Business is a Competition

I’ve not revealed this before, but earlier this year I was invited to be on the panel of judges for the “ActionCoach My Business Magazine Awards”.  I felt it was a great honour to be asked so could not refuse the request.  The task was not easy for many reasons.  The number of entrants was significant and thousands of pages of data had to be considered carefully to form an assessment of each candidate.  With most being of such an incredibly high standard, this truly made the task for judges very difficult.  Amazingly though, most of us formed a fairly similar opinion of those candidates that really stood out from the crowd.

It got me thinking about how important it is to stand out from the crowd when you’re in business, and not just to win competitions.  It demonstrated to me yet again, that it’s no accident when a business is successful.  It does become obvious to everyone when you stand out from others in business, and there is a lesson in it for each of us in business.

As a follower and regular reader of this blog, you already know that I bang the drum (rather loudly) about business succession, and I do so because you are operating a business that I know you will one day hope to sell.  You’re working hard building an asset, and often you’re so hard working ‘in’ it, that you can overlook working ‘on’ it.

I want to see my followers succeed and stand out from the crowd, especially the crowd that is gathering around the ‘for sale’ post.  I’m referring to the tsunami I mention in my book “Your Business Succession”, because the average demographic age group of small to medium sized business owners are so near to retirement and are looking for ways to extract their equity to move on to another phase in their life.  With so many about to do this (80% in the next 5 to 10 years) there will be quite a crowd of businesses selling.  It will become a buyer’s market and only those that ’stand out’ from the crowd will gain the most when they exit.

You Business Succession
Leigh Riley

Too Young To Exit?  Think Again

Now before you zone out because you think you’re too young for formal exit strategies and succession plans to matter, think about these two very important points:

• 50% of business owners leave well before retirement because of factors they could not have imagined, such as dispute, divorce, disability and death.  You don’t want to get caught out in a weakened position trying to liquidate your business equity in a crowded market, so take steps to ensure you have an action plan that will keep you in control to capitalise when you exit despite your circumstances.
• Raising Capital to grow your business or release your equity when exiting your business takes time to organise.  In fact it’s damn hard for an SME like yours to get finance for anything related to business if you don’t have a clearly demonstrated and formal exit strategy in place. That means your business growth could be stifled or you could get stuck without any funding when you do leave.  Either scenario is one you definitely want to overcome well beforehand, so get ready now.

Time For Your Business To Stand Out In The Crowd!

The  reason I’ve commenced a series of FREE educational webinars, is so you can see what you can do to ’stand out’ and make the difference for maximised cash flow and profits, with an enhanced  business valuation and a strategy to ensure you get paid what you deserve for your lifetime of effort in business, through most circumstances.

I’m pleased to reveal the finalists have been chosen for the ‘ActionCoach My Business Awards’ .  You may see those that ’stood out’ for yourself by clicking here.

Here’s to your business success and profitable exit!

Leigh Riley

How can You Boost Your Business Valuation?

Increase Your Business Acquisition Attractiveness by:

• Developing a market presence that is desired by potential buyers
• Obtain critical mass with demonstrated consistent growth across niches
• Maintain higher margins than your competitors
• Add value with a management team and systems
• Create effective planning that aligns your business motives with your employee’s actions

If you haven’t already done so, make sure you register yourself to attend the FREE Webinar I’m running so you can learn all you need to know about how to BOOST your Business Valuation.  I’ll be interviewing Business Valuation Guru, Sean Hutchinson live from San Francisco. Sean excels in explaining the levers you can control to increase your business valuation and I’m very certain you will learn a lot from listening to him. Register for

Date: Thursday 8th September, 2011
Time: 11.30am
Register Now for the FREE webinar at http://yourbusinesssuccession.com/bizval-webinar1.php

You can’t afford to miss this opportunity to learn all you can about how to BOOST your business profits and valuation.

Here’s to Your Profitable Business Exit!

Leigh Riley

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How can You Boost Your Business Valuation?

Here is a taste-test of some of the items to be covered in the FREE Webinar I’m running on:
Date: Thursday 8th September, 2011
Time: 11.30am

You will discover how to BOOST your Business Valuation when I interview Business Guru, Sean Hutchinson, live from San Francisco. Sean is sensational at explaining the levers you can control to increase your business valuation. You can Register Now for your place at the FREE webinar at http://yourbusinesssuccession.com/bizval-webinar.php

In this post, we will discuss How can you Increase Earnings in a way that increases your business market valuation?  Here’s how:

Lever One:

Build a Robust Financial History for your business by:

1. Increasing sales, but not just any sales.  Increase the sales of your products and services that add the most economic value to your business.  It’s worth spending the time to understand which of your products and services are the most profitable to your business.  Making more sales of products and services that are not overly profitable doesn’t make good sense.  If you want to BOOST your business valuation, concentrate on increasing sales where it counts most.
2. Lowering cost of goods sold means taking control of the input costs of production of your products and services, to increase profitability.  You may want to renegotiate with suppliers to lock in lower in-put costs. If your business sells services, consider how you may reduce costs by making more efficient use of lower cost labour and materials. Segmenting the costs of your service offerings will allow you to understand which of your goods and or services provides the least and most economic benefit to your business.
3. Controlling operating expenses Segmenting the costs of your service offerings will allow you to understand which of your services provides the least and most economic benefit to your business.  Once you can clearly define the most profitable products or services sold by your business, you will be in the position to make decisions about how your business will continue forward.

Timely Factors: don’t leave it ’til the 11th hour

Understanding fully the levers that you can control and manoevering them to boost your business valuation, can take time.  For some strange reason, business people too often think they don’t need to worry about it until the moment before they exit. Here are the important reasons why that’s faulty thinking:

More than half of business owners will be forced from their business due to factors they could not have imagined (statistics show 51% leave due to sudden and unplanned events).

• The sudden event means there is no time to prepare; and
• When you’re vulnerable due to unplanned events, it leaves you without power to negotiate

This means you are forced to be a ‘price taker’ and to accept whatever is offered without question.

The time it takes to build a business of value means it is not something you can leave to the last minute or just prior to exiting.

Business Boosters

In the next post of this series, stay tuned for: “How Can You Increase Earnings in a way that increases your business market valuation”, I’m going to reveal the 6 risks you must overcome in your business if you are to increase your business market valuation.  You’re going to be surprised at how large a part mitigating risk in your business will BOOST and contribute to your business valuation.

Until then, make sure you register for your FREE place at the Webinar to be held on Thursday 8th Septemeber 2011 at 11.30am. You can’t afford to miss this opportunity to learn all you can about how to BOOST your business profits and valuation.

Here’s to Your Profitable Business Exit!

Leigh Riley

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How can You Boost Your Business Valuation?

This would have to be the most commonly asked question by business owners preparing to exit.  Buyers are scrutinising more carefully than ever before, so you would want to pay attention to this blog series. The factors impacting your business valuation can seem extensive, which is why I’m running a FREE 45 minute Webinar to explain in simple terms on Thursday, 8th September 2011 at 11.30 am.  You can register your place FREE by clicking here.

FREE Webinar to find out How To BOOST Your Business Valuation!

At the FREE Webinar, I’ll be interviewing Business Valuation Guru, Sean Hutchinson live from San Francisco, USA.  I’ve chosen Sean because he is the best I’ve ever met in my 23 years experience.  Sean breaks down the individual factors without the jargon so you can clearly understand what you can do with your business to BOOST its valuation.

When you attend the FREE Webinar, you’ll discover things like:

• the levers you can easily control to maximise your business valuation
• the 6 risk factors that you’ll want to overcome
• the 3 proven methods to increase your business earnings
• the 5 ways to increase your business acquisition attractiveness
• You’ll have the opportunity to learn exactly how much your business is currently worth; plus learn
• One incredibly simple thing you’ll want to do immediately to dramatically boost your business valuation
  Places are seriously limited to this Webinar and this topic is popular, so don’t delay in registering for your place.

We can’t wait to help you BOOST your business valuation!

Here’s to Your Profitable Exit!

Leigh Riley

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I’m blogging to you from New York City and about to reveal the last 3 important reasons to think like a buyer when you sell your business. These are the points I emphasized to the editor of Inc Magazine (USA) when I was asked to list the things a buyer should look for when buying a business (these follow on from the previous two blogs)

Scenes form New York City: Columbus Circle in Manhattan

8.Systems and Processes

Buyers will want to check out the way your business operates as this will provide an indication of efficiencies. If it is a turnkey operation that anyone can run; and there are established, up to date training manuals, and all staff clear about their role in the business, buyers will pay a premium for that, so it makes sense to ensure you provide this if you are to profit the way you had hoped when you leave your business. If not, be prepared to have a buyer beat you down on price.

9.Leases, Plant, Equipment and; Machinery

Terms and life of leases of your business operation are essential so buyers will scrutinize these carefully. You want to make sure there are reasonable and long term leases in place to protect the continuity of the business operation. Operational equipment must be in good order, or else a buyer will be turned off believing they may be burdened with the need to inject immediate capital to upgrade for future efficiency of the business. Tired equipment, plant and machinery can be a massive drain on profitability, so sort it out before you sell, otherwise you can expect this to be reasoning to beat down your business price.

