June 2009

7 Ideas Owners Must Consider About Succession Planning

by Guest Author on June 2, 2009

Statistics show that 70% of entrepreneur-owned businesses do not survive the founder. Did you work this hard, for this long, to see your life’s work implode?

One of the most important features about good marketing process is its impact when it comes time for the owner to move out. Whether you plan to sell out or pass the business on, having a system installed that generates leads and converts them to loyal, profitable clients will significantly improve your business’s value.

Your marketing system should include a clear statement of how you are different and better; a complete sales kit filled with persuasive reasons to do business with you; a lead-generation process that includes the internet, advertising, public relations and referrals; and a process that effectively and efficiently converts leads to loyal customers.

Succession planning is more than just marketing, however. Here are seven other areas you need to consider:

1. Retirement isn’t death. Small business owners don’t plan for succession because they genuinely hate the idea of not working—no control, no work, no identity …so only about one quarter have a plan. Not planning leaves your staff and their families incredibly vulnerable.

2. Retirement isn’t just deciding not to go into the office anymore. It’s ensuring you have enough money to retire on from the sale of your business. Will your business even carry on or will you sell it? Who’s going to manage the business? How will ownership be transferred?

3. The biggest business “killers” are taxes and family discord. So succession planning is about management, ownership and taxes. Will an owner manage the business or not? Will all owners have the same number of shares? How will you reorganize the company to reduce your taxes?

4. Outsource. If you’ve been successful, you already depend on a network of help to manage your financial, tax, and legal; maybe even marketing, distribution and HR issues. Small business owners are typically too emotionally involved to make good succession plans, so let someone else you trust do it for you.

5. Train and mentor your successor(s). Okay we know you hate this one—who has the time? But how can you expect your business to continue to thrive without you if you don’t train? And remember, you’ll be throwing away your life’s work if you don’t.

6. Start business succession planning early. Okay we know you hate this idea too. But five years in advance is good. Ten years in advance is better. Many business advisors tell budding entrepreneurs to build an exit strategy right into their business plan.

7. Read. You owe it to yourself, your family, your employees and your suppliers to know the issues that will affect them once you’ve left.
Canadian Resources

An overview by the Financial Post of retirement planning, after the sale, taming your tax liability, financing the sale, and accurately evaluating the business.

“Investing in Your Future: Building a Succession Plan” to members of the Canadian Federation of Independent Business.

Transition planning tips from the Business Development Bank of Canada

“Closing or Selling Your Business—A Succession Plan Info-Guide” from the Canada-Ontario Business Service Centre. Includes toll-free numbers to get detailed information on legal and tax requirements, plus helpful information.

ducttapemarketingbadge Ken Burgin and Elizabeth Walker are the Marketing Masters (www.MarketingMasters.ca), a full-service marketing and advertising partnership that helps build busy businesses. Send your ideas on How to Thrive in Times Like These to liz@marketingmasters.ca or ken@marketingmasters.ca, or call 1-866-908-5720.

web: http://www.marketing,masters.ca
blog: http://thebuzzwithkenandliz.blogspot.com/

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TXTG FSHNCY

by Steve Lange on June 2, 2009

I try not to get too upset by the texting-based trend of contracting perfectly good words to a rebus of sometimes indecipherable characters. But mostly I just shrug it off because I don’t use those gadgets and tools that specialize in reducing communication clarity.

But sometimes I get a chuckle or good laugh out of the concept. Just the other day I laughed at the May 27 installment of Adrian Raeside’s comic The Other Coast. There the cell phone texter had eliminated almost all the vowels. “omg u r my bfflnmw u qtpi.”

The next day in Working Daze, by John Zakour and Scott Roberts, one of the characters says that she’d save more time if she eliminated all the consonants instead. “AY I EE O EE OU O”.

In keeping with the trends, and moving them forward, I think I’m going adopt both these strategies, removing vowels and removing consonants for my texting, blogging, IMs, and the like. So, you’ll know it’s me when you receive the cogent, succinct, efficient
“

.”

I look forward to your response, in kind.
Steve Lange
Senior Editor
Palo Alto Software

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BizEquity: What's Your Business Worth?

by Tim Berry on June 2, 2009

I’ve posted about BizEquity before on my Planning Startups Stories blog, but I believe it belongs on this blog as well, because it has a lot to do with basic information about entrepreneurship.

