-

Unusual Oportunities

December 2, 2011 - Posted in Business Tips - Permalink

A Tale of Two Economies

With apologies to Charles Dickens, “It is the best of times and it is the worst of times”. The opening lines of his 1859 novel best describe the economic situation facing businesses today. How with unemployment stuck above 9%, GDP at the lowest levels in decades, with bankruptcies and foreclosures at an all time high could this be in any way “the best of times”? For those with a vision of the future and with confidence and commitment there is an opportunity which has always provided forward looking individuals a unique opportunity. Ordinary people tend to hunker down during difficult times which is why they are….ordinary. Nearly 25% of the Fortune 500 companies were started during economic times more severe than what we are now experiencing and most started in somebody’s garage. It is a time for businesses to discard conventional thinking which encourages preserving capital, cutting back on sales and marketing and generally reducing staff. Certainly there is a need to use resources wisely but you should consider diverting as much as you can to gaining market share. If you are observing the business scene you should be aware of how some the largest corporations are changing their business model to offer new products and services to existing and new customers. TV advertising is at an al time high. These companies know that this is a time to devastate their more vulnerable competitors taking much of their share in anticipation of a recovery which will eventually come. They are trading margin for share knowing that the margins will eventually improve and once they have market share its theirs to keep or lose. Wayne Gretsky” advice of “forget where the puck is and go to where it’s going to be” is still good advice.

Your Business Model’s Health

November 3, 2011 - Posted in Business Tips, The Business Model - Permalink

Conventional Wisdom & Your Business Model

Conventional wisdom typically results in conventional results which work OK in good economic times but not during difficult business cycles. Conventional wisdom is based on what worked in the past. If your business model hasn’t noticeably changed for a couple of years it could be a real problem. All let me say it again all business models erode. The worst piece of advice ever given to the business world is “if it ain’t broke don’t fix it”…it’s always breaking. Your challenge is to recognize it and take remedial action before it becomes critical. There are some simple aspects of your business of which you need to be aware that will tell you how your business model is doing. Understand I’m not talking about your business plan I’m referring to your business model. The business plan is how you will deliver your value proposition and you can’t implement a
flawed business model. Here are the things you need to be constantly monitoring to be certain that the business model is still valid:

Margins. How do yours compare with similar companies in your industry?
Product/service salability. Can a salesperson of ordinary skill sell your offerings?
Your 4 Capitals. Intellectual, financial, human and brand capital.
Competitive advantage. Are there sufficient barriers to entry and customer exiting?
Quality of your customer base. Diversity, too much concentration, profitability.
Business and industry longevity. Trends up or down.
Graceful exit capability. Could you sell it for the value you’ve set for it?
Pitfall avoidance. Trends, regulations, financial management, organizational issues.

It probably isn’t a bad idea to spend a day or two each year analyzing your business model validity. Look at it as your business’ annual checkup. It could be the difference between a long and healthy life and premature death.

Chang,,,embrace, nurture, encourage and manage

October 26, 2011 - Posted in Business Tips, Strategic Planning - Permalink

Change…embrace, nurture, encourage and manage

“I don’t care where the puck is, I go to where it’s going to be” Wayne Gretzky, Hockey great.

Anticipating the future is the clear path to success. Steve Jobs began designing the Iphone 3 years before the technology was available to implement it. This requires a change in thinking and ordinary business people fear change and that’s why they’re….ordinary. The only people who welcome change are babies with a wet diaper. Change doesn’t come from the comfort zone. The things that will have the greatest impact on the future business environment are:

The global economy. Still very uncertain and a long ifficult way back.
Fiscal policy in the US. Changes in the tax laws will have a major impact on business decisions.
Monetary policy by the FED.
Technology.
Regulations.

If your business can be effected by any of the above factors you need to hedge against the risk of decisions that could negatively impact your opportunities. Growing your business can only come from three sources:

Charge more foryour product/service. In this environment not very probable
Increase market share
Introduce new products or services

To grow your business you are going to have to make a change in your business model or business plan. You need to find a way to embrace change, nurture it, encourage it and manage it easily.

Bank Funding

October 13, 2011 - Posted in Business Tips - Permalink

Bank Funding

No matter what business you are in, there are times when borrowing money makes good financial sense. Trying to finance growth internally presents challenges and restrictions to most companies especially when upfront investment is required, and the proper capital structure and working capital support are not in place.

The first step for [any company applying for a loan will be to present your bank with a comprehensive overview of your business by providing them with a business plan that gives them a full strategic understanding of you and your company. The business plan will need to address any challenges that you and the company are facing and a plan of how
you are meeting them – now and in the next couple of years.

