Does Your Business Have Curb Appeal?

Let’s say you’re in the market for buying a house and you go to view one that looks appealing in the ad. How does it look on the inside? The outside? What about the location? What is your general impression?

Like your house, your business projects an image to potential buyers. When they come to see your business for the first time, your “curb appeal” can attract a buyer to your business—or cause them to walk away from it.

Do you need to improve your curb appeal?

Here’s a three-step plan:

1. Fix Your Leaky Faucets

Perhaps, like many other business owners, you started your business from scratch with one or two employees and now you have 20 people working for you. But do you have the appropriate HR infrastructure in place for that size of a company?  Perhaps you even take pride in your informal management style, but it can prove to be a liability when it comes time to sell.

Make sure your human resources policies are at least as stringent as those of the company you hope will buy your business. Some basics to have in place:

• A written policy making it clear you forbid any form of harassment or discrimination;
• A written letter of employment for each staff member;
• A written description of your bonus system;
• Written policies for employee expenses, travel and benefits.

2. Assemble Your Binder

When you go to buy a house, it will give you confidence if the owner has the instruction manuals for the appliances, information on where they were purchased, and who to call if one of them breaks down.

Similarly, when a potential buyer looks at your company, he wants to see that you have your business information in order.  Documenting your office procedures, core processes, and other intellectual capital can help you attract more bidders and a higher price for your company, while also lowering the chance of the deal falling apart during diligence.

If you want to attract a buyer one day, your business needs a binder with instructions for basic functions, such as:

• Opening up in the morning and closing down at night;
• Forms and step-by-step instructions for routine tasks;
• Templates for key documents;
• Emergency numbers for service providers;
• Billing procedures for customers.
• How your company is positioned in the market and your marketing tools.

3. Document Your Intangibles

Intangibles for house buying might include:

• Is the house near a good school or daycare?
• What kind of neighbourhood is it?
• What kind of commute are you looking at to get to work?

Your business also has intangible, often intellectual, assets that a potential buyer needs to be made aware of, such as:

• Proprietary research you’ve conducted;
• A formula for acquiring new customers;
• Criteria you use to evaluate a potential new location;
• Your unique approach to satisfying a customer.

As with selling a house, your company’s curb appeal can go a long way toward closing a deal.

Republished with permission from Built to Sell Inc.

The majority of businesses in Canada today started out as service companies. If you want to own a web design firm, you didn’t need a lot of money, just a technical knack. Enterprising professionals who know how to get the media’s attention can start their own pubic relations firms without much more than a mobile phone. No capital required.

But if you want to build a valuable company – one you can sell – you’ll want to stop presenting yourself as a service firm. Consultancies are not usually valuable businesses, because acquirers generally view them as a collection of people who peddle their time on a hamster wheel. The typical way to sell a consultancy is for the consultants themselves to trade their equity for a job, in the form of an earn-out that may or may not have an upside.

If you want to build a valuable company consider re-positioning your business out of the ‘consultancy’ box.  Depending on your business, you may need to change your business model and ‘productize’ your service. One of the first things to do is to stop using consulting company terminology and replace it with the terminology of a valuable business:

Consultancy

Defining your company as a ‘consultancy’ will announce to the market you are a collection of people who have banded together around an area of expertise. Consultancies rarely get acquired, and when they do, it is usually with an earn-out. Replace ‘consultancy’ with ‘business’ or ‘company’.

Engagement

An engagement is something that happens before two people get married; therefore, using the word in a business context reinforces the people-dependent nature of your company. Replace the word ‘engagement’ with ‘contract’, and you’ll sound a lot more like a business with some lasting value.

Deck

A deck is a place to have a glass of wine. It’s not a word to use to describe a PowerPoint presentation unless you want to look like a ‘consultancy’.

Consultant

Instead of describing yourself using the vague term ‘consultant’, describe what you consult on. If you are a search engine optimization consultant, who has developed a methodology for improving a website’s natural search performance, say you ‘run an SEO company’ or ‘help companies improve their ranking on search engines, such as Google’.

Deliverables

Consultants promise ‘deliverables’. The rest of the world guarantees the features and benefits of their product or service.

Associate, engagement manager, partner

If you refer to your employees with the telltale labels of a consultancy, consider replacing ‘associate’, ‘engagement manager’ and ‘partner’ with titles like ‘manager’,” ‘director’ and ‘vice-president’, and  you’ll reduce the chance of your customers expecting a bill calculated at 10-minute increments.

Clients

The word ‘client’ implies a sense of hierarchy in which service providers serve at the pleasure of their client. Companies with ‘clients’ are usually prepared to do just about anything to serve their clients’ needs, which sounds great to clients, but also telegraphs to outsiders that you customize your work to a point where you have no leverage or scalability in your business model. Would your ‘clients’ really care if you started referring to them as ‘customers’?

It’s easy to get stuck in a low-growth consulting company. ‘Clients’ expect to deal with a ‘partner’ on their ‘engagements’, so the business stalls when the partners run out of time to sell. If a company ever decides it wants to buy your consultancy, acquirers will know they have to tie up the partners on an earn-out, to transfer any of the value. When it comes to the value of your business, optics matter and the first step in avoiding the consulting company valuation discount is to stop using the lingo.

