. Last month we talked about planning and how often our office learns from businesses that they really didn’t put too much time and effort into the planning phase but did just enough to get going and are now operating meanwhile the day-to-day struggles of entrepreneurship are setting in.

Continue reading “Business Vital Signs Part 2”

Business Vital Signs Part 1

Before you open. While you operate. Your exit plan.

(Planning – Performance – Parachute)

There are several all-too-common situations we see with prospective new clients (small business owners) when they call or visit us. Most are avoidable or at least could be less traumatic with some “Planning”. Often times the entrepreneurial clock is ticking and we open businesses based upon industry experience or other factors and sometimes we didn’t do the due diligence or planning needed up front.

Here are two very common things we encounter with our clients:

1) They wish to find out why they are not passing through the amount of net profit compared to what they thought they would when they opened their business “years ago”. The question isn’t really stated as such; this is typically what we hear – “I don’t understand where all of the money is going. It seems there’s not enough money left over to deal with downturns in business, equipment, hiring needs or even the next crisis that seems to come along!”

2) They wonder what happened to the “dream” of entrepreneurship when they seem to have almost no time left over to enjoy family or to relax. This it usually what we hear – “I opened 3 years ago and have always worked hard but, there never seems to be a break. I may have an employee who can’t make it to work or another goes on vacation and then something else happens and there I am, like always, working 70-80 hours weekly earning about the same as I did before. Again, I don’t mind working hard and I thought I knew what I was signing up for when I opened. Yeah, I like being my own boss but it’s not exactly what I thought it would be after a few years”.

Can you relate? Have you been there before? Are you there now?

Not unlike any good doctor; our ability to help our “patient”, the small business owner, is only limited by the quality, quantity and frequency of information we receive from the client. If you visit your doctor and do not allow them to run tests or have an in-depth, open and candid conversation, how would you expect your doctor to really help you otherwise?

Just so we’re on the same page, let’s first look at what is generally accepted or defined as “small business”. According to the SBA (Small Business Administration) there are approximately 28 million small businesses making up 99.7% of all U.S. firms. The SBA sets size standards according to industry. SO, your small business could be defined as “small” with up to 250 or 1500 employees maximum as per industry OR $750,000 to $38.5M in annual receipts. The point is that when we refer to small business these numbers look huge to a solopreneur or truly small company of maybe 3-20 employees or $300,000 to $5M in annual receipts. It is no surprise that U.S. small businesses also account for most of new jobs created as well as expansion. Therefore, it is very important to understand when we refer to small business almost all of business is “small business”.

There are 3 key areas we review and they involve:

a) What you do before you open the doors (planning)

b) What you do while your doors are open (performance)

c) What do you want to do for an exit plan (parachute)

Let’s take a brief look at the first item…

Planning:

As with medical, there are norms or benchmarks associated with your business in various areas such as human resources, financials, etc. We all know 98.6F is considered “normal” so how do you determine or plan for what is considered “normal” for your business within your particular industry? This requires a few things. How well does your best competitor do? What are the established / published benchmarks for your business type? What key market factors affect performance in all measurable ways? Before your doors swing open and the first sales ring that register there are many things to consider when putting together your Business Plan. Didn’t have one? Don’t have one? Don’t worry, if you have since become established we can help take into consideration many of the things that should have been looked at and create some guidelines for comparison to help your business implement a plan that covers all of the key areas needed to help get things on the right track and keep them there.

Next month we will spend some time talking about “Performance” as the second vital area of small business and the key things to be on the look out for. In the meantime, if you have any questions or are curious about what we can do for you; please contact Shabro directly (239) 437-3016. Thank you.