Thursday, 24 of April of 2014

Hi Brad, I’m ready to become a business owner but how do I know what’s the best price to pay for a existing small business?

What I want to see first is really the sales and marketing side of the business. You know, a lot of people look at their business and think it is worth a lot of money, but the reality is, if you’re a carpenter, oftentimes you’ve got to sell your business to another carpenter, because you’re not selling a business, you’re selling a job. Therefore you won’t ever get very much for the business.

Next, you’ve got to look at the business assets on very much a written down value: what are they worth in a fire sale auction? If you want to make real money, you can’t pay full price for a business.

Now when you go in to do the valuations, you’ve really got to be fairly careful that you don’t in any way, shape, or form, value it at what replacement cost would be. Its value is what you could sell it for in a fire sale at an auction.

Also, keep in mind that the average person overrates goodwill massively, when it comes to the business you are looking to buy. You see goodwill, in 99.9% of cases is worth zero, and the reason I say that is because most of the time, the clients that are coming there now won’t stay there if a) the staff, or b) the owner leave, especially if you don’t do something drastic to keep them there.

Too often, people seem to say ‘Well, you know, they’ve already got good turnover and they’ve already got good profits,’ but in most cases you’re going to lose a fair bit of that when you first take on the business, and you’re going to need to rebuild a lot of that. But the flipside of that, probably 80% of businesses that are for sale out there in the marketplace are actually running at a loss at present, and that’s a very important thing to remember.

Sure, the sellers may show you how it’s really making a profit but if you took a normal wage out for you doing your own job in the business, after that it’s not making much profit. So you’ve got to balance it up. Before you buy a business, think about it. If I took a wage out and paid someone else to do the job that I’ll be doing, would it still be making a profit and would I still get a good return on investment?

All the best,
Brad


Hi Brad, What’s the best way to motivate a sales team beyond blunt financial incentives?

I hate to state the obvious here, but if your salespeople aren’t motivated by financial incentives they may be in the wrong business. Most sales people are highly motivated by money – which is why they opt for a commission job versus a salary. With a commission job, their income is never limited and they have the opportunity to make as much money as they possibly can instead of a steady check every week.

In my opinion, without knowing the particulars of your business, if your sales team isn’t motivated by money – what could be wrong with what they are selling? Is it the product, the company, your company’s culture, your customers or clients?

If the answer isn’t in any of those areas, it’s in your hiring process.

Bottom-line, I look to hire motivation so I can train in skills, so is your hiring process delivering you people who are motivated to sell? It seems it’s not. You can direct passion and enthusiasm with training and scripting, etc. … but if at their core they lack any motivation – it’s time to hire people who are and train them in exactly what you expect from them.

All the best,
Brad


Hi Brad, I have recently been to one of your seminars and have also had a meeting with a coach local to us. I am an owner of a Ceramic Wall and Floor tiling company whose customers are building contractors and developers. As I am sure you appreciate, the construction industry is quite unique! My question is, do you feel that your systems are suited to a business within the construction industry? I can understand how some of the things that you and your coaches talk about can work in a shop situation but not sure about within my company. I am keen to use the Coaching but obviously don’t want to waste time and money!

First off, let’s clarify that the systems that our coaches teach our clients are not “our” systems. They aren’t necessarily the same systems we utilize within ActionCOACH. Instead, we teach business owners how to build and implement their own systems into their business. We teach business owners how to be generalists who can work and run any type of business, because they know the principles that work…While it’s true that not every system works in every business, for the most part systems are how you turn yourself from being self-employed to being an actual business owner. Systems are how you gain the ability work ON the business, not IN it and they are vital to your company’s long term success and growth.

Obviously, each business should develop its own systems based on its needs and what it provides to its customers, so your systems aren’t going to be the same systems that a restaurant or a flower shop would employ, but the reasons for those systems and, hopefully, the outcomes will be the same. The ideal outcome is a smoother running organization, more cashflow and profits, happier customers and more time to enjoy life for the owner.

For you, the challenge is to tailor those systems to meet your business. ActionCOACH has been helping business owners for two decades and we’ve worked with more companies in your field than I can begin to count so the systems we teach will certainly work for you and your company. You’ve just got to take Action and commit…

All the best,
Brad


Hi Brad,I would really like to take power naps at work, but I suspect my boss would frown on the practice, or mock it outright. What could I do to change his mind?

This is a very tricky question. Ideally you go to work with plenty of rest so you can do your job as quickly and efficiently as possible, so you won’t need to nap at work. I suspect that if I walked into my office and saw some of my team asleep I would have a real problem with it. That said, salaried employees tend to work long hours, more than 40 per week, and spend loads of time at the office. When you put those pressures with the stresses of home life, it’s not surprising when some team members are absolutely beat and need to shut their eyes for a few minutes.

