Get the junk out of the trunk: Now is a great time to reassess your business.

Every year about this time my wife organizes the house in preparation for the holidays. This includes going through all the stuff we have in our closets, shelves, hampers and trunks. The ritual is fairly painful, because she pulls everything out to reassess usefulness and how each item might fit in our plan for the next year.

Now is the time to get the junk out of your trunk and reassess your direction, tools, products and people. How much baggage does your company carry into every year? Evaluate your business as objectively as possible and get rid of those things that have no place in 2012.

Some areas to look at include:

Your business model

Many businesses and industries have materially changed since early 2008. We hear many people talk about the “new normal”; this may mean that products and services that you have relied on for years are no longer valid going forward. One company I work with has relied on a personal one-to-one service model and has added books and videos to their product offering. This was done to diversify their revenue and reduce the reliance on a business model that requires the principals to be involved with the generation of revenue during an 8:00 to 5:00 business day.

Opportunities

What opportunities have you missed in the past that might have put your company in a different place today? I meet with a number of business owners that discuss the actions they could take that would improve their business, but then go on to say “we discussed these areas 12-18 months ago and just couldn’t find a way to execute.” Does this sound like your company? Many business owners and leadership teams can sit down and plan how to take advantage of new opportunities, but fail to execute. Objectively evaluate your opportunities and develop a plan to get them implemented.

Strengths

When was the last time you and your management team identified your company’s strengths only to find a list that included things like “good customer service” or “good customer relationships”? Evaluate your company from the view point of your customers, partners, competitors and prospects. Does good customer service or good customer relationships set you apart from others in your industry? If not, then look deeper for sustainable areas of differentiation and identify how you can further exploit these strengths for a competitive advantage.

Weaknesses

Deep down we all know what some of our weaknesses are, but in many cases don’t confront them. It is difficult without outside input to develop a complete list of areas in which your business needs to be improved. Take this time to have candid discussions with your customers to learn how your company can improve. There are also some excellent tools and resources to perform a loss analysis, to develop insight into how your company can improve for the future.

People

Do you have the right people in the right places in your company? Many businesses have not strategically evaluated their most important asset… their people. Take a hard look at the direction of your company against the skill sets in your business and identify gaps that your management team can work on in the coming year. It may mean moving people into new roles, implementing training programs to help develop your employees, or hiring new people to supplement your team.

Yourself

As senior leaders we have a tendency of overlooking our own developmental needs. Are you ready to make the changes necessary in the new year to be successful? Just because you have been successful in the past, does not necessarily mean you will be successful doing the same things going forward. Successful leaders are those that can manage in changing environments, retool their company, and operate during times of ambiguity. Take an objective look at yourself and get ready for whatever the future brings.

Look at the junk in your trunk

Take the time to pull your leadership team together and objectively look at these areas as you prepare for 2012. Get an outside facilitator to work with you and your team to help develop the objective thinking and forward look needed to develop the basis of your operating plan for next year. Be prepared to gather additional information from your customers and partners to help guide you through the process. Taking the time to evaluate your business with independent input will help you develop a strong plan.

Larry Turner is CEO of Roundhouse Advisors, Inc. and has over 25 years experience growing, starting up, repositioning, and revitalizing organizations. Roundhouse Advisors is a consulting practice focused on helping businesses increase enterprise value by managing pain, growth and owner exits. Larry is a consultant, public speaker, and the author of two books “Owner Exit Planning: Leave On Your Own Terms” and “Mapping Your Recovery: Grow sales in difficult times”. For additional information visit www.RoundhouseAdvisors.com

“Mapping Your Recovery: Grow sales in difficult times” provides additional information on areas that can positively impact your company.

Business is hard enough without going it alone: Get outside help to boost your business

Business owners know their company and industry, but still get stuck in the day-to-day business. Often times they hit a plateau and find it difficult to reach the next level of performance. Many of these executives and business owners look inside their organizations for the solution when the answer just simply is not there. They need to be seeking support from someone outside the company.