Financial planning for business owners is different.  Following the same traditional financial planning methods appropriate for your employees will lead you down the wrong path. Your business is where your wealth is and planning how to access that wealth when it comes time to retire is key.

Wondering if you have a sellable business? The Sellability Score® is a quantitative tool designed to analyze how sellable your business is. After completing the questionnaire, you will immediately receive a Sellability Score out of 100 along with instructions for interpreting your results.

Take the Quiz here: The Business Sellability Audit

Why not find out now if your business is sellable?

This free online tool is the only no-risk step you can take to determine if your business is ready to get full value. Fast-track your analysis by taking advantage of this free, no-obligation free online tool.

This Sellability Score you instantly receive is a critical component to any business owner’s complete financial plan and is something that, until now, we have only made available to existing clients.

However, we recognized that there is value in knowing in advance of working with a financial planner whether or not your largest asset is ready to be exchanged for your retirement nest egg. Our view is that you are better to learn more about your businesses sellability today and find out how your business scores on the eight key attributes so that you can ensure you obtain full value.

If your business part of your retirement plan, finding out your sellability score will be the best 10 min. you could ever spend working “on” your business.

For more free information on Creating A Business Owner’s Dream Financial Plan, you can listen to a free, eight part series we did exclusively for business owners. The show is also available to subscribe to for free via iTunes.

Photo by: Ken Teegardin licensed under Creative Commons Attribution 2.0 Generic

Financial planning is critical to a comfortable retirement.

But, too many business owners are following the same financial planning strategies that their employees are following and are jeopordizing their ability to retire as a result.

Traditional planning from some very successful “barbers” say you should pay yourself first.  Take 10% of each paycheque and put it into your retirement fund as the first thing you do each and every month.

For traditional employees, who have no control over the form of income they receive (i.e. they receive a salary, plus the odd bonus) this is a prudent strategy.  Either put aside 10% of your monthly paycheque or run the math to determine how much you need to put aside each month to accomplish your long-term retirement income goal.  Utilize an RRSP as the vehicle to put the funds into (which creates an immediate tax deduction and allows for long-term tax deferral).  This is prudent financial planning – for traditional employees.

But, when you’re an employer – this could kill your business.

As an employer, you are able to choose not only how much income to receive but also what type of income to receive.  And, not only that, you are able to convert a lot of personal expenses into business ones.

So, if you are a business owner and you are taking more out of your business just so you can put it aside into an RRSP, you are taking vital cash from the business, pushing your personal tax bracket up just so you can then put the remaining cashflow into your RRSP to then get an offsetting deduction to then grow the funds on a tax-deferred basis just to be forced to take the funds out of your RRSP at age 71 in the form of a RRIF to then pay tax on an even higher amount and force your overall taxable income in retirement through the roof.  This doesn’t sound like the best strategy.

Prudent financial planning for business owners takes into account the following options only available for business owners to assist in their wealth accumulation in a tax-preferred way:

• Income splitting with family members to keep the overall family tax burden to a minimum.
• Increase tax-sheltered contribution room through the use of an Individual Pension Plan so that you can put aside more for retirement in a tax-efficient manner.
• Potentially pass retirement assets to your child beneficiaries tax-free through the use of an Individual Pension Plan.
• Invest surplus retirement funds corporately instead of personally so that you can keep income taxes lower on the surplus funds.
• Take advantage of the Capital Dividend Account available to business owners through a properly structured Wealth Protection Plan as a way of growing and utilizing these accounts during your lifetime and transferring the residual wealth tax-free on death.

And the list goes on.

If you are a business owner, I know one thing for sure.  You don’t need to take any extra risk with your retirement finances – you’re already taking a risk by being a business owner.

Bottom line is this.  If you are a business owner and you are following the traditional financial planning advice that is geared toward your employees – you are missing a lot of wealth creation and protection opportunities.

Want more information on financial planning for business owners?  Click Here to be taken to our library of blog posts written directly for you.

Republished with permission from Built to Sell Inc.

Prevention is better than cure

To grow a valuable business – one you can sell – you need to set up your company so that it is no longer reliant on you.  Financial Planning for business owners is less about what you can take out of your business and more about what you can do to it so that it runs without you.

This can be easier said than done, especially when, like a PR consultant or plumber, what you are selling is your expertise.

To scale up a knowledge-based business, you first have to figure out how to impart your knowledge to your employees, so that they can deliver the goods. However it can be difficult to condense years of school and on-the-job learning into a few weeks of employee training. The more specialised your knowledge, the harder it is to hand over work to juniors.

The key to scaling up a service business can often be found by offering the service that prevents customers from having to call you in the first place. You have to shift from selling the cure to selling the prevention.

Fixing what is broken is typically a hard task to teach; however, preventing things from breaking in the first place can be a far easier task to train others to do.

For example, it takes years for a dentist to acquire the education and experience to successfully complete a root canal, but it’s relatively easy to train a hygienist to perform a regularly scheduled cleaning.

