Small Business Owners Are Horrible Salespeople

This article was written by Barry McKinley, SCORE Orange County Business Mentor

Who was the best computer salesperson? Steve Jobs, Apple Founder/Owner. Who was the most recognized Men’s Clothing Salesperson? George Zimmer, Men’s Warehouse Founder/Owner.

These business owners recognized early on that to grow their companies they needed to “pitch” their products and services 24/7. They further realized to be successful at doing that they needed sales training. Do you know what Bruce Willis, Tiger Woods, Julia Roberts and Samuel L. Jackson have in common? Fear of speaking in public which affects nearly 75% of the population. They recognized their weakness and got the proper training and have gone on to very successful careers that put them in public speaking situations weekly. Learning to sell is no different. With some training and guidance you can become very confident and effective in presenting your company’s products/services.

When the business owner cannot successfully create excitement regarding their company’s products/services, or expound on the features & benefits they leave perspective customers wondering? I recently worked with a CEO who constantly looked down or away from the client as he gave his sales pitch. He did an excellent job presenting the products but because of no eye contact the customers perceived that he was lying or hiding something. After working with him to overcome this weakness and longtime habit he now makes constant eye contact, reads the customers interest, emotions and his sales closure rate has almost tripled.

To be effective in sales, the business owner needs to focus on proven techniques and then give them time to become second nature. Larger companies commit to one well thought out strategy and stick with it.

Stay focused - Stick with one plan

Learn to make yourself and your company stand out. Don’t follow the crowd, make your presentation unique. Probe the customer to find out what they want and what excites them.

Be Unique - Stand out from competition

Learn a system to sell your product, selling is no different than acting, it takes a lot of time, practice and preparation. Steve Jobs before making a presentation would practice for days and review all of the video tapes of his practice runs. His preparation could easily be 24 hours for a 1 hour presentation.

Be prepared –Do not wing it

Selling is an everyday occurrence. The business owner can’t set side one day a week to “Go Sell”, results from selling may take months or longer. The business owner should be selling every day to everybody, employees included.

Do not wait-Make things happen today

Business owners don’t know how to find customers. If you can’t find them how do you expect your business to grow or employees to increase sales? Put a multi-layered sales plan into effect, some cold calls, appointments calls, email campaign, one networking meeting event every week, look for opportunities to promote your business through public speaking and figure out ways to get your company in the news.

Become a cheerleader for your business

Common Business Plan Blunders/Mistakes

 

This article was written by John Rau, SCORE Orange County Business Mentor

A business plan is your “roadmap to the future”. There are many templates available in public libraries, text books and on the Web, including a basic template provided by SCORE at www.score.org; however, preparing and writing your business plan is more than merely obtaining one of these templates, filling in the blanks and now “you have one”. You’ve got to do your homework and address the specifics of what you intend to do with your business. Relative to these business plan templates, some provide more details than others, but all follow a similar outline in terms of topics to be covered. In this regard, a general overview of the topics to be addressed and illustrative examples of typical common mistakes made are as follows:

Executive Summary

General Topics: Brief overview of the total business plan, citing the important and noteworthy elements of your business plan, and generally written after the other sections are completed. This is the “eye catcher” section to get the attention of potential investors so that they will want to read more about your planned business venture and perhaps invest in it.

Common Mistakes

1. Too many pages and too much detail regarding what is further discussed in the plan. Typically no more than one to two pages, three pages max. Beyond this number of pages, you lose the concept of what is a “summary”.
2. Not providing a “clear focus” as to what your business opportunity is all about. Make it “short and sweet”.

Company Description

General Topics: This is your company overview section that describes who you are and what you plan to do. Present you mission statement followed by company goals and objectives and business philosophy. Describe your industry, your target market and where you plan to fit in. Describe the legal form of ownership you will choose. If your company has any history, mention it here.

Common Mistakes

1. Goals and objectives are too detailed and not readily measurable. Keep them simple and achievable. You will want to create metrics to be able to track your performance.
2. Lack of a clear business idea or a poorly defined business concept.
3. Not providing a clear and convincing argument that your selected market area has the potential for growth so as to ensure, in the long run, that you can be successful. You need the “why you” story relative to other business entities already in the same marketplace.

Market/Industry Analysis

General Topics: Analysis of the target market (total size, current demand, growth history and potential, any barriers to entry, sales trends, statistics, etc.) and a profile of your target customers (demographics, etc.). Describe the industry structure and how you would fit in. Do you have a niche? If so, describe it. Describe the potential competition. (Note: Never assume there isn’t any!)

