10 Things That Build Business Value!!

 1. Establish your brand in the marketplace.

 2. Develop your operations manual. Put systems into place that will let your business maintain or grow in your absence.  

3. Be vigil in keeping your books current; showing accurate, clearly identified and consistent records.  (Remember, besides it ultimately making you more successful, a potential buyer or auditor might be looking at them any day.)

 4. Expand your individual client lists, your networking sources, and especially protect your reputation. Your reputation and your company’s reputation are identified as being the same.

 5. Take care of your intellectual property: trademarks, patents, etc.

 6. If you have any outstanding tax issues, take care of them ASAP.

 7. Give a good first impression – the business should always look clean, businesslike, and attractive when anyone walks in.  Specific maintenance duties should be included in every job description, e.g. keeping trash emptied, personal items out of sight, etc.

 8. At least quarterly, review that your legal paperwork is being maintained.

9. Update your business plan weekly or monthly as well as your expected future projections.  Maintain your business plan as if a buyer might walk in the door any day with an outrageously large offer – IF you can hand it over your current business plan and books for review Right Then. 

 10. Obtain a realistic picture of the value* of your company, noting that specific actions you take with the above can increase its value. Despite all of the things you hear, there are no set formulas in determining your company’s value.

 *Determining the value of a business will depend upon several things including, but not limited to, company assets; net profits the business is showing now and in the past; feasibility of further growth or expansion of the business; location.   If the goal is to sell – the recent sold price other area businesses in that industry will need to be taken into account, but only as one variable.

 Compliments of Lew West Business Consultants
http://www.lewwest.com/   Blog – http://www.mynext30.com/

 2.  Be aware of the difference between what a client “perceives” as the product value and its “actual” value.  Once you determine the break-even cost (actual value) of your product, you have established a base price. Now you need to focus on establishing the “perceived” value of the product to the client. The client usually knows the market price range of the product, so your job is to show the client your enhanced attributes of the product.  You want your client to begin to “feel” that you are offering a product of greater value than what is on the general market.  If you have developed a strong list of benefits and advantages to serve their need, they will “perceive” your product as worth more, and will be willing to pay more for your enhanced version. These unique attributes could possibly be an improvement you’ve added, or something your competitors have failed to point out, or even showing them how to more efficiently use your product to better fill their need.

3.  Peer image often influences product purchase.  The “in thing” has a great deal of emotional appeal. Know your target market and strive for an innovative way to tap into that perceived need.

4.  Competing on price. Be sure you know what the pricing for your product, or similar product, is within the general market. If you undercut the going rate too much, not only are you undermining your own marketplace by diminishing the going price, but the backlash from your competitors might trigger a price war.  No one ever wins a price war, and the one that ultimately comes out on top will be the larger company(s) with the deepest pockets. A idea is to not open that Pandora’s box at all.

5.  Play fair.  Many times we get so involved in breaking our services into multiple “options” we lose sight of how the client may respond. Yes, many times more can be collected by doing it this way, but keep it to a minimum. No one likes to be “nickel and dimed” so be careful not to over-do the options and their escalating costs. 

Even though options can give you leverage as to what you will or won’t do without additional payment, if the client ultimately feels you aren’t playing fair, and not showing proper empathy for their needs, it will hurt you in the long run.  You may consider it fair pricing, but if the client doesn’t – you lose.

Compliments of Lew West Business Consultants
http://www.lewwest.com/   Blog – http://www.mynext30.com/

You have a new “Concept” or “Idea”.  Congratulations!  Now what do you do?

If the acquisition of capital is your primary goal for your business, then let’s take a step back and see what you need to do.

Many entrepreneurs become so excited with their New Concept they mentally start banking their money – but oops, they don’t have any money.  No problem. They’ll shop their great new concept to the highest bidder, get enough to pay-off their debts, hire the necessary personnel to run the new piece of business and still have a healthy operating budget.  Sounds doable, right?   

And Why Not?  It seems you read about these kinds of successes all the time, don’t you!? 

While you should “never say never”, the reality of the odds playing out, as described above, are right up there with winning the national lottery.  The good news is there are ways to better those odds.

1. Specifically, know who you are going to approach to request funding.  Gather all of the contact information and as much background knowledge as possible about the company and/or the contact person you will be approaching.

To keep rejection to a minimum, search out those investors who have an interest in your industry and specifically your niche focus.  Just because an individual or group has money to invest doesn’t mean your particular niche is of interest to them.  e.g. – if their passion is to build a station on the moon, don’t ask them to fund your fishing rod conversion system.  You will only suffer an unnecessary rejection.  It isn’t personal; the Investor just isn’t interested in your concept no matter how well you have developed your concept and financial information.

