Does my Business need an Advisory Board ?

May 11, 2011

In Australia there are 10’s of Thousands of businesses in the $5M to $250M turnover size.

Most have the same issues as the $Billion businesses, but they cannot afford to pay $250K to $1M+ per year for a specialist Advisory Board.

Issues companies need to address for sustainable success – whilst doing business:

Management Finance, Commercial & Legal
  • Business growth strategies
  • Increase in competition
  • Succession planning
  • Changes in business process
  • Leadership
  • Strategic vision
  • Compliance
  • Ageing management team
  • Divergent risk-appetite of Executives
  • Disconnect between Board and Executives
  • Maintaining margins
  • Keeping focus on bottomline
  • Fixed-price contracts
  • Minimising legal exposures
  • Risk vs Reward management
  • Capital to sustain growth
  • Cost of money
  • Return on Investment &/or Capital
  • Exposure to currency fluctuations
  • Mergers & Acquisitions
Research & Innovation Human Resources/Capital
  • Lead-time to Revenue
  • Innovation by competitors
  • Cost of innovation
  • Cost of NOT innovating
  • Value-creation opportunities
  • Service-line extensions
  • Product-line extensions
  • New entrants re-shaping a market (eg: Google)
  • When to innovate, and when to wait
  • Intellectual Property protection
  • Knowledge retention
  • Cost of Retention vs Acquisition
  • Motivation and productivity
  • Fixed vs Variable workforce
  • Total Cost of Employee
  • Skills transfer
  • Team morale
  • Poor internal communications
  • No sense of ownership/belonging by staff
  • “Bench” management
Sales & Marketing Technology
  • Qualifying opportunities
  • Increasing gross margins
  • Salesforce efficiency
  • Brand Identity
  • Brand Promise vs Service Delivery
  • Customer experience
  • Product/Service differentiation
  • Channels to market
  • Channel management
  • Market segmentation
  • Dis-integrated systems
  • Business/Technology alignment
  • Outdated technologies
  • Cost of ICT operations
  • In-house vs Outsourced
  • Poor documentation
  • Limited/No knowledge of systems in use
  • Not leveraging the full benefits of technology
  • Unable to make sense of voluminous data
  • Rising power & consumable costs

The list of challenges facing small to medium, and even large, businesses is bewildering.

The items covered above are only a small sample of the total array of issues that distract business owners and executives away from their main concern – which is making or saving money.

As it just happens, we offer an Advisory Board Bureau that provides you with access to all the expertise you need, when you need it, to help you navigate your way through incredibly complex issues that are taking up TIME YOU DON’T HAVE.

Expertise available through our Advisory Board Bureau

The following list gives you a sense of the expertise at your disposal as/when you need it.

  • Drop-in CEO, COO, CTO, CIO or CFO for a short-term engagement to turn around a company.
  • Development/Review/Validation of a Marketing Strategy or Plan.
  • Mentoring and Measurement of a Sales Team.
  • Mentoring of the CEO/CFO/COO through periods of dramatic change in the business.
  • Development/Review/Validation of a Business Growth Strategy or Plan.
  • Support the business executive team through the pains associated with actual business growth.
  • Oversight of the Acquisition or Divestment of Businesses &/or Business Units.
  • Creating, or Maintaining, High-Performing Teams within a business.
  • Dealing with staff, talent and knowledge retention (or high turnover)
  • Mediating between the Executive Team and The Board where there is a disconnect.
  • Development/Review/Validation of an ICT Strategy or Plan.
  • Oversight of the creation of a Project Management Office to handle all project activity.
  • Health-Check, or Audit, of specific projects that are concerning Management.
  • Specialist sector-specific advice relating to Product/Service innovation.
  • Expanding your sales channels.
  • Health-check of your IT Systems.
  • Benchmarking your Outsourced service providers against industry accepted performance.

So, we can deliver to your business the same quality of Advisory Boards that $Billion businesses have, but with a small business price tag.