What’s a business worth? What could the owners get for it if they wanted to sell it? What’s a reasonable estimate to use for attracting investors?

The buzzword for this is valuation. If you own a business or want to start a business, then you care about valuation and how it works. Even if you don’t now, you will later.

Businesses that seek investment need to anticipate valuation as part of the exit strategy, which is how the investors make money. You get investment now, but only if investors believe they’ll make money when the business sells later.
For estate planning, you need to estimate valuation if you deal in shares of a business for your wife, partner, significant other or children. Tax code defines how much you can give in any given year, and that depends on valuation.
Lots of people who never thought of exit during years of running a business start thinking of selling as they get into their 60s and 70s. And that means selling the business.
Valuation is obviously critical for buying or selling a business.
Not to bring up unpleasant angles, but valuation figures in wills and divorce settlements, too.

All of which brings up BizEquity.com, introduced last year as “the Zillow.com of small business valuation.” Take a look at it. You can search your ZIP code for estimated valuations by type of business. You can search for your specific business by name. Most interesting, and a new feature, you can sign up and run through a valuation based on your business numbers.

I did a test run over the weekend, by inventing hypothetical numbers for an internet company. I had it started just three years ago, growing sales to $350,000. It had little or no profits, a bit of debt and a lot of dependence on the owner (the site’s auto wizard asked me the right questions). The estimate ended up at about $275,000, with interesting variations above and below that depending on how I set several sliders. You probably can’t read the details in the shrunken illustration below, but the sliders are asking how favorable the location, the level of competition, and how you foresee the future financial performance.

Bizequity input

With the way the sliders work, you can see instantly how valuation would change with different settings

Obviously, these are just estimates. As with estimates of house values, before you list your house, these estimates give you some idea but are far from exact. They’re based on some standard formulas that estimate valuation based on factors such as sales, profits, assets, liabilities and so forth. Don’t even dream of using this for a tax-related valuation, which requires a certified valuation professional; but it’s still a useful first look.

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Twitter and Small Businesses

by Steve Lange on June 1, 2009

Should your small business use Twitter? Corey Perlman has the answer for you.

Yes…and no. Allow him to explain in his Mplans.com article, Should a Small Business Use Twitter?.

Corey Perlman, author of the #1 Amazon.com bestseller eBoot Camp: Proven Internet Marketing Techniques to Grow Your Business, is our newest Mplans.com contributing author. In his debut article with us Corey outlines a program to help small- and medium-sized businesses determine if Twitter is a good social media fit in their marketing programs.

Once you’ve completed the test program, evaluate how Twitter is working for you. Bottom line: is it worth your time? Just like with any other marketing strategy, you have to evaluate and be willing to abort mission if it’s not producing results. That might be the best time-saving decision you’ll ever make.

Corey Perlman is the President of eBoot Camp, Inc., an education company that provides people with the knowledge and skills to effectively market their business on the Web through interactive books, seminars and workshops. Since 2005, Corey has conducted over 200 eBoot Camp workshops and seminars to public audiences as well as small- and mid-size companies all over the United States using layman’s terms and learn-by-doing approach. Corey’s book, eBoot Camp: Proven Internet Marketing Techniques to Grow Your Business, hit #1 on the Amazon.com bestseller’s list in the marketing, retail and ecommerce categories.

Click here to read the article on Mplans.com.

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Win $100K to Boost Your Business In 2009

by Tim Berry on June 1, 2009

Now is a great time to develop your entry for the annual Forbes.com Boost Your Business contest. First prize is $100,000, which comes as $50,000 cash plus $50,000 in advertising.

This is your chance. Unlike the MBA-level contests sponsored by major business schools, this contest is open to just about any company. To enter your business, you have to have at least one salaried employee, be incorporated (LLCs, LLPs and LPs are OK) for less than five years, be a for-profit company and have annual revenue of less than $5 million. You can click here for more contest details.

Speaking from both the judge and entrepreneur points of view, this is an especially interesting business plan contest, for two reasons. First, it’s open to more or less everyone, while most of the business school contents, not surprisingly, have academic requirements; second, it’s for existing businesses, not just startups. I’ve been involved with this contest since last year, and I love it. Good people, good plans and good prizes.

To enter, you start with a 500-word summary, which is due as a web submission by June 30. From there you hope to get selected to give a pitch and, if you make the finals, give a pitch and answer questions from the judges. Even if you don’t win, it’s a great opportunity to focus your pitch, and a great experience.

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