It’s almost effortless for an estate agency manager to hire someone to clean the gutters once a month, but repairing the flooded basement caused by the clogged gutters can be quite complex.

For a master car mechanic, overhauling an engine that has seized up takes years of training, but preventing the problem by regularly changing a customer’s oil is something a high school student can be taught to do.

For an IT services company, restoring a customer’s network after a virus has invaded often takes the know-how of the boss, but preventing the virus by installing and monitoring the latest software patches is something a junior can easily be trained to do.

When you’re selling your expertise, it can be tough to hire a team to do the work for you. As ironic as it sounds, sometimes the key to getting out of doing the work is to offer a preventive service, which not only maintains your business income, but also eliminates the need for someone to call you in the first place.

Financial planning for business owners is different.  Following the same traditional financial planning methods appropriate for your employees will lead you down the wrong path. Your business is where your wealth is and planning how to access that wealth when it comes time to retire is key.

Wondering if you have a sellable business? The Sellability Score is a quantitative tool designed to analyze how sellable your business is. After completing the questionnaire, you will immediately receive a Sellability Score out of 100 along with instructions for interpreting your results.

Take the Quiz here: The Business Sellability Audit

Why not find out now if your business is sellable?

This free online tool is the only no-risk step you can take to determine if your business is ready to get full value. Fast-track your analysis by taking advantage of this free, no-obligation free online tool.

This Sellability Score you instantly receive is a critical component to any business owner’s complete financial plan and is something that, until now, we have only made available to existing clients.

However, we recognized that there is value in knowing in advance of working with a financial planner whether or not your largest asset is ready to be exchanged for your retirement nest egg. Our view is that you are better to learn more about your businesses sellability today and find out how your business scores on the eight key attributes so that you can ensure you obtain full value.

If your business part of your retirement plan, finding out your sellability score will be the best 10 min. you could ever spend working “on” your business.

For more free information on Creating A Business Owner’s Dream Financial Plan, you can listen to a free, eight part series we did exclusively for business owners. The show is also available to subscribe to for free via iTunes.

Republished with permission from Built to Sell Inc.

Warren Buffett famously invests in businesses that have what he calls a protective “moat” around them – one that inoculates them from competition and allows them to control their pricing.

Big companies lock out their competitors by out-slugging them in capital infrastructure investments, but smaller businesses have to be smarter about how they defend their turf. Here are four ways to deepen and widen the protective moat around your business:

Get certified

Is there a certification program that you could take to differentiate your business? A Canadian company that disposes of radioactive waste decided to get licensed by the Canadian Nuclear Safety Commission.  It was a lot of paperwork and training, but the certification process acts as a barrier against other people jumping into the market and competing.

Is there a certification you could get that would make it more difficult for others to compete with you?

Create an army of defenders

Ecstatic customers act as defenders against other competitors entering your market, a factor that has enabled companies like Trader Joe’s to defend their market share in the bourgeois bohemian (bobo) market, despite a crowded market of stores hawking groceries

Get your customers to integrate

Is there a way you can get your customers to integrate your product or service into their operations?

The basic switching costs of Customer Relationship Management (CRM) software are virtually nil.  Everyone from 37signals to Salesforce.com will give you a free trial to test their wares.

The real expenses associated with changing CRM software only come when a business starts to customize the software and integrate it into the way they work. Once a sales manager has trained his salespeople in creating a weekly sales funnel in a CRM platform, try to convince him to switch software.

Can you offer your customers training in how to use what you sell to make your company stickier?

Become a verb

Think back to the last time you looked for a recipe. You probably “googled” it.  Part of Google’s competitive shield is that the company name has become a verb. Now every time someone refers to searching for something online, it reinforces the competitive position of a single company.

Is there a way you could control the vocabulary people use to refer to your category or specialty?

Widening your protective moat triggers a virtuous cycle: differentiation leads to having control over your pricing, which allows for healthier margins, which in turn lead to greater profitability and the cash to further differentiate your offering.

If you are curious to see how your growth stacks up and if you’re building a business you could sell one day, take the 13 minute Sellability Score questionnaire:

Take the Quiz here: The Business Sellability Audit

Why not find out now if your business is sellable?

This free online tool is the only no-risk step you can take to determine if your business is ready to get full value. Fast-track your analysis by taking advantage of this free, no-obligation free online tool.

This Sellability Score you instantly receive is a critical component to any business owner’s complete financial plan and is something that, until now, we have only made available to existing clients.

However, we recognized that there is value in knowing in advance of working with a financial planner whether or not your largest asset is ready to be exchanged for your retirement nest egg. Our view is that you are better to learn more about your businesses sellability today and find out how your business scores on the eight key attributes so that you can ensure you obtain full value.

If your business part of your retirement plan, finding out your sellability score will be the best 10 min. you could ever spend working “on” your business.

For more free information on Creating A Business Owner’s Dream Financial Plan, you can listen to a free, eight part series we did exclusively for business owners. The show is also available to subscribe to for free via iTunes.