How do we do this ?. We’ve aggregated many $5M to $200M businesses, who use our Advisory Board service as a Bureau, which means we can afford to pay for Top Talent by sharing the cost across many businesses.

What will it cost you …. Let’s talk to understand what you need, it could be as little at $5,000 per month.

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Revisiting the Topic of “Is 2011 the year of M&A, IPO or the return of Private Equity ?”

February 28, 2011

In 2010, I kept getting asked about this – it seemed to be the topic de jeur in many of the meetings I was in during H1 of 2010.

Check here for a link to the 2010 blog entry I wrote.

As I said last year, everybody has their reasons why they might favour one dominant approach (M&A versus IPO versus PE Funds) over the others, and ultimately that’s what it tends to be … people pushing their own wheelbarrow on the coat-tails of one of these types of trends.

Irrespective of which one ultimately dominates during 2011, there are some things we can definitely observe and therefore make some educated guesses about:

  • Mergers & Acquisitions will continue to be very busy during 2011, continuing what happened in 2010 with industry consolidations and tactical acquisitions.
  • The number of attempted IPO’s in 2010 was only a small % of the successful ones. In 2011 this % will be much higher, and also be based on a much higher number of attempts.
  • Private Equity got a bit of a run-on during 2010, but is still being brought unstuck by having to hold onto the trading operations for much longer than they used to.

Now, whilst those observations are very much SFW, there are some specifics to consider.

M&A.

  • M&A activity will actually be stronger again in 2011 than in 2010, last year it was about businesses leveraging their balance sheets again. In 2011 it is all about growth by acquisition.
  • Businesses were being picked up at 3 x EBIT early in 2010 it got better through the year – but didn’t get to the 6 x EBIT I thought it would. However, roll-ups have intrinsically greater value than a tactical acquisition and this is being borne out by some of the multiples being achieved.
  • At the larger end of town hiring of staff has become very tight, in the SME space it isn’t as tight but this is because they’re being less picky. As always, acquisition is an easier way to get the right people (then you just have to find a way to keep them !!).

IPO’s.

  • Public interest/appetite in solid businesses looking to list has continued to increase, and will do so throughout 2011.
  • Trading conditions are still very fragile in some sectors, so whilst IPO’s are a viable option again, there is definitely enough downside risk to require caution.
  • There are some heavy duty businesses looking to list, an example is the iSelect business in Australia which I gather is looking to IPO and list towards the end of 2011.

PE Funds.

  • The Facewash/Strip/Sell strategies are still not viable because of the EBIT multiples available.
  • PE Funds have had to hold and run businesses for the last 2-3 years, previously they’d have been out in 12 mths.
  • The PE Funds have now got a totally different skillset/timeframe/approach courtesy of the GFC.
  • Providing that trading conditions improve there will be a number of PE Funds looking to offload businesses during 2011, as they seek to reset their investment strategies for the growth times ahead.

Given all of the above, it will be a very active and interesting year for Corporate Advisory firms (like ours) and for those businesses out there that have a good story to tell.

Feel free to contact me if you want to explore this topic in greater detail.


Some thoughts to guide future business investments

January 27, 2011

My apologies for being absent from the blog posting world for many months – it has been a busy time, and H2 of 2010 was particularly busy for my business.

Because I get asked for advice on all sorts of topics, I’ve decided to put some pointers/tips/hints/advice all in the one easy to find place.


Some great quotes to consider, when creating the vision of your next business venture:

1. Revenue is vanity, Profit is sanity.

2. Your business idea …. If It Doesn’t Spread, It’s Dead.

3. Businesses take note …. The youth of today don’t wake up thinking about your brand.  Stop trying to buy their attention, because nowadays you have to earn it.

In a future blog posting during H1 of 2011, I will explore each of the 3 points above in more detail.