Generally the funding options are:

• Banks
• Third Party Investors (includes Angel Investors and industry Investors)
• Venture Capitalists  (be very clear on what they want in return from you)
• Private Lenders  (usually family or friends)

2. Some of the Basics you will need to have ready:

If your “concept” or “idea” is to be taken seriously by any of these investors it must be verified with a well developed business model/plan.  This plan includes how much capital you are going to need and specifically how you are going to use it.  

When you are able to catch an Investor’s interest in your business proposition, the first thing they will do is to review your supporting financials in order to understand if this business proposition supports a sustainable and scalable investment opportunity (on-going profitable growth curve).  If your numbers pass their scrutiny, they will then – and only then – want to:

• better understand the product offering,
• investigate the potential investment opportunity more fully, and
• review your management team. i.e. -do you and your key personnel have the ability and expertise to make it happen?

Your well developed business model/plan will be a major key in the investor’s decision as to whether your concept is worth pursuing.

If you have shown the Investor realistic financials with verifiable backup information, they will then want to review a well developed Business Model/Business Plan.   If they are going to invest their money into your concept, they want an in-depth understanding of the business.

Remember, their business is funding companies with the expectation of receiving a profitable return as soon as possible. They aren’t interested in dreams and they don’t like surprises.  

Great things can happen if you put your concentrated effort, energy and diligence into the development of your business plan.  Pick the Investor with the most empathy and appreciation of your concept, and present realistic financials knowledgeably. 

Build the odds in your favor.

Compliments of Lew West Business Consultants
www.lewwest.com   Blog – www.MyNext30.com

I am often amused when someone claims they don’t need a BP (Business Plan) because they “fly by the seat of their pants”, or “a BP is a waste of time”; then smugly point out they have never had a BP and they are so busy they can’t keep up.  To me, that’s a sign they are in the middle of a wild fire instead of a controlled burn. One day they are going to burn out.

To have a successful business it is necessary to keep track of income; cost of goods; general expenses; payroll; commissions, principal’s draw – in other words;

• finances;
• how a larger segment of the marketplace can be gained and maintained;
• employee management;
• distribution – to name a few. 

Whether they are keeping this information in their head, or delegated to trusted employees, they are working a rough version of a BP.  Unfortunately without a clear vision of what their company will look like at maturity, they will never get there.  The entrepreneur will never know when to step back or how to set up the company to flourish on its own.  Instead, the entrepreneur is establishing a guaranteed, forever Job.

Every active company has some kind of a BP, even if they don’t have it in an organized format. It is also a fact that without a tangible interactive plan they never realize the full potential of their business. There will always be some aspect of the business being neglected because the owner becomes so engrossed in just one or two areas that the overall health of the company is forgotten.

The same holds true for someone with a great business idea.  Even though owner can’t imagine how it could possibly fail, now is the time to check that concept with real numbers from the marketplace.  Even if they are convinced it will be profitable, until the marketplace is surveyed and the numbers are run, they are only projecting hope, not reality.    

A great deal of money can be saved by developing an informational BP that lays out an outline of the business, including costs and income.  Caution should be taken here.  Often an entrepreneur is so eager for it to work, there is a tendency to skew the numbers.   Now is the time that it is imperative to be objective and honest.  Make the business show You how it can be profitable.  If you can’t see a profit on paper now, how do you expect it to be profitable in the future? Better to spend a little money now in finding if the company can be profitable than for you to invest your life’s savings only to lose it all – including the capital seed to start a different business.

Entrepreneurs are not gamblers; true entrepreneurs only take calculated risks.

Compliments of Lew West Business Consultants
www.lewwest.com   Blog – www.MyNext30.com

In case you hadn’t noticed, many articles, experts, textbooks, etc. tell you that you are “confused” if you don’t subscribe to their particular definition of business terms.  I too have my set of definitions, and because this is my Blog you will find them listed below.

Please understand that my definitions, along with everybody else’s, are only words.  To each of us, in our attempt to convey those illusive, intangible concepts of business success, believe our words best describe them. 

The important thing, however, is that You are able to grasp the basic key concepts necessary to drive your business to its greatest potential.   

My favorite quote is, “If you don’t know where you are going, then you are probably already there.”  Becoming as clear as possible as to “Where You are Going” is often the difference between success and failure. 

I’m for success – by any definition.

 #1. Strategy or Action augmentation:

Here you utilize your “big picture” goal and begin enhancing that picture with the information accumulated in #1 & #5. From this collection of information, you can initially set the course

• for your business,
• its marketing direction and
• define the milestones to “make it happen”! 

 Bonus: Ultimately you want your strategies implemented in a way that your company is making money without you even being there – the quicker the better.