Professional athletes use coaches to improve their performance because someone from the outside can see things the individual cannot. The coach can observe and communicate what things need to be changed and support that change. Even the best golfers in the world employ coaches to help them improve every part of their game. Business is no different.

Executives and business owners run into new situations every day and have a limited set of reference on how to deal with them. An outside coach can help them put these situations into perspective and support them in adapting to either internal or external situations.

I work with one business owner who is an expert in his field, and wanted to look into his future planning what it would look like. He needed help with developing an exit strategy, ie: sale to an insider, sale to a 3^rd party, or passive ownership; to include increasing sales and adding resources. In our meetings we discuss what is going on in his day-to-day business and progress against our action items. He has found tremendous amount of value by having someone he can talk through the issues and opportunities in his business.

The following are areas to consider if you move forward with a coaching relationship:

Can you take outside advice?

It is not unusual for a business owner or executive to feel inadequate asking for help. The entire organization looks to them for direction and they tend to be very intelligent. If you cannot check your ego at the door however during a coaching relationship, then don’t waste your time looking for help.

One-on-one or Group setting:

There are a number of very good peer advisory group organizations that provide coaching in a group setting. The organizations I know of all are all high quality and the participants tend to do much better than their competitors in areas of business growth, client retention and organizational development. BUT, group settings are not for everyone! If you cannot openly accept input from others in a group setting, and cannot provide balanced support to others you should look to a one-on-one coaching relationship.

Getting Started:

There are a wide range of choices when it comes to business or executive coaching. Prior to meeting with any business coaches perform an inventory of your issues, opportunities, and areas you need help developing. This will give you a starting point when having initial discussions with coaches. Be honest with yourself and assess how you will interact with someone providing feedback. Share this with your coaching prospects during initial meetings.

How to Find a Coach

1.) Ask others that you know about their coaches and solicit recommendations from your network. One of the best ways to find a coach is based on feedback from your network.

2.) An internet search will provide you with a wide range of options. Look for someone local so you can have face-to-face meetings, and not just telephone coaching.

3.) Industry is not important. Don’t get hung up on whether the coach has experience in your industry. They provide the outside look to your industry expertise.

4.) Find out how they operate. Discuss how the meetings work and assess how this matches your style.

5.) Assess the personality of the coach. You will be spending a fair amount of time with your business coach and it is important that you feel comfortable with that person.

6.) Ask for references.

In most cases you will find that coaching for you or your business is very cost effective and can support you and your management team. Understanding if you are the right candidate for coaching is the most important step, followed immediately by your coach’s approach and personality. Most business owners find benefit from most coaching relationships within the first few meetings and measured results within a few months.

Larry Turner is CEO of Roundhouse Advisors, Inc. and has over 25 years experience growing, starting up, repositioning, and revitalizing organizations. Roundhouse Advisors is a consulting practice focused on helping businesses increase enterprise value by managing pain, growth and owner exits. Larry is a consultant, public speaker, and the author of two books “Owner Exit Planning: Leave On Your Own Terms” and “Mapping Your Recovery: Grow sales in difficult times”. For additional information visit www.RoundhouseAdvisors.com

My book “Mapping Your Recovery: Grow sales in difficult times” provides additional information on areas that can be positively impacted by outside coaching or consulting www.roundhouseadvisors.com/growsalesbook

Building Your Business Quickly: Acquire a Competitor, Drive More Volume

We all know that increased sales volume in our businesses can be the cure to a number of problems. What is not readily known are the opportunities to increase sales through acquisition during economic downturns. Sure, many banks have higher standards for lending, but there are ways to get a deal done.

I know a number of companies that have increased their business by integrating volume and operations of other organizations. Here are two areas that I have seen work over the past few years:

Failing competitor

Many companies are not going to make it through to see the end of this recession. Those that do not make it leave their customers and sales people looking for a home. You can proactively approach your competitors with a solution for taking care of their customers and employees, while allowing the owner to keep assets for liquidation.