Some great links to check out, to help formulate the details about what your next business venture will be:

1. http://anthillonline.com/5-reasons-your-problems-arent-being-solved-and-5-ways-to-solve-them/

2. Bessemer Venture Partners acknowledged some of their big “misses” from the past  http://www.bvp.com/Portfolio/AntiPortfolio.aspx

3. 100 Best Small Business Podcasts  http://www.smbtrendwire.com/2010/03/01/100-best-small-business-podcasts-2010/

Some interesting technology statistics from the end of 2010 that your next business venture should be looking to exploit:

  • In the US today (2010), text messages outnumber phone calls
  • Globally, 95% of all text messages are read within 15 Minutes
  • Over 20% of people respond to a text message
  • Globally, twice as many people use text messaging as use email
  • Over 2 billion people have mobile internet access
  • 1.8 billion people will send at least 1 text message today

Some “scary” societal/economic statistics from the end of 2010 that represent some of the imbalances we should be trying to address:

  • China has 140 cities with 1+ Million residents, the whole of Europe has 35 !!!
  • The US is 4% of the total world population, but each year consumes 60% of the worlds total savings !!!
  • In Europe in 2010, there are 4 workers per retiree.  In Europe in 2050, there will be 2 workers per retiree !!!
  • In China, in 2050, there will be 450 Million people aged 60+; there will also be 100 Million people aged 80+.
  • In the US today (2010), 40% of all adults aged 50-65 are already experiencing difficulty with basic activities like walking, and climbing steps.
  • In the US today (2010) 1% of Americans received 25% of ALL personal income, this is also more than the bottom 50% of households put together.

Feel free to contact us, if you want more information, or want to discuss how your business might be able to take account of these trends to create a better business plan and a more sustainable business for the future.


Developing a Successful Strategic Plan

May 29, 2010

I thought I’d provide some guidance in an area where I get lots of questions, plus there is lots of information (too much) available to help businesses but not typically expressed in a language that they can act quickly and simply on.

This is predicated on the business having an idea about what its Products/Services are, and what are the basic profiles of likely purchasers of these Products/Services.

OK … now that you’ve developed your Marketing Plan, you need to put it into action through the Strategic Plan and Sales Plan.  The processes of Strategic and Sales Planning is completed via 11 key building blocks.

1.  Potential Problems and Company Objectives:

First spot and rank the Potential Problems in your Company Operations.  Some examples of the areas that need to be analysed:

  • Cash Flow;
  • Market Changes;
  • Competition;
  • Costs;
  • Distribution;
  • Productivity;
  • Staff Turnover;
  • Market Regulation;
  • Market Acceptance;
  • Product/Service Pricing;
  • Quality of Offerings;
  • Customer Experience Management;
  • Capital Management;
  • Control Systems and Facilities.

With your Problems identified and ranked in importance and severity, you can develop Company Objectives you aim to obtain.  These Objectives should strive to minimize and manage the identified Potential Problems, while emphasising your Company’s Strengths.

2.  Risk Analysis:

Building on your Potential Problems identified in Section 1, this Analysis produces Expected Risks.  Look at Litigation Threats, Liabilities, Regulatory Issues, Major Risks and Problems and answer the following questions:

  • When are Problems plausible to occur?
  • What is the Expected Monetary Value of a problem if it occurs?
  • What can you do to mitigate the potential risks and problems?
  • How will you deal with these problems?

The last part of the Risk Analysis looks at how you can turn these problems into opportunities.

3.  Company Strategies, Tactics and Operational programs:

First develop your Strategies, then the relating Tactics and next the resulting Programs of work.

  • Strategy is Focus.  Strategy consists of key factors that distinguish your Company and are most expected to contribute to your success.  It is important that your Company Strategies complement each other so you are not sending your business in separate directions.
  • Tactics are used to implement strategies and relate to a specific Strategy.
  • Programs are specific business activities which have concrete dates, assigned responsibilities and highly-developed Budgets.  Programs relate to one/more Specific Tactics of a Specific Strategy.

4.  Sales Strategy:

It is important to remember that sales close the doors (deals) which Marketing opens.  Sales are dealing directly with your Customers.  Develop the Sales Strategy as it specifically relates to the Marketing Strategies you have already articulated.