To me, as a business owner, it comes down to results. It you hit your deadlines and get your work done with quality and efficiency, a case could be made for some power work naps. But you’d also have to be sure that other team members weren’t taking advantage and letting their work slack.

Many companies these days give their employees lounges and other areas where they can get away from work for a few minutes while at work. It’s a great way to build a pleasant culture that everybody wants to be a part of. That might be a better avenue to come to your boss with than asking to take naps from time to time. But, remember, whatever you approach your boss with, be sure you can prove the results will work for him and the business before you ask.

All the best,
Brad


Hi Brad, I need to get a handle on my company’s finances. I think I’m spending way too much money in salary and I’m having trouble figuring out where my profit (when there is some profit) is coming from. What can I do to change this and get my business on track?

The first thing I would recommend is hiring a coach but beyond that there are some strategies that you can put into place that will help you work out some of these challenges.

First, let’s talk about your payroll challenges.

You could reduce the cost of your team by putting your salespeople on a commission-only system. That way you won’t lose money through team members taking time off when they’re sick, tired, or just plain lazy. You’d also save money over holiday periods and by not having to fund unproductive times like lunch hours or Friday afternoon slow periods. The upside (for the salespeople) is that they will earn more if they perform better. If you offer outstanding rates of commission your sales people won’t be upset, they will see the chance to make more money. Nothing motivates like money.

When it comes to understanding where your profits are coming from and how to generate more of them, you’ve got to work out your costs as a percentage of sales, as this will give you an idea of how many sales you need to make before you start showing a profit.

To do this, work out how much it costs you to run your business each week. You need to include all expenses, from wages to stationery, electricity bills to rent-anything that you have to pay to keep your doors open.

Then work out how many sales are needed to cover that cost before you start to see a profit. Once you’ve identified this figure, explain to your team what is required to keep the business profitable. This will motivate team members to increase sales and achieve their goals.

Hope these tips help you get your business moving in the right direction.

All the best,
Brad


Brad, I just came into some money and some friends of mine want me to invest in their business. I’ve never done any investing before, so I’m scared of making mistakes and losing my investment. What are some of the most common mistakes made when entering into an investment and how can I avoid them?

The most important thing is to fall in love with the deal. Too many people fall in love with the business, not the deal. They like the idea of being an investor or an owner and don’t look at the bottom line. And if you’re looking to invest with friends, that makes the situation even more complicated.

Before we touch on the aspects of the relationship between you and your friends, ask yourself some hard questions about the business itself. Why is the business looking for investors? Are they looking to grow or stabilize? What is their plan and how long will it be before you see a return on your investment. How much of a role will you play in the business once you’ve invested or will you be a “silent partner”?

With most purchases you are dealing in emotion, but when it comes to investing you’ve got to put that emotion aside and look at the cold, hard truths and that may be harder to do because your friends are asking you for help.

This is a difficult situation but if you want to take that money you just came into and make it work for you, don’t rush into an investment. Take your time, do your due diligence and get all the numbers possible. If you don’t know how long it will take to get your investment back (and get a return on that investment) why would you invest? Friendship could be the answer to that question, but it isn’t the way you build wealth.

Simply put, take the emotion out of the equation and figure out whether this investment will bring a nice return on your investment or not by following through and looking at all the aspects of the deal. Then, if it makes sense, go ahead and take action.

All the best,
Brad


Hi Brad, I’ve been trying to get my career moving in the right direction but every time I take what I consider to be a big step, someone I know seems to want to chop me down and I get sidetracked. Do you think that the people you surround yourself with make an impact on your success and failures?

I believe it’s true that the people you surround yourself with play a big role in your success or failure. Support plays a big role and you need to have people around you who understand the challenges you are facing.

If you want to be successful, you have to have the right mindset for success. Too often people are surrounded with dream stealers, like the people you describe.  To help improve your mindset (and your outcomes) you’ve got to surround yourself with other like-minded people, people who won’t resent your success, but will celebrate it.

You see, success and failure tend to feed off each other, and those around you who haven’t achieved the same success that you want may try to bring you down. Sometimes, even when the people you surround yourself with are supportive they may not have the knowledge to help you get ahead, so even when support isn’t a problem, surrounding yourself with successful people is important.

Being around other successful people can push you to things you never thought possible. You will also learn a lot being around successful people and learning throughout life is a key to success.

I’m not saying you have to completely cut yourself off from the people in life that haven’t been successful. Some of these people may be important in your life and you can’t forget where you came from, but the more talented, successful people you surround yourself with, the better chance you have at being successful yourself.

All the best,
Brad


Hi Brad, how do you feel the consistent measurement of results impact a person’s ability to achieve their goals?