Common Mistakes

1. Don’t just list similar businesses in your target market area and leave it at that. If these are potential competitors, then describe what’s “competitive” about them. Point out what is “different” about you, that is, what is your competitive advantage, if any, and potential discriminators.
2. Target market is poorly defined. Be very specific in your definition of your customer(s). Is the consumer need really there? Don’t use the “field of dreams” approach, that is, “If I build it, they will come.”
3. It’s not enough to say “there is a big market” without backing it up with facts.
4. Not providing a clear understanding of the industry that you are in and how it functions.

Company Organization and Management

General Topics: Describe how you are organized and how you plan to manage the organization. Identify key personnel, what roles they will play in the management of the organization and what are their relevant credentials/background.

Common Mistakes

1. Selecting for key personnel friends or relatives with no business experience relative to the roles they will play and/or responsibilities they will have. Investors will generally not invest in companies that don’t have the “management credentials” to ensure that the company can be properly managed and that the investors can be assured that they will get their money back with a reasonable rate of return in a relatively short period of time.
2. If you plan to “grow” your organization in the sense of starting small with a few key management positions filled initially, then you need to present a time-phased plan showing how you will subsequently fill the remaining positions.

Service or Product Line

General Topics: Describe what product(s) or service(s) your company will provide. What are the most important features, advantages and benefits to the consumers? Are they brand new or never been seen before, if so, then describe why this might be a “discriminator” in the marketplace. Describe any intellectual property considerations such as use of patents and copyrights. If there are any competitive advantages or “elements of uniqueness”, then identify them. Relative to products, if there are any development efforts required, then you need to describe where you are in the development process and what is needed (resources and time) to get your products “consumer ready”. If there are any applicable regulatory issues relative to your products (such as government approval), describe them here.

Common Mistakes

1. Describing the product(s) and/ or services with too much technical information and using too many industry specific words or phrases and special acronyms. Put spec sheets, laboratory test results, etc. in the appendices.
2. If new development and/or technology advancements are required, failure to adequately address risks involved that could affect overall quality and performance.
3. If regulatory approval is required, such as with medical products, failure to address the impacts of regulatory delays on product development timelines and introduction into the marketplace. Remember these types of delays could also impact your cash flow.

Operational Plan

General Topics: Describe your start up requirements in the sense of what you will need to get your business off the ground. Describe the daily operation of the business in the sense of how the product(s) and/or the service(s) will be provided. Provide a description of your operating facilities—geographical location, building size and space, equipment necessary, etc. If you have a facilities plan and a listing of capital improvements needed, describe it here. Likewise, if you have a staffing plan in terms of number of employees and corresponding job descriptions, then describe this here also. This information may have already been provided at the “top level” in the Company and Organization and Management section above, but here you should go into detail as to how the business will function on a daily basis. If applicable, describe any manufacturing processes involved and how you will conduct these types of activities. If there are any potential risks to successful implementation of your plans, here is where you should identify them and discuss your plans for mitigation.

Common Mistakes

1. Not addressing obvious risks. Bankers and investors want to know the downside risks, if any, associated with how you plan to run your business.
2. Not providing a clear and convincing story that “you know how to get there” in the sense that you have defined what your business is all about, but you haven’t convinced the reader that you have a master plan and know what needs to be done to get you there.

Marketing and Sales Plan

General Topics: Describe your basic marketing and sales strategy in terms of how you plan to make consumers aware of your product(s) and/ or services(s) and the specific approach(es) (such as pricing strategy, advertising, promotional efforts, distribution channels, use of e-commerce, social media, etc.) you plan to implement to get them to buy what you are offering.

Common Mistakes

1. Your marketing and sales plan/strategy does not correlate with your sales projections. For example, you show millions of dollars worth of sales when you haven’t even marketed your product(s) and/or service(s). Remember it takes time to implement a sales and marketing strategy before you can expect to see results. Success doesn’t “happen overnight”! You need to show a time-phased approach with a master schedule and associated timelines.
2. Too much time spent describing your products in full detail rather than describing the marketplace and who will buy them and why will they buy them.
3. Lacking clarity about how future changes might affect your market and how you would respond to these changes.

Funding Requirements

General Topics: Describe your funding strategy, if applicable, in terms of equity funding and debt funding as well as how this will be repaid. Provide a discussion of all sources and uses of funds including any loans or grants. Mention your planned exit strategy, if you have one.