If you’re trying to sell something that you haven’t developed marketing strategies around previously you will just waste time, confuse and alienate customers and burn-out your sales team.

Describe and develop the different sale methods and channels you will use to sell your Products and Services.  Determine your Sales Goals and your Sales Process.

You will also need to develop an effective Salesperson Training Program and suitable Compensation Structures.  You should also look at order processing optimisation, sale milestones expectations, price maneuvering, sales leads generation, distributor roles; credit and collection policies; how Internet, social media and viral channels will be utilised; and so forth.

5.  Sales Programs:

After developing your Sales Strategies, it is time to define the Sales Programs, which will address how your Sales Strategy will be implemented.  Once implemented, you should have systems in place to measure the implementation of your Sales Strategy and support your sales efforts.

6.  Strategic Alliances and Joint Ventures:

Define your Keystone Strategic Alliances and Partnerships.

Identify and develop Co-Marketing and Co-Development Opportunities; Sales Commissions and any Product/Service Agreements.

Is the fate of your Company tied to another Company?  Explain how these Alliances help your Company and any inherent risks that have to be managed.

7.  Operating Budget — Rolling Monthly Outlook (Yearly Basis):

The Operating Budget is a Planning and Control Mechanism which also helps you develop the Sales Forecasts.

It should be on a Rolling Basis 12-month basis, including Forecasts and Actuals.

Rolling Basis means after each quarter you re-Budget for the next 3 months, based on the Actuals for the last 3 months.

The Budget should be 12 months forward looking, as well as Financial Year YTD figures.  You should have Targets and Actuals so you can track results and adjust throughout the year as necessary.

Your Operational Budget should directly reflect your Strategic Planning Goals.  Determine whether it is best to use a Top-Down, a Bottom-Up or Blended approach for your Operational Budgets.

Ask yourself:  How will your Budget be used as a Control Measure?  How will your Budget be used to judge Company, Management and Key Employee Performance?  Your Budget is a valuable tool to use for Employee Management, Education and Delegation; Managerial and Executive Goals.

8.  Sales Forecast:

Using your newly developed Sales Strategy and supporting Programs, plus your 1-Year Operational Budget, you now need to develop a 5-Year Projected Sales Summary Forecast.

This Forecast will then be used to develop your Detailed Profit & Loss Statement in the Financials Section of your Business Plan.

If you’re an existing business, you can show your Historical Sales Trends going back 2-3 years, and how this trend will continue/improve based on the new (or revised) Sales Strategy.

It is VITAL to show how you will attain your Annual Sales Targets, and the Assumptions that have been used to develop the Sales Forecast.  The key here is create a Sales Forecast that is achievable and also believable.

It is also very important to show how your Sales Forecast relates to your Market Analysis, Target Market Segments, Sales Strategy and Marketing Strategy.   This ensures your Marketing Plan is a direct influence on your Strategic & Sales Plan, which then keeps everything (and everyone) focused on the Company-Wide Strategy.

9.  Milestones Table:

Your Future Company Goals, Milestones and Strategies, along with your Marketing and Sales Program rollouts need to be measured and managed.  The key way to do this is to define milestones for each key event/outcome, as well, as intermediate milestones that get your business towards the key outcomes.  As a guide, if an event/outcome is more than 9 months away you need to have at least 2 intermediate milestones to track against (that way AT WORST you’re 3 months behind if everything is totally off track, rather than 9 months behind if you didn’t have the 2 intermediate milestones).

For each Milestone Event you need:

  • A Qualitative Description – what does the milestone look like;
  • A Quantitative Description – a measurable number that validates you’ve made it;
  • Start and End Dates;
  • Budget Numbers;
  • Individual Manager, and Department, Responsibilities;
  • Dependencies on other internal (or external) groups to meet the Quantitative measure.

    10.  Control Mechanisms:

    What Mechanisms for Control of each critical Skill and Resource are available to you?

    Is direct ownership necessary for your Resources and Skills or can they be Outsourced and at what discount/premuim?