It is useful to the bank, if not required, to provide a detailed
explanation of the purpose of the loan. This could for example be an outline of how the purchase of additional equipment would enhance revenues, efficiencies and profitably. You should include relevant information such as purchasing contract details outlining delivered and installed price, capital expenditure justification studies and projected timelines. An integral part of the information will be a schedule detailing the projected cash-flow and draws against the desired loan.

You will be required to provide a full set of financial reports, which will include at least the most recent balance sheet and income statements.as well as any notes that would provide them with a clear understanding of the company’s financial condition. Most banks prefer at least 2 trading year’s worth of financials and will not even consider any company that cannot provide this. A bank loan is highly unlikely if you have not been in business for more than 2 years. This information will allow the bank to gain a proper understanding of recent trends within your business.
Personal financial information is increasingly being used to supplement the company’s information. So you will likely be required to provide your FICO score and full personal financial reports.

A perennial problem with small businesses is the fact that owners generally see it as an accepted benefit to run personal expenses through the business. The owner’s salary is an acceptable business expense as long as they are active in the running of the business, it is justifiable. Whatever the Taxman does or does not allow beyond this is largely irrelevant to an investor except to the extent that it might detract from the business. An investor is really only concerned with the actual ability of the
business to generate an acceptable return. Strictly speaking, the strongest P&L will be one that has been “Normalized” by taking out all discretionary and extra-ordinary personal income benefits and expenses that the owner draws or puts through the business.

Growing, funding or selling your business

September 26, 2011 - Posted in Business Funding, Business Growth, Business Tips, Selling Business - Permalink

Funding/Growing Revenue/Exiting

You need to be aware of your ability to execute any of these
objectives at all times for a number of reasons:

1) You never know when a new opportunity will present itself.
2) You may be on one track and all of a sudden find yourself on another.
An example:You have a plan to double your revenue by moving into some new markets. One of the major suppliers in that market wants to sell and you can pick up his business at a great price if you act quickly. Now all of a sudden you need funding.

Another example; you want to sell your business and you want or need a multiple of five times earnings.You find out it’s only worth 70% of that figure unless you increase sales revenue and correct some major problems.
Now you need to both increase revenue and get funding for fixing your
problems.

Here is the take away. If you can’t get funding for your business
you’ll never sell it for what you expect. If you can’t show a clear path to additional revenue you probably won’t be able to sell your business except at a fire sale price. If your business isn’t readily salable it isn’t readily fundable. Hopefully you can see how interconnected these three aspects of the business are. If you have a solid path for one you can achieve the other two. If you want to know more about the common elements that can assure success in each of these areas let me know by commenting. I love to ear about what others are experiencing.

Staging your business to grow, fund or sell

September 21, 2011 - Posted in Business Funding, Business Growth, Business Tips, Selling Business - Permalink

The Nature of Staging Your Business
The objective of any business simply stated it is to optimize revenues while minimizing expenses. In that simplistic definition is an inference which is not clear and whose importance is grossly under estimated and that is the element of time. In any business transaction time favors the buyer and in the case where you’re trying to grow your business, securing funding or selling your business you are the seller. Why is time so important?
• While you are on one of these paths you are expending resources towards that goal. The longer it takes the more it costs.
• The market will get a sense of the difficulty you’re having and it will begin to develop a more negative view of your business as will bankers, investors and buyers.
• As time goes on unforeseen occurrences will appear. Occasionally they may be positive but you really cannot take a risk on a new competitor, a downturn in the economy or loss of key personnel or 100 other things.
Minimizing time –
First, understand all of the obstacles that stand in the way of success. Don’t ignore or minimize them. The market or your competitors will magnify them.
Second, take the time to fix the problems or develop a sell around before you start your efforts. It is so much easier and less expensive to fix the problem before the marketplace becomes aware of it than to try to recover from it.
Third, there are some 33 elements prospects will be looking at to get a perspective on your business. To a great extent they will determine what ROI you can expect and how long it will take for you to be successful. If you’re interested in knowing more about these issues check out the web site www.ceosolutions.biz.

Funding, Growing or Selling Your Business

August 30, 2011 - Posted in Business Funding, Business Growth, Business Tips, Selling Business - Permalink

The one thing all businesses want is additional revenue and there are only three ways to get it.

Reach out to funding sources.
Seek new revenue from existing or new accounts
Sell Your Business

In a business transaction time always favors the buyer. In the three revenue opportunities above you are not the buyer. The longer it takes to complete the transaction, the more it’s going to cost you.