The approach could be a letter, email or a face to face discussion where you offer to transition their clients to your business, allow the sales people to continue closing business on a straight commission basis, and also allow the other business owner a commission on new business that they may close due to relationships already in place. You never know how your competitors are doing and opening the discussion for them to gracefully transition out of their business may be a good solution for some.

This approach will not be a solution for many, but it never hurts to ask. Make sure your operation can absorb the extra volume and you have sufficient buffer to support the working capital requirements of a quick increase in volume.

Purchase a competitor

Purchasing a competitor’s assets is a great way to increase volume. This option is only available to those companies that are not overburdened by debt, have been able to sustain positive cash flow, and the owners have not over leveraged themselves personally.

Purchasing a competitor allows you to leverage your current infrastructure, increase your volume of product that you can support in your business, and leverage your knowledge in the industry. There is bank debt available to support the right deal and the loan officers like deals where your current company is in good shape, you have industry and business specific knowledge, and your personal finances are clean.

Take advantage of SBA programs to acquire smaller firms as an add-on to your current business. I recently had a conversation with an SBA loan specialist in the Denver area and he informed me that they are funding SBA deals if the situation is right. There are a few industries they are staying away from, but in general they are looking for opportunities to lend.

Summary

It doesn’t cost you anything to ask your competitors if they are interested in transitioning out of their business. If you can get increased volume without having to purchase their business or assets it allows you to leverage the additional volume in your operation. The worst thing that can happen is your competitor tells you “no”.

The next best thing that can happen is you start a discussion on acquiring certain assets of their business. If you have been able to hold on to some positive cash flow, and can show a solid integrated business there is a potential of getting financing to support an acquisition. You will also find that there are a number of banks in the area that are lending, but with different criteria. Check out a number of different lenders. Your opportunity may fit their business model.

Larry Turner is CEO of Roundhouse Advisors, Inc. and has over 25 years experience growing, starting up, repositioning, and revitalizing organizations. Roundhouse Advisors is a consulting practice focused on helping businesses increase enterprise value by managing pain, growth and owner exits. Larry is a consultant, public speaker, and the author of “Owner Exit Planning: Leave On Your Own Terms”. For additional information visit www.RoundhouseAdvisors.com

Growing Sales: Five things you can do today to grow your business

I meet with many business owners that are frustrated by the lack of sales. During our initial meeting we discuss the activities they are currently undertaking to increase business and the response from many is something like “we cut all our marketing and sales activities to save money”.

Sales result from generating activity and developing new leads in your sales pipeline. Your sales pipeline today needs to be larger than it was before the recession because in most industries the average sales cycle has gotten longer and the average price of products/solutions sold is lower. Driving increased activity at the front end of the sales pipeline will generate more sales. There are five things you can do today at very little cost that will begin to generate the sales you desire:

1.) Sales Focused Organization

In one company that I managed, the sales coordinator would check with manufacturing before accepting an order. This was typical practice, even when our manufacturing organization was below capacity. After seeing this, I spent some time with the sales coordinator and head of manufacturing and we all agreed that nothing starts unless we have an order and to immediately take the order, unless it required out of the ordinary delivery terms.

Don’t lose a chance to secure an order. Putting off the decision to accept an order, can delay the purchase order by approximately two weeks. Dealing with all orders this way may push back a significant number of orders.

We were also able to shift the culture of the entire organization to one that focused on getting new orders in the house. This took place over time, but it required us to be proactive in securing orders, communication to the entire company on a regular basis on how we were doing and our progress against sales goals. Everyone in manufacturing/operations knows that their job depends on securing new orders, so take advantage of that fact and get them involved.

2.) Visit Customers

The largest asset you have in your sales organization is existing customers. The management team should be visiting your top customers. Your sales organization should include visits to current customers in addition to expanding the customer base.