    What contractual incentives/penalties do you have at your disposal with your critical Resource/Skill/Service Providers?

    11.  Strategic Planning Advisors:

    Strategic Planning is such an important part of running a Successful Business, you NEED to retain a competent team of Professionals, Advisors, Experts and Consultants.

    An Experienced Business Consultant can be a very important part of your Strategic Planning Team, ensuring your Strategic Plan is not just effectively developed, but most importantly, effectively implemented throughout your Company Operations.

    The key here is that good Advisors have a very broad set of knowledge and experience, particularly in terms of what works and what doesn’t.  Why make the mistake somebody else has already made, when you can avoid the mistake and still get the benefits of the learning that would have come from the mistakes.  It will save you buckets of time and money.

    After your Strategic Plan is implemented, an experienced Business Consultant can also help you ensure the Strategy stays on track, reaches its goals and is adjusted as necessary due to market changes and unforeseen problems.

    IN SUMMARY:

    Some key things to remember, as a cheat-sheet if you like, to get successfully through this sort of a process as quickly (but effectively) as possible.

    Products and Services Development:

    1. Market Analysis and Segmentation
    2. Market Trends
    3. Market Growth
    4. Competitive Analysis, Positioning and Edge
    5. Marketing Strategy:  Positioning, Pricing, Promotion and Distribution Strategies
    6. Marketing Strategy Profit and Loss Projection
    7. Marketing Programs

    The above equals an Effective Marketing Plan.

    From the Marketing Plan, you then move through these steps:

    1. Strategic Potential Problems and Risk Analysis
    2. Company Strategies,  Tactics and Operational Programs
    3. Sales Strategy
    4. Sales Programs and Alliances
    5. Company Operating Budget
    6. Sales Forecasts
    7. Milestones and Control Mechanisms

    The above gets you to a Successful Company Strategic & Sales Plan.

    Once you have the Strategic Plan and the Sales Plan, you can build a believable set of Financial Forecasts.

    With all of the above in place, you not only have a bit of a clue about what you need to do, but have a comprehensive set of plans, actions and measurements to take the entire business forward to your financial targets.

    As the saying goes “If you Fail to Plan, then you’re Planning to Fail !!!!”.

    Feel free to contact us if you want more information, or specialist assistance in this area.


    Success Leaves Clues, So does Failure

    May 15, 2010

    I’m regularly asked questions that come down to “how come they can do …… and my business doesn’t seem to be able to ???”.

    This leads me to the question … Why do some businesses achieve great success, while other seemingly similar businesses struggle forever?

    My own answer to this is to look for the trail of clues that indicate why a business has (or will) succeed, or conversely why a business has (or will) fail.

    The reality is that even though there are many businesses out there with great products and excellent services, they never seem to get beyond survival let alone achieving stellar performance.

    Below are 5 critical mistakes that will kill your business’ chances of attaining above-average success.

    I see these every day in businesses looking to sell, or raise capital, so I can say with great conviction …. If you make any of these 5 critical mistakes, your business will achieve average performance at best, and likely create a trap where you end up working long hours for mere survival, or even eventual failure and bankruptcy.

    Feel free to read on and check to see where you and your business are at.   Be honest with yourself when looking at these common, but highly-detrimental, mistakes.

    1.  Short-term focus

    Most SME business owners are focused on short-term survival rather than long-term success.  Typically, short-term cash requirements become the driver for most things that happen in the business.

    If this short-term requirement is constant, the future development needs of the business are totally neglected.  This also leads to feast and famine as the business pipeline is managed for next month rather than next quarter or next year.

    This also tends to create transactional business rather than long-term relationship business.  The cost of acquiring transactional business is 4 to 5 times higher than acquiring relationship-based business.

    If you’re spend more than 10% of your time, as a business owner, putting out fires then you’re sealing the long-term fate of the business …. and it won’t be a good fate.

    The only way to stop this sort of problem in the long term is to work on prevention in the short term, at least you will know that at some point “it will get better”.  This means taking time out to analyse what’s going wrong and planning what needs to be done to achieve the long-term goals (as well as eliminate the things going wrong).