10.Exit Planning Prospects for the future

I know you’re thinking “why would it be important to a buyer to consider their exit strategy on a business they’re about to buy and probably not planning on leaving for some time?” It’s good question, but definitely don’t discount it because buyers today are thinking to start with the end in mind. That’s because the informed buyers knows one day they will want to also sell for a maximum price. The informed buyer also knows they may not always choose when they leave because unplanned events such as dispute, divorce, disability and death are a lot more common than is thought. You can help by thinking about the exit options for them, and one way to demonstrate this is to have your own exit strategy clearly mapped out. Financiers are now also asking for this information before they lend money on the acquisitions, so it really is in your interests to have this sorted out before you sell. On top of that, it will help you because what if circumstances force you out unexpectedly? Is this a business you are going to be able to off load quickly if you need to, and at a price that is satisfactory to you. If it’s a business that requires special interest or skills, you better start thinking about it now, before you sell, so you don’t get caught out and left strapped for cash.

You can read a lot more about these points I make in the book “Your Business Succession, how to enter, execute and exit your business for maximum cash flow and profit”

Here’s to Your Profitable Business Exit!

Leigh Riley

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I’m currently in New York City and when Inc Magazine (USA) asked me to comment on what a buyer should look for when buying a business, following on from my previous blog, here’s 4 more things I told them.

View from my rooftop of NYC – Manhattan Skyline

Where is your business positioned in the marketplace?  Does it dominate a particular niche or is it floundering in the fringes?

4. Marketing

Understand the purpose and motivation of why a buyer may want to purchase your business as this will enable you to use it to your advantage. Let’s say you have a business that is uniquely positioned in a manner that could provide a competitor with the competitive advantage they long for. This could be a strategy for you to build upon toward your business exit plan and develop a superior sale price.

On the other hand if your business is just coasting along but you have identified ways to improve the performance quickly, you can offer to demonstrate this to a a potential buyer, so you may retain their interest and prevent them from insisting on a reduction in sale price.

5. Ownership Structure

This is important to you as a seller particularly in relation to taxation and a buyer in terms of future ability to raise funds for expansion plans. A seller may need to go to the expense of restructuring to ensure they’re in the best position to profit after tax. This is something you must consider before you sell with the advice from a CPA.

6. Buying the shares versus the business

Sellers are usually advantaged by selling shares of a company (under Australian Tax Law) rather than the business itself, but if a buyer accepts this, they take on the liability factors of the company that could impact them adversely in the future, so they are generally reluctant to agree to this. One way to mitigate this risk for the buyer and encourage them to buy the shares for your benefit is to provide sale terms with ‘run off’ professional, product and public liability cover (funded by you as the seller) to protect their acquisition with insurance.

7. Management and Organizational Chart

Buyers are looking for a business that’s viability is not dependent on too much of their own physical effort. As a seller your business will be more attractive to a buyer when you can demonstrate the management and responsibility structure with an organisational chart to show who in the company has the rainmaking responsibilities versus the operational tasks. A clearly defined structure indicating little or no owner reliance can provide some comfort. Further to this, show how your key employees are remunerated with attractive employment contracts ensuring staff retention when you leave. You don’t want the buyer to have any fears about the key income generating staff leaving due to a change in ownership. Remember you’re not just selling your business; you’re buying selling everything that make the business work which may or may not include the staff.

So there you have 4 more good reasons to think like a buyer when you sell. In the next blog, I’ll reveal the last 3 which may arguably be the deal makers or deal breakers for the successful sale of your business.

Here’s to your profitable business exit!

Leigh Riley

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I am so excited to report that I successfully passed the Chicago Uni CEPA program which means I am now a fully qualified Certified Exit Planner and indoctrinated into the USA industry body known as CEPA.

Class photo from Chicago Uni – CEPA Program

To reward myself I decided on a quick trip to New York City where i was asked by the editor of Inc Magazine USA to contribute to an article about what buyers should look for when buying a business.  Over the next three blogs, I’m going to tell you everything that I told them, and this is important for you to take notes, because understanding what a buyer looks for when purchasing a business does effect you.  As a seller, you can make sure your business looks exactly like the type of business a buyer would want, and in doing so, your business will become the business that stands out in the crowd, and can command a premium price. That translates to a future set for financial security.