I had an international sales manager who worked for me and who only traveled to one international show in Europe each year. We discussed growing sales through our distributors in Asia and he acknowledged that he had never visited any of them. We setup a two week trip and within a few weeks of his return we started seeing incremental orders from the distributorships he visited. He was amazed, since there was no discussion during his visit of the orders we received. It just happens… you visit your customers, inform them of all the products/services you provide and you are now on the top of their mind.

3.) Make Sales Calls

You obviously expect your sales team to make sales calls, but you expect the management team to join them? You should! It provides your management team with additional information that they in turn bring back to their organization. It all helps to become more customer focused. It also provides your sales team with a step up against the competition. Your sales team will close more deals because of the direct involvement of management. It shows the prospect what kind of company they may be doing business with.

4.) Internet Marketing

The tools to generate more sales activity on the web continue to grow. Search engine optimization (SEO) and local search are great tools, but require a large amount of work and time to generate results. These are great tools to utilize after you put together some activities that will generate more immediate results.

For quick results, I like to use pay-per-click advertising programs with landing pages that are designed to convert visitors to a meeting or purchase. These programs along with drip marketing campaigns and social media efforts are a great way of contacting prospects and generating results. You can pull these programs together yourself, but if you are stretched for time and knowledge, leverage one of the many experts in the field.

5.) Strategic Partnerships

Your customers and prospects are buying products and services that are complementary to your product line from other companies. Understand what these are, who provides them, and how they sell. Approach these firms with the intent of developing a strategic relationship. It may be a distribution/license agreement, a joint sales approach or a revenue sharing agreement based on mutual lead generation.

Work on these items in your business and you will see incremental activity and sales. It is difficult to do them all at once while you are running the day-to-day operation, so pick one and start doing it. Once you have that one activity generating results, and then do the next one. The best way to eat an elephant is one bite at a time and that also pertains to developing incremental activity in your business.

Larry Turner is CEO of Roundhouse Advisors, Inc. and has over 25 years experience growing, starting up, repositioning, and revitalizing organizations. Roundhouse Advisors is a consulting practice focused on helping businesses increase enterprise value by managing pain, growth and owner exits. Larry is a consultant, public speaker, and the author of “Owner Exit Planning: Leave On Your Own Terms”. For additional information visit www.RoundhouseAdvisors.com

Owner Exit Planning: The 7 things you must do before selling your company: part 5

Editor's note: This is the last of a five-part series on preparing yourself and your company for sale to maximket.

You have prepared your business for sale: increased sales, increased profits, strong management team, improved the value detractors and got your house in order. It is now time to take your business to market and see the results of your efforts.

The process of selling your business is like no other sale you have been involved with in your business career. It is different than buying real estate, different than selling your products and different from selling your home. It can be a complicated process, but not difficult if you have a team pulled together that has been there before.

Many business owners have figured out new business actions in the past, so it is a natural reaction to take this process on by yourself. DON'T...this is the single most important transaction of your career and it pays to have the support of a team that can steer you in the right direction and maximize your results.

Get your team together

Pull together a team of professionals that can help you navigate the process.

Business intermediary - A business intermediary is an individual or organization that can sell your business for you. Manage the process and help you maximize the amount you receive for your business. A business intermediary might be a business broker or investment banking firm. These firms will market your business and manage the process. A general rule of thumb is a business broker works with companies that have a value less than $5 million and an investment banker that will provide an auction like service for companies with values over $5 million (these ranges vary by organization). Find a business intermediary through referral if possible and always check references.

Attorney - You may have a business or personal attorney that has supported your organization for years, but do they have acquisition transaction experience? Some of the more difficult deals that get done are due to an attorney on one side that has not done any/many transactions making issue over items that shouldn't be and miss areas to protect you. Find an attorney that has the transaction experience and in many cases they will partner with you and your trusted attorney.