    You need to become proactive instead of reactive if you want to achieve real success.  You need to define what that success looks like and then develop a plan to get it.  Then go out and make it happen.

    As Yoda says “Try, there is no try.  Do or Not Do”.

    2.  Haphazard advertising

    Advertising decisions in SMEs are commonly made based on how busy everyone in the business is.  The corollary being “let’s do whatever is easiest”.  The signs are:

    • There is no defined marketing plan;
    • Advertising is initiated when sales slow down and stopped when sales pick up;
    • Advertising is usually tactical/opportunistic rather than strategic.

    This endlessly reactive cycle just tends to keep the business operating around the same level of sales (survival).  In turn, this level becomes the limit to the future success of the business.

    Smaller, struggling businesses tend to react by using price as their main competitive strategy.  This sets up a knee-jerk approach to price setting and sales/marketing activity, creating a response from competitors that ends up damaging everyone’s profits and cashflow.

    Marketing is about communicating to the market the distinctive reasons why your company’s products should be the logical choice compared to competitive offerings.

    Successful companies determine their strategic advantages over the competition and then proactively communicate the value of those advantages to the market.  More often than not, this style of marketing allows them to sell at higher prices than their competitors because they’re focusing on what customers really value.

    3.  Ineffective delegation

    You can’t grow your business without delegating work to someone else.   THERE IS NO OTHER WAY.

    However, most business owners would prefer to do the work themselves rather than learn how to choose the right people, set them up with the right systems, then motivate and nurture them.

    Partly this is a trust issue, but mostly this is a control issue.  You just need to learn to hand the steering wheel to the Universe over to somebody else for a while and focus on the areas of your own business where you can significantly increase the capability/competitiveness of your business.

    The trust/control issue is commonly caused by the business owner having expectations of employees that are not communicated clearly – therefore they don’t get the results they expect.  The outcome will always be frustration followed by the assertion “you just can’t get good staff these days”.

    The best managers know clear interactions between people and good relationships are essential to productivity, so they develop effective communication processes.

    These include job descriptions, operations manuals, work instructions and appraisal systems to ensure that expectations about an employee’s role in the business are effectively communicated and understood and that the employee’s performance results are fed back and effectively worked through to the satisfaction of each party.

    Delegation can then occur without frustration and antagonism, and everybody is clear about what/why/how/when leading to a highly-productive and positive work environment.

    4.  Ineffective control

    Many business owners/managers are so focused on getting the work done that they never stop to check how efficiently it is being done or whether performance levels are improving/deteriorating.

    Running a business without performance indicators is like walking across a highway with a blind-fold on (you just wouldn’t do it would you ???).

    Some business owners/managers don’t even know what their financial position is from month to month.  That’s like guessing how much fuel you have left, then being surprised when the car stops.

    Many businesses stay at the level of growth where the business owner can physically see/check how hard people are working.

    This method of maintaining control is self-limiting, because it puts a self-imposed cap on business growth.  However, it is often also ineffective because activity and productivity are not the same thing.

    Staff have a tendency to try to look busy, even when they aren’t working hard.  Many managers are then lulled into a false sense of security by visual checking.

    Without real performance measures that identify actual levels of productivity, operational costs and relativity to targets, a business has no real controls.  Making this critical mistake almost guarantees that it will be impossible to achieve above-average success.

    5. Doing it all yourself without looking for help

    Significant achievement always involves help from others.

    In small business it has long been accepted that you need external professionals for preparing accounts and dealing with legal matters.

    However, it is also becoming commonplace to bring in specialist skills to work on improving specific business functions (eg: Strategy, Marketing, Sales, HR).

    Running a successful business requires effort, and the effective leverage of everybody’s time.  It is unusual to achieve without a significant amount of mentoring/guidance from people with the right experience and expertise.

    It is accepted practice in all sports and almost every elite athlete uses a coach to provide external guidance and tips to improve performance.