Common Mistakes

1. Lack of financial investment on the part of the founders. If the founders aren’t willing to invest in the company, then is the company really viable?
2. Offering a lower percentage of ownership than the investment requirement demands. Not clear what the percentage distribution of ownership is and how that is derived.
3. Offering a return on investment that is out of line with your industry.
4. Unclear company valuation and exit strategy. Failure to point out how investors will get their money out.

Financial Plan

General Topics: This is your cash flow projection section where you present projections of revenues, costs and profits for at least the first 12 months of operation and generally quarterly for the next 3-5 years. Include balance sheets and capital expenditure estimates. An explanation of projections in terms of assumptions is important.

Common Mistakes

1. Failure to review your numbers and projections with an accountant or other experts who are familiar with your type of business or industry to check the credibility of your estimates.

2. Using “standard percentage templates” found on the Internet or in textbooks to create your annual projections of costs. You must use what is specifically relevant to your type of business or industry.

3. Making unsubstantiated “wild ass guesses (WAGs)” without any backup and lack of financial assumptions to explain where the numbers originated.

4. Showing you will make millions of dollars the first year and many millions more each year thereafter. Keep in mind that most startup businesses generally don’t make money in the first year or two and potential investors know this. You lose credibility with unrealistic financial forecasts.

5. Stating that you will capture a certain percentage of the overall market for your product(s) or service(s) without fully explaining how you intend to do that.

6. Not making it clear as to how you’re going to make money. Spending too much time describing what you do and not enough time on “how you will sell to whom”, what you will charge and how much profit you will make.

7. Underestimating expenses and not budgeting for unexpected costs.

Appendices

General Topics: Here is where you can provide backup information relative to the basic sections described above. Examples would include detailed resumes of key personnel, additional financial analyses, preliminary marketing materials, web site description, competing products/services literature, etc. Use this section sparingly as you don’t want to dramatically increase the size of your business plan.

In general, use a business plan template to get you started in the sense of getting the information needed into the right sections. Once you have “completed the template” to obtain a “first cut” at your business plan, then use the illustrative “business plan mistakes” cited above to make sure you haven’t made any of these common and frequent mistakes. Good advice is to have a third party (such as tech writers, SCORE counselors, etc.) review what you have written to check for clarity and completeness. You need a smooth flowing narrative free of grammar, spelling and punctuation mistakes. It shouldn’t read like the writer never passed English 1A and 1B in school. Furthermore, don’t use too many superlatives as that will turn off most investors and readers, and when unsubstantiated, hurts your credibility.

In summary, as pointed out numerous times in the literature, the quality of your business plan depends on the quality of the underlying business concept and your business plan should be believable, accurate, comprehensive and enthusiastic. As a general rule, your business plan should not exceed 15-25 pages, excluding appendices. Remember you are not writing a novel!

How Good Are Your Books?

This article was written by Renee Butler – Consulting Manager, Littlefield, Siminski & Co., From her blog, Reprinted by Permission

Your books are only as good as their execution. Otherwise, even the most perfect business model does no more good than the latest diet book growing dusty on your bookshelf.

The fact of the matter is that your books ARE your business. At the end of the day, your company IS how much it makes. You take in your sales but you have to deduct the cost of goods sold as well as all your administrative expenses. In addition to the regular costs like rent and payroll, you have the one offs – like the impromptu holiday party you threw to thank your workers for pulling off a tight deadline or the machine that broke down right as you were in the middle of a huge order.

All in all, if you aren’t keeping accurate books, you could find yourself in a tough spot.

Playing Defense

Many business owners are so focused on their trade that they neglect their books, or at least don’t give them appropriate attention – but sloppy bookkeeping can cost you a ton of money. It can make you flip from playing offense to playing defense. Think of it like a soccer game. One minute, your team has the ball and you are taking it all the way to the net. Then, something happens – a foul or an interception. Before you know it, the other team is halfway down the field and you are running as fast as you can trying to get back in the game. It happens just like that, when you least expect it and in the blink of an eye. You went from offense to defense.

Extra Costs

In the case of running a business, this can mean that because of sloppy bookkeeping you are stuck with a 27-percent cash advance loan instead of being able to access a 6-percent bank loan or open a credit card with a 0% APR. Not only are you paying a small fortune in interest but you also miss out on favorable repayment terms. You may only have six month to repay the cash advance whereas you could have been able to spread the repayment of a bank loan over 5 years or more.