Accountant/Accounting Firm - Your accounting firm can help you and your attorney structure the deal to help minimize taxes. It is also helpful if your accounting firm has assisted other owners in the sale of their business. They can be very beneficial in assisting during the due diligence process as well as working with you to understand the tax implications of your transaction. In the end it is all about what you take home from the sale of your business.

Financial planner - Hopefully you have worked with a financial planner during the early stages of your planning process to understand how much you need to take home from the sale of your business to fund your lifestyle after selling your business. Now is the time for your financial planner to get involved with managing the proceeds from the sale of your business. They are a key player to help you achieve your lifestyle and legacy goals.

Business consultant - A business consultant can help you in the preparation of your business prior to going to market, but they can also help you through the sales process. Business consultants that have worked transactions can help you manage the due diligence process, answer any questions that arise during the process and can help you work with your other advisors to make the process as enjoyable as possible. Selling your business is very stressful and having someone that you can confide in will help ease the process.

This is the most important transaction of your career, so get the right team together to help manage through the process. Take advantage of their experience in managing the transaction process to increase the chances that you end up with a positive outcome and experience. More in-depth information is available in my book, "Owner Exit Planning: Leave On Your Terms"

Larry Turner is CEO of Roundhouse Advisors, Inc. and has over 25 years experience growing, starting up, repositioning, and revitalizing organizations. Roundhouse Advisors is a consulting practice focused on helping businesses increase enterprise value by managing pain, growth and owner exits. Larry is a consultant, public speaker, and the author of “Owner Exit Planning: Leave On Your Own Terms." For additional information visit www.RoundhouseAdvisors.com

Owner Exit Planning: The 7 Things You Must Do Before Putting Your Company On The Market: Part 4

This is part four of a five part series on preparing yourself and your company for sale to maximize your outcome.

Preparing your company for sale includes more than just improving the value drivers and fixing the value detractors in your business. It also means getting your overall house in order to be the best product on the market. Business owners are all getting older, and those that missed going to market before the recession hit in 2008 will all be looking for an opportunity to sell their business when the economy improves.

This means that there will be a huge number of businesses going on the market over the next few years, and those that are best prepared will sell faster and get better prices than those companies that are not prepared. Be ready in all areas of your business, and specifically during prospective buyer visits and due diligence.

Visits and due diligence is an opportunity for the buyer to look at your company and all areas of your business. The process is similar to staging your house for sale…those that are staged better sell quicker and at a higher price. That is where “getting your house in order” comes into play in your exit planning process.

Get your house in order

Getting your house in order involves focusing on those last few areas in your business that will be reviewed by a prospective buyer. In many respects, these may be areas of your business that should have been kept up over the years but you never really got to them. They may be general housekeeping, paperwork or legal issues.

You need to present your business in the best light with prospective buyers and the following are some examples of areas that could trip you up:

Some Examples:

Pick up your office – You will be bringing prospective buyers through your facility, so make sure it looks the best possible. This includes cleaning carpets, purge files of old information, organize your production or development facility, and have all employees pick up their areas. Prepare for this process just as you would an important customer visit to your facility. First impressions are important with the buyer.

Clean up legal issues – Take care of any pending or current legal disputes in your business. This can kill a deal or at the very least provide negotiation power to the buyer. This includes making sure all software in your business is properly licensed.

Normalize earnings early – Most privately held businesses legally manage their profits to minimize taxes. Adjust or normalize your earnings well before going to market. The last thing you want is to be in a weak position at the negotiation table, and starting this discussion with talk of adding back profit due to your business practices immediately puts you in a weaker position.

Eliminate baggage – Settle disputes with your employees, customers and suppliers before going to market. These areas will surface during due diligence and could hurt your chances of maximizing the price you receive at the time of sale.

These are only a few areas to review and fix prior to going to taking your company to market. By reviewing those areas in your business that represents risk to an outside buyer, you can be prepared for the due diligence process and maximize the value you receive from the sale of your business. More in-depth information is available in my book, “Owner Exit Planning: Leave On Your Terms.”