    The best business owners also accept this principal and look for advice whenever they can.  It seems that only the poor performers try to go it alone and think they have all the answers themselves.

    Conclusion

    If you make any of these mistakes in business, your performance – and the businesses performance – will suffer and you will most likely tend to spend your time struggling to survive, or at least working longer hours than you want to get where you want to go.

    Success leaves clues.  Successful businesses operate in a different way from most average businesses …. that is why they’re successful.

    Wouldn’t it be a good idea to find out how they do it and how you can eliminate the mistakes that keep you trapped in a business that is a continuous struggle and a constant source of frustration ?.

    Feel free to talk with us if you want to break out of this “Cycle of Despair”.


    3 Things Working Against You When Selling a Business

    April 29, 2010

    Google recently acquired Aardvark, a social media company that lets users tap into the knowledge and experience of their extended network of contacts to get quick answers to specific questions.

    Let’s say you’re from Melbourne, but in Sydney on business, and get a dose of back spasms. You can post a question to Aardvark that will ask your friends and friends of friends for a recommendation on a good chiropractor in Sydney.

    Google paid US$50M for Aardvark.

    Aardvark is a good case study on building a company to be sold. They didn’t try to compete with Facebook for all forms of social media.

    Instead, Aardvark specialised in getting obscure questions answered by trusted contacts.

    Google is in a Coke vs. Pepsi- battle with Facebook for dominance of the social media category, so it made sense to look at Aardvark as an acquisition.

    Could Google have built the same technology? Absolutely !!.

    Could Google have acquired Aardvark for less money and time than it would have taken Google to build it from the ground up? Yes again.

    Aardvark therefore gets acquired.

    We all know that becoming the world’s best at something can help you win business; becoming famous for one thing can also help you sell your company.

    Strategic buyers are looking to pick up something new they don’t have and couldn’t easily create on their own. Before doing a lot of due diligence, strategic buyers ask 3 basic questions:

    • How much would it cost us to build from scratch?
    • How long would it take?
    • How much could we buy that company for?

    If you offer a broad set of products/services that a potential buyer also offers some/all of, that potential buyer will argue that it would be easier to just build what you’ve created and drop its price below yours or hire a couple of salespeople to go after your customers.

    However, if you offer something truly special that is difficult to replicate, the acquirer will want to buy your business instead of wasting the time and money to build it from the ground up.

    Becoming a specialist in one thing will not only help you in your marketing; it will also help you get acquired for a premium when you’re ready to exit.

    To find out more about where you currently stand as a business you can check out the “Sellability Index Quiz” by going to http://builttosell.com/siq.php and answering the 10 questions to get a view on where your business is at.

    Either way, if you’re thinking of selling, you should contact me to help you understand your options (plus I may even know who your “buyer” will be, based on my current clients).


    In 2010, high-net-worth individuals are looking to invest in private companies

    April 22, 2010

    According to a recent survey of 4,169 Australian investors conducted by Wholesale Investor, investor sentiment in private sector investments is buoyant.

    The statistics revealed:

    • 76% of investors are seeking investment into private companies
    • 53% have $500k or more to invest
    • 72% believe now is a great time to invest
    • 79% of investors have over 50% of their funds in cash, ready to invest
    • 91% would invest in an early-stage/start-up if strong Board/Management was in place and in a preferred sector
    • 55% said their biggest challenge was finding suitable deals
    • 63% were looking to invest directly into companies
    • 61% sought an equity stake of less than 20%

    In addition, the survey revealed several positive factors influencing the private company market.  These include:

    • Former MDs and CEOs are now actively pursuing high-growth businesses.
    • Many smaller VC and PE firms are forming and looking to gain exposure to high quality companies.
    • Larger private firms are taking advantage of market conditions and looking to make strategic acquisitions.

    Contrary to the prevailing attitude of doom and gloom, these figures reveal that this is a golden period for business – for those investors and entrepreneurs who are prepared to see the bigger picture, take a calculated risk and back themselves.  As they say “a crisis for some is a blessing for others”.