Sloppy Bookkeeping

Sloppy bookkeeping can take many forms. Maybe you don’t bother to balance your ledger until your quarterly taxes are due or maybe you tuck some personal expenses in with company ones.  Whatever the case, even if you were cranking out profits like you had your own money tree, if your books are not kept up to date and accurate, you can expect extra costs No lender in the world is going to loan money to a company that hasn’t balanced its books in months. Further, even if you are keeping your books up to date, if they are packed full of so many personal expenses that your cost of goods sold is inflated to the point you are barely showing a profit, your lender may assume that making a payment on a new debt could be difficult and deny your application on that basis.

You Might Be Surprised

Moreover, there are greater costs to worry about that just lending. If you are keeping sloppy books, you may not realize how much you are actually spending or how much your jobs are actually costing you. Many businesses, especially early on, end up finding out that at least one venture is costing more than it is making. By keeping accurate books, you can track your actual costs (read: “not the figures you wrote on the back of a napkin”) and get a much better picture of  where your company’s operations stand.

In turn, this can help you make more informed decisions about the direction of your company and develop a strategy that plays into your company’s inherent efficiencies.

Conclusion

Maintaining accurate books will save you in the long run. Whether it means better access to financing or improved cost accounting, your business will run better with better bookkeeping.

5 Ways To Raise Extra Money When Buying A Small Business

This article was written by Peter Siegle,in Bizben.com, reprinted by permission

It's common for someone buying a business to discover he or she will need more cash than expected to take over the company. In addition to the down payment, money will be required for working capital. Here are five of the most popular strategies buyers have employed to get the extra funding needed.
A surprise that some entrepreneurs encounter when buying a small business is that the amount of money expected to go into the purchase will not cover every expense involved in becoming the new owner. Not only is it necessary to come up with the down payment, but in order for the business to succeed the buyer will need working capital when taking over. Smart strategies for raising that extra money include:

1. Seller Financing: If the deal calls for an all cash purchase, and the buyer is emptying his bank account to pay off the seller, perhaps the agreement can be modified to include a promissory note to be used by the buyer for part of the price being paid. That will free up some of the cash originally intended for the down payment. The seller may find tax benefits to this arrangement.  Besides, making sure the buyer has sufficient working capital is an important way to help her succeed.

2. Inventory On Consignment: The buyer can save the money that would ordinarily go for purchase of the inventory at close of escrow, by paying the seller the wholesale costs for inventory items only as they are sold to customers of the business. Rather than the buyer's several hundreds or thousands of dollars tied up with parts or products, it can be used for other expenses and the seller will be paid for each item of inventory as the buyer sells it.

3. Earn-Out Agreement:  Another way for buyer and seller to work together to make sure the business won't run into trouble for lack of working funds, is their agreement to establish a lower selling price than was originally planned. That can call for a lower down payment than the amount stated in the sales agreement. The seller will be compensated later, under the earn-out provision of the sales contract. It would specify that the price is linked, by an agreed-on formula, to a specific low performance level for the business. As the business outperforms this initial projection, the price would rise according to that formula. That means the seller sacrifices at first, with lower payments for the balance of the price than he wanted. But as the price of the business goes up, so will the amount owed to the seller, as expressed in larger payments.

4. Borrow From Financial Institution: The buyer may be able to get extra money from a bank or other financial institution.  If there is seller financing involved in the deal, another lender i s more likely to agree to approve an application for a loan to help fund working capital. And it's a good idea for the buyer to start shopping among financial institutions before he or she finds a business to buy. That way the buyer will know which company is likely to offer the needed cash.

5. Assume Seller's Debt: If the seller will need cash at close of escrow to pay off business creditors and deliver the business free and clear of debt, the buyer may be able to assume that debt instead. That will require the cooperation of the vendors to the business. Some or all are likely to go along with the plan as it will insure their continued relationship with the business.

A shortage of cash to take over a business need not stop a buyer from proceeding if he or she can use one or more of these methods to raise additional funds before taking over the business.

About The Author:  Peter Siegel, MBA is the Founder & President of BizBen.com (businesses for sale, businesses wanted to buy, resources, & articles) and the BizBenNetwork Online Community. He advises and consults with business buyers, business sellers/owners, brokers, agents, investors, & advisors on a daily basis. Reach him direct at 866-270-6278 to discuss strategies regarding buying, selling, (or financing a puchase of) small to mid-sized businesses.