You hear a lot of things about how to achieve success and there are some truths, like you have to learn before you earn and you’ve got to be prepared to work hard. But you also have to be prepared to make mistakes and remedy these mistakes and the only way to do that is by testing and measuring everything you do. In that respect, testing and measuring is the ultimate key to success.

Good ideas (and bad ideas) come and go and, despite everything you know, you never really know which ideas will work and which ones won’t until you try them.

The problem is that too many people think something is a good idea and stick with it past the point of it being a positive, so they throw good money after bad and hope that their customers will eventually come around. It doesn’t work that way. You’ve got to try something, measure how effective it is and then decide the next step.

For example, you may think your latest marketing campaign was spot-on, but if it didn’t bring you enough customers and it cost you money instead of making you money, it didn’t work.

But, you might think the copy was great, or your offer was perfect and you just can’t believe that this isn’t the campaign that will take your business to the next level, so you stick with it. A few months later, you have no customers and your business is on its last legs. Don’t blame the economy or the competition or any other factors, blame the fact that you didn’t test and measure something that wasn’t working.

This is more common than you might think. Unfortunately, too many business owners don’t test and measure these campaigns to see if they are profitable for the business, so they push on, without ever really getting a return. This happens to all too many businesses in various aspects of the business and it’s the real reason so many businesses fail.

But if those same businesses tested and measured to see what truly works and what doesn’t, they’d not only last, they’d thrive. It’s really very simple; you can’t change what you don’t measure.

All the best,
Brad


Hi Brad, I have a goal of become financially free, but I feel like I’m stuck in the day to day of my business and can’t get ahead the way I want to. What can I do to gain that freedom?

If you’re like most business owners it’s typically a simple reason you feel this way and it’s a simple, but important fix you have to undertake, both in your mind and in your business.

Most business owners feel like they can do the job better and continue to do it so they don’t develop the systems or team to run the business efficiently, leaving them stuck in the day to day of working IN their business, rather than the rewarding balance of working ON their business.

If this sounds like you (and I think it does) you’ve got to learn to let things go a little bit, but more importantly, you’ve got to train your team properly and develop systems that make sense and are easy to use for your team.

It sounds like you already understand this, but business owners have to understand that the way to real wealth isn’t being self-employed, it’s owning a profitable, commercial enterprise that works…without the owner.

So lose the thought in your mind that only you can do the proper thing in your business. Then make plans to train your team to do things exactly the way you want them done. Make your expectations clear and be sure that your team understands that things are going to be different from here going forward. Set training schedules (at least once per quarter) and begin to develop systems that make sense for you and your customers.

Once you’ve done those things you’ll find that your business is running more smoothly, and you have more time to enjoy your life… and if you have trouble getting started down this path, call an ActionCOACH who has been trained to help you do just this.

All the best,
Brad


Hello Brad, In your opinion what is the biggest mental obstacle most poor and/or unsuccessful people have in common?

Mindset plays a big part in success.  In my business we talk about, are you above the line or below the line?  Above the line means you have ownership of what you do, you are accountable and responsible for what you do. On the other hand, below the line means you lay blame, make excuses and live in denial. Which of those sets of traits sound like success and which sound like failure? It’s what I call the victor versus victim mentality and many who don’t ever achieve success live in that victim frame of mind.

On the other hand, those who stay above the line don’t let anything stop them. They work through failures and keep moving toward the greater goal, without excuses and taking responsibility while others let themselves get defeated.

When we think of successful people we automatically think they are smarter, more talented, luckier or some other different and that’s what makes them successful. But it’s important to remember that success doesn’t always translate to the smartest or even the hardest working people. The people who achieve success get there because they don’t play the victim and take responsibility for their actions and their life.

All the best,
Brad


Hello Brad, Do you watch all of these shows where “experts” coach businesses? Is there real coaching going on in these shows or are they just a reality show gimmick?

I have watched these shows and I think they are a great education in business and can show what some of the coaching process is like. The problem with shows like this is that they don’t show what an intense, and long process coaching is.

Typically, in these shows the experts spend only about a week with the business. In many ways that seems more like consulting than coaching. One of the most important aspects when it comes to coaching is the length and depth of the relationship between business owner and coach.

At ActionCOACH, our coaches have been called their clients “unreasonable friend” and there is a lot of truth to that. Our coaches aren’t gone after a week. They typically work with their clients for years and keep them pushing to achieve real, positive results while creating balance.

What we see in these television shows only scratches the surface. Yes, Gordon Ramsey helps to change the culture, menu and leadership in the restaurants he helps in Kitchen Nightmares, but many of those businesses have gone out of business just a short time after the show ends because a coach doesn’t stick around and keep the owners focused on what’s really important, creating balance in life and a profitable, commercial enterprise that works… without the owner.