Here’s the first three key points that buyers are looking for:

1. Proven Financial Stability and Profitability

Buyers will want to check the historical performance of your business before they purchase and will verify reports against lodged tax statements.  They want to check out your business debt exposure and understand the debtors (money owed to the business by customers) and creditors (money the business owes to suppliers etc). If buyers are applying for finance to fund the purchase, banks will require this as part of their due diligence before they will approve a loan. If banks won’t lend, buyers may look to you to provide some assistance with Vendor Finance terms or some other financing mechanism, so you’ll need to be prepared for this. Financial data will give buyers a good understanding of how well your business has been managed financially, and enable them to gauge the ability of the business to borrow for expansion and capital improvements. Shrewd Buyers know the past is not always a good measure for the future, so make sure you offer your business plan to indicate a clear direction for the future of your business. 

2. Future Prospects and Forecasts

There are many businesses that have performed well in the past, but the future looks grim for them due to technological advancements or changes in demand and market trends.  You would be wise to provide some evidence of the future market conditions. If you are not sure why this matters, think about what iPods and iTunes have done to CD sales and you may have some idea of how trends can impact heavily on the future financial viability of the business.  Understanding your business future prospects together with a legitimate reason for selling can be a huge bonus in securing a buyer for your business. Take the time to research future prospects for your business so that buyers are secure in avoiding a dead end acquisition.

 3. Client Concentration

Consider where the main income of your business comes from and how much exposure it has to each client.  If your business receives more than 20% of its income from one source or customer, this is risky for the buyer especially if there are no service contract in place to protect the revenue source when you leave.   Everyone knows that when there is a change of management or ownership, there is a possibility of client loss, so take steps to ensure the income your business generates is secured with contracts, and that income sources are sufficiently diversified.  Income sources that are too heavily concentrated in one area, leave you open to the buyer haggling on your business price.

Like I keep saying, you need to think like a buyer when you sell, because it will help you to position yourself for strength and financial reward.

Here’s to your successful exit strategy

Leigh Riley

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How Is The Credit Crunch Affecting The Sale Of Your Business?

Who would have thought that a credit crunch originating in the USA would affect your ability to exit your business profitably in another country? Yet that is exactly what can happen if you are planning to sell your business without proper preparation in the form of a holistic business plan.

Despite the best efforts of governments around the world to free up credit markets, access to credit is still tight, with financial institutions carefully scrutinizing small business access to funding and therefore limiting the pool of potential buyers for your business.

If you’re a business owner who is planning to sell your business in the near future, the chances are that your ability to sell at the price you want and deserve will be directly affected by the your buyer’s capacity to obtain finance to fund the purchase.

Financial institutions are reported to be lending on business acquisitions right now, however only those businesses with proven financial viability and profitability, together with strong asset backing, will be in the running for loan approvals.  This presents a succession problem for you as a business seller who desires to exit your business in the near future.

To overcome this dilemma you want to prepare your business exit thoroughly and cover all options to ensure your sale can proceed in your timing and on your terms.  In my book ‘Your Business Succession’ due for release on 31st January 2010, I detail literally dozens of strategies to help you avoid or overcome business succession problems, and below I offer 7 strategies to help you prepare to sell your business profitably regardless of a credit crunch.

7 Strategies To Prepare Your Business For Sale In A Credit Crunch

1.  Assemble a reliable set of financial statements, prepared by your Certified Practicing Accountant, to  substantiate at least 3 years of your business performance.

2.  Increase your business cash flow with a reliable income stream.  This may mean formalizing service agreements with your customers or introducing product or service lines to increase business income.  It may also mean reviewing the pricing of the products and services you already provide.

3. Examine your business expenses and cut costs wherever possible.  Financial institutions will be looking for proven lean operations before providing funding to a potential buyer of your business.

4. Consider Vendor Finance options that enable you to facilitate the sale with potential buyers. Remember this effectively means you will become the banker on the sale, so you need to protect your interests with assets, insurance and a legal agreement.

5. Don’t forget to consider staff within your business as potential buyers. They’re in the best position to appreciate and understand the value of your business and are usually more prepared to pay the price you’re asking.  Think about arranging an Employee Share Ownership Plan (ESOP) to facilitate a buyout by your best staff.

6. Prepare a feasibility study of the future prospects and potential of your business and target market to impress financiers and save your buyers the trouble.  As the business owner, you’re in the best position to describe your competitive advantage and can best present the value that your business offers to future owners.

7. If you haven’t had time to implement the above recommendations, consider delaying selling until you can prepare adequately. If you want the best price for your business sale, forward planning in the form of a holistic succession plan is essential to ensure your business is operating at optimal profitability.

How prepared are you to sell your business for maximum cash flow and profit?

Invest just 3 minutes of your time to complete the online assessment and receive your FREE customized report with an instant explanation and “To Do List” to complete your Business Exit and Succession Plan at http://ybsProfits.com/quiz.php

To Your Profitable Business Succession,
Leigh Riley