Coming up: Managing through the process.

Larry Turner is CEO of Roundhouse Advisors, Inc. and has over 25 years experience growing, starting up, repositioning, and revitalizing organizations. Roundhouse Advisors is a consulting practice focused on helping businesses increase enterprise value by managing pain, growth and owner exits. Larry is a consultant, public speaker, and the author of “Owner Exit Planning: Leave On Your Own Terms”. For additional information visit www.RoundhouseAdvisors.com

Owner Exit Planning: The 7 Things You Must Do Before Putting Your Company On The Market: Part 3

This is part three of a five part series on preparing yourself and your company for sale to maximize your outcome.

Preparing your company for sale includes more than just improving the value drivers in the business. There are a number of areas a prospective buyer will review during the sales process that are not readily visible when they make the initial offer. These areas will be looked at in depth during due diligence when placing your company on the market for sale.

Due diligence is an opportunity for the buyer to look deep into your company and review all information, processes and structure of the company that was presented during the first part of the sales process. This is where those areas that were neglected over time come back and can negatively impact the price you get for your business. These areas make up the value detractors.

Manage the Value Detractors

The value detractors include areas of your business that are reviewed during due diligence by the buyer and can represent risk to the new owner. Risk comes in many forms and can include too much revenue concentration in only a few customers, aging IT infrastructure, or lack of process in the organization. These are only a few areas that can cost a new buyer additional money after purchasing the business, or can represent risk in the revenue stream.

Most offers are based on a multiple of the free cash flow in the business, and any risk to the revenue can impact the purchase price a prospective buyer is willing to pay for a business. You need to objectively review your operation and identify those areas that a buyer would view as risk to their investment.

Some Examples:

• How secure is the revenue in your business with you gone? Many business owners are the key interface with customers, and when gone represents risk to someone else running the business. In this example it is critical that you have already transitioned many of the key sales activities to others in your company, so you can demonstrate your lack of involvement in the day-to-day sales efforts.

• Do you have a procedure manual that outlines the processes of your organization, or do key employees have the process in their head? The risk to a buyer in this case is from employees leaving or out for extended periods of time. Focus efforts on developing a procedure manual that outlines the key areas in your business and defines the process flow of your organization. It should be written in a way that would allow a new employee or temp to read a section as it relates the job they are doing and perform that task with some guidance. A buyer will look at the procedure manual as a road map to provide direction in the operation.

• Is your IT infrastructure outdated? The buyer will look at this area as an additional investment they will need to make within the first 12 months of purchase. Have your IT infrastructure reviewed approximately 18 months before going to market and update the equipment and software that is outdated. By managing this upgrade far enough in advance of taking your company to market allows you to make smaller monthly investments, as opposed to one large investment. This approach helps you manage your cash flows during the time leading up to your liquidity event.

• Too much revenue in too few clients. You have a problem if only a few customers make up 10% t0 15% of your total revenue. This lack of diversity represents risk to the new buyer in the security of the future revenue and cash flow in the business. This is also a difficult item to fix in a short time frame. The only solution is to increase sales with other customers to lessen the impact of the large customers.

These are only a few areas to review and fix prior to going to taking your company to market. By reviewing those areas in your business that represents risk to an outside buyer, you can be prepared for the due diligence process and maximize the value you receive from the sale of your business.

Coming up: Ready your business for market by getting your house in order and managing through the process.

Larry Turner is CEO of Roundhouse Advisors, Inc. and has over 25 years experience growing, starting up, repositioning, and revitalizing organizations. Roundhouse Advisors is a consulting practice focused on helping businesses increase enterprise value by managing pain, growth and owner exits. Larry is a consultant, public speaker, and the author of “Owner Exit Planning: Leave On Your Own Terms”. For additional information visit www.RoundhouseAdvisors.com