 #2. Financial Tracking: 

All income needs to be tracked daily – e.g. cash-flow and expenditures, sales, distribution, payroll and benefits, assets, inventory – in other words anything to do with what is happening to your company’s money.

 Bonus: Whenever funding is needed, you can create the requested documentation from your operation and financial summaries. 

 #3. A Marketing Plan is only one piece of your Grand Plan – albeit a very important and visible piece.  A Marketing Plan promotes your product to a specific segment of the marketplace.  By generating excitement and recognition for your product or service, Marketing’s role is to drive customers in your door. Once in the door, you close the sale, deliver their order and collect your money. 

 #4. Sales:

While Marketing creates the customer excitement and desire for the product or service, Sales does the actual close of the sale and collects the payment.  Although Marketing and Sales work closely together, their purpose and execution is very different.  Marketing creates a positive marketplace enabling Sales to utilize Marketing’s materials and created “need” to close the sale with individual clients.

 Bonus: Marketing generates interested prospects, Sales convert prospects into clients.

 Customer Service and Customer Retention are an important part of Marketing and Sales.  Questions and problems must be handled promptly and cheerfully along with scheduled on-going customer follow-up.

 #5. Operations:

Orders need to be filled quickly and efficiently so customers will be happy to reorder again, and become long-term clients. Quality of service while keeping costs in line is a major responsibility of Operations.  Depending upon the company structure,  employees are usually accountable to Operations.

 Bonus: Operations implements systems/procedures building toward company maturity while maintaining a unified and coordinated staff to achieve the company’s goals and purpose. 

 Congratulations! You now have a Working Business Plan!  All of the Steps listed #1-#5, are only segments of your total “Business Plan”.  Together the segments lay out a coordinated, tangible picture of your business, adjustable to the changing needs of the marketplace.

 Bonus: During this process, you have run various scenarios illustrating what will work and what won’t, and what would have only cost you time and m

By taking these preliminary planning steps,  

Your business will be set-up for long-term success.

Compliments of Lew West Business Consultants
www.lewwest.com   Blog – www.MyNext30.com

The first business owner fully understands the numbers required to run a company. He knows to the penny the start-up and general expenses, cost of goods, and the break-even point. He sees the trends and how the customers are responding to the company’s marketing and the employee efforts.

This financially focused business owner can explain and justify any numbers to the bank when additional funding is needed. He knows what is going on in the marketplace, how his business fits within his market niche and can readily adjust to keep the focus on that market. That’s a good thing, right?

The second business owner considers his primary need is to get his name and his brand out there. In his grand plan, exposure is the difference between success and failure. This marketing business owner is constantly on the street, or on the road, publicizing his business and making contacts. Where most of us encounter him is at every networking event, ribbon cutting, open house, committee, street corner ….. He seems to be everywhere. His potential customers are becoming familiar and comfortable with him and his business.

This marketing business owner’s logic is profound. Without customers, you don’t have a business. Obviously this marketing business owner has put together a well developed marketing strategy, thus he is going to be bringing in an increasing number of customers. That is good thing, right?

Both business owners are applying a winning strategy to their business – BUT ….

Let’s go back to the Numbers business owner. As knowledgeable as he is, his viewpoint is from the inside of the business. Basing everything on numbers, he does not quickly or easily implement new ideas. Even with the fluctuations in the marketplace, he continues to improve his current structure, but not make any major adjustments. It is more comfortable to stay with variations of the “tried and true” actions of the past.

Numbers are very necessary in the building and maintenance of a profitable company, but people and vision are also critical for long-term growth and success.
With that said, does that mean the marketing business owner has the right formula? Not necessarily.

The problem with the Marketing business owner is he is spending all of his time, energy, and focus outside of his business. Again, assuming this marketing business owner has put together a well developed marketing strategy, he is going to be bringing in an increasing number of customers. So what happens when his great marketing starts turning into larger and multiple orders?

Without competent order processing, fast and efficient distribution, inventory management, excellent customer service, and policies for repair and return in place, all of his time, effort, energy and expense with have been for naught.

Customers are not forgiving. If they have problems with submitting their order, receiving delivery in a timely manner (their concept of “timely”), or poor customer service, they won’t spend the time to order again.

Best advice for both owners is to closely examine the other’s procedures and duplicate them as much as possible into their own business. If they can’t do it themselves, this is a signal to carefully select an individual or company to develop that part of the business for them.

Both business owners are to be commended in utilizing their greatest strengths, but no one is perfect at everything. Recognizing this fact is what gives life to an exceptionally successful business.

Compliments of Lew West Business Consultants
http://www.lewwest.com   Blog – http://www.mynext30.com/