All the best,
Brad


Hi Brad, How do you rate profit-sharing as a way to motivate staff? Surely it has to be the ultimate in motivating your team?

While profit sharing can be a great motivator, it’s important to remember that all teams are not created the same, so some teams and team members may not find this motivational at all.

I think you’ll find some, like sales people or business development people, are more motivated by money. But others in your employ are motivated by a company mission, or a great working environment or a balanced schedule where work is left at work and home life is left at home, or maybe they have a completely different motivation… you’ve got to figure out what motivates your team and how you can use that knowledge to get more production.

Another factor to consider when it comes to profit sharing is can these things be oriented around a common profit or market share goal everyone works towards, so the entire company can reap the rewards, not just your team enjoying the profit sharing?

It can – and can help those who are motivated by these other factors to do the best job they can to move the company forward.

It really depends on your company, your industry and your overall goals and mission.

Just remember – profit sharing may be a direct benefit for some – and an indirect benefit for others.
How you position it will go a long way in getting the best performance out of your team – making your common operational goal a true team effort.

And that’s to say nothing of the fact that profit sharing means you are losing some of the reason you are in business, your profits.

So to make this work there are many factors to consider. Will your entire team be motivated by profit sharing? Does it make sense for everyone on your team to share in the profits? Is it financially feasible for you and the company and, in the end, will it make a positive difference to your bottom line?

Those are a lot of factors to consider, but if you answered in the affirmative on all of those questions, it might be a solid strategy to implement.

All the best,
Brad


Brad, How do I get my staff to show more initiative and not send every tricky customer query up the line to me?

My definition of a successful business is a profitable, commercial enterprise that works…without you…. And that certainly isn’t the case in your business.

When this problem arises, you have to ask yourself what you are doing that your team can’t do their jobs on their own. How have you trained them to handle “tricky” customers? If you don’t give them the tools to succeed, who is really to blame?

But there is good news…you can change all of this, but you have to be the first to change. You’ve got to train your team in exactly what you expect from them. You have to use scripts so anyone can handle customer questions…and you have to set up a management structure that allows you to work ON the business and not IN it, as you have been.

So what do your systems look like? What about scripts your team uses? Do they handle the objections your toughest customers would have?

When I first started out – I had a 28 point check list for FAQs and/or objections to a product I was selling – so anything that came my way I knew how to answer.

Can you do something like that for your team?

So get started on creating systems and scripts and if you really need help, find an ActionCOACH in your area that can help you put these things into place.

All the best,
Brad


Hello Brad, Some sites make it easy for small business people to farm out projects to outfits all over the world. I’m just too nervous to try it, but do you have any experience with micro-outsourcing? Do you recommend it?

If you’re like most business owners, you simply don’t have the time to get everything done or you may have specific needs to fill that your team can’t handle in an efficient and timely manner. In those cases, working with a vendor you trust can be a very profitable idea.

But keep in mind, every vendor is not the same. At ActionCOACH, we’ve worked with many types of vendors – some are great – some not so much. Some vendors you really have to stay on top of while others just get their work done with very few issues.

But since you don’t know which vendors are good and which aren’t, it is important to try to use one on a small project, and test and measure the results. If you aren’t getting the return on your investment that you wanted, move onto the next one and try them.

Don’t rush into a relationship with an outside vendor. Think of the process of finding one in much the same way you go through a de-selection process to hire a team member and be sure you’re happy before you’ve made that commitment, especially if that commitment involves a contract that would be hard to get out of.

Once you find a good vendor or freelancer, you’ll be able to go back to that person time and again and have that particular aspect of your business handled by someone you trust.   It is definitely worth a shot trying these services out, but do your due diligence and find the vendor/freelancer that is right for you.

All the best,
Brad


Hi Brad, If you were going to say something in a single statement to help people get in touch with their inner entrepreneur what would it be?

My single statement would be to dream big and relentlessly figure out what people really want.

If your focus is on only making money, you’ll never be truly successful. You’ve got to figure out what people need and how to give it to them.

In other words, how can you most positively help and impact the most people possible with a commercially viable idea, product or service that people want to buy? Remember, there’s a difference between a great idea and a great commercial idea. Just because you think something will sell doesn’t mean people want to buy it. That’s why it’s so important to sell what people need, not what you think might sell.

So … dream big and relentlessly figure out what people really want – and how you can satisfy and fulfill their wants, needs and desires in innovative ways. If you can fill a need and create a great experience in every transaction with your company, you can succeed.

So find a way to build a company you’ve always wanted to buy from, no matter what you sell – and you’re on your way to building that company – for your customers and yourself.

All the best,
Brad