Business owners must have three separate business plans:       

• A Business Plan
• A Marketing Plan and      
• An Exit Plan.  

Do you have all three?

A Business Plan allows the owners and shareholders to plan for the daily operation of the business and to put targets, budgets and operating systems in place. It’s like the “instruction manual” for the running of the business.

Every business should have one.

Good business managers regularly refer to the Business Plan and use it as a constant reference point when making business decisions. It should be reviewed at least annually and updated and adjusted regularly.

A good business plan includes:          

• A mission statement          
• Plans for growth and expansion
• Budgets
• Asset replacement plans
• Operational plans         
• Key Performance Indicators to be measured and
• Action Plans which summarise the actions to be implemented with dates and responsibilities 

A Marketing Plan refers to the business plan and the mission statement to outline the targets and outcomes to be achieved through marketing and details the plan for achieving those aims. It includes a budget, and a mechanism for measuring spending and results achieved. The Marketing Plan also includes KPIs that are to be measured and monitored. 

An Exit Plan. All that‘s required to produce an Exit Plan, is to:

1. Decide when you want to exit, and how much you’ll want to sell for
2. Plan on how much profit the business will need to show to sell for the price that you want to achieve
3. Set a program with targets and KPI’s (Key Performance Indicators) required to realise the price sought.
4. Decide who is the most suitable buyer of your business
5. Plan to prepare the business for sale
6. Seek advice from credible advisors to keep you accountable and “on-track” and
7. Measure your performance and adjust where necessary to hit targets

Then, make it happen by engaging an effective business broker who will:

1. Help set an appropriate pricing plan
2. Help set the sale plan (including how the sale is to be executed)
3. Prepare the data and information that buyers will need
4. Understand the most suitable marketing techniques and produce a bespoke marketing plan
5.  Pro-actively follow up on buyers and engage them
6. Remove emotion from discussions and help to negotiate the best outcome
7. Follow the process through due diligence and co-ordinate activity to finalise the transaction.

The first plan to prepare should be the Exit Plan. Remember to start with the end in mind, and work back from there. 

There are three Business Plans every Business Owner must have: Business Plan, Marketing Plan and an Exit Plan. You need these to run a successful Business.

The end of the year is the best time to set up your Business plans: Why not taking advantage of the Christmas break and finish your Plans? 

Benchmark Business Sales and Valuations

IT COULD BE WORTH MORE THAN YOU THINK!

Did you know that many business owners don’t realise that their businesses are valuable? Often business owners simply close down and walk away from their business without ‘cashing-in’ on the Goodwill that they have built up in their business. What a shame…. all those years of hard work – and no reward for their effort…. if they had only known that there was a buyer out there for their business, they may have acted differently. There is another group of business owners who operate their businesses every day, without planning for the day that they will sell out. Oh… they plan to sell, but they just don’t know when, or how, or who they will sell to…….. or how much the business should sell for. There is no plan in place – just a vague intention that one day they will sell. Do you fall into either of these groups? ..or do you have an exit plan for how you intend to maximise the reward that you deserve when you decide that it’s time to move on. Having a plan on how and when you will sell your business is known as having an “Exit Strategy”. What are the benefits of having an Exit Strategy? With an Exit Strategy in place you get to sell your business on your terms, when it suits you, and when you are ready. This makes you a CONFIDENT seller. You will be confident because you will know that your business is ready to sell, and that alone makes it very attractive to potential buyers! Without an Exit Strategy in place you will be a passive seller – waiting and hoping that a buyer will come along and solve all of your problems…. that is like gambling, and that way you are simply reliant upon chance… that’s no way to run a business. Having a proper Exit Strategy in place will allow you to cash-in quickly, easily – and scientifically. Having an Exit Strategy will enable you to:

• Get the best possible price
• Avoid disruption to daily trading
• Avoid “time wasters”
• Save money
• Achieve minimum settlement time

So how do you create an Exit Strategy? You can talk to an accountant, business coach, lawyer or a business broker. Business brokers work in the market everyday, and they know what your unique business will require to be ready to sell for maximum value. They can advise on the 17 areas that you need to consider when selling, and how to implement your plans. An Exit Strategy includes:

• A target date
• Preparation of a list of targeted potential buyers
• Knowing what potential buyers will want and ask for
• Determination of an appropriate asking price
• Preparation of financial accounts and data that buyers will require
• Creation of a marketing plan and tactical execution timetable

Many business owners never get around to actually sitting down and planning how and when they will sell out of their businesses, they procrastinate, and let other issues take priority. Don’t put off this important part of business ownership, do it soon – do it today! Business owners with an exit plan in place are often proven to be more effective business people than those who don’t. This is because they have focus and direction. They are not aimless, because that know where the business is headed, and exactly what they have to do to achieve their goals. Having direction provides confidence, and confidence enhances performance. If you would like to receive a free book entitled “Twelve Tips for Selling Your Business” contact the author. Details appear at the end of this article. 

CASE STUDY – 

In 2005 Merv and Linda were ready to retire from their business located in a rural Queensland township. Just like so many other small business owners they had never set a real goal for when they would sell the business – or for how much they would sell for. They had owned the business for over twenty years and had worked long and hard to survive in a difficult region. So without much planning, they decided to put the business on the market. Their financial advisor assisted in selling the business, and after a year, they had not sold. They hadn’t even spoken to one serious buyer. As time went by Merv and Linda started to think about simply closing down the business, but as they owned the premises too, they felt it would be better if they could sell, and find a tenant to operate the business. In August 2006 Merv & Linda engaged a professional business broker to sell their business, and in October 2006 the business was sold… for $900,000 – plus stock! The buyer was a multinational company.Just when they were looking to “walk away” from their business, they found the right person to sell it for them – and they are $900,000 better off as a result! Had they been in a position to plan their sale, and prepare over time, they would have sold their business at a premium price, and they would have sold out within a defined time period.

 Benchmark Business Sales and Valuations

Tools to help improve your Small Business

A small business is an exceptional investment that will not only increase in value with improved performance, but it will also provide the owner employment, an above average return, a sense of achievement and, in some cases, noncash benefits. But every business owner needs to look at the future, and ways to grow the business. A few years ago, the Harvard Business Review published an article which offers some interesting thoughts on how to grow and innovate in business.   The article talks about a "tool" they have named the "Innovation Ambition Matrix" which (essentially) suggests that businesses should invest;  

• 70 per cent of energy and effort into serving your existing markets and customers,
• 20 percent of energy and effort into branching into “new to the company” business activities
• 10 per cent of energy and effort into developing “breakthrough” products or services.

(copyright: https://hbr.org/2012/05/a-simple-tool-you-need-to-mana)

This concept is particularly relevant today where disruptive technologies and methods are challenging traditional business models.

1. Look after your core business,
2. Look for strategic opportunities
3. Develop a “breakthrough” for markets that don't yet exist.

Read the full article from the Harvard Business Review about the Innovation Ambition Matrix here:

https://hbr.org/2012/05/a-simple-tool-you-need-to-mana

Benchmark Business Sales and Valuations

Good Advertisement – Because You Can't Sell a Secret

It makes it difficult to find the right buyer for your business if you don’t widely promote and advertise. The wider the net is cast, the more potential buyers you will have look at your business.

More buyers equals more demand. And more demand equals more value for you. You simply have to expose the business to the widest possible market to sell the business for the best possible price.  That’s a fact.

When selling large commercial property or up-market residential property, it’s common for successful marketing agents to allocate a marketing budget of 1% of the selling price. As businesses are more specialised than property and it’s often more difficult to find the perfect buyer, a larger advertising budget will often be required to achieve a sale.

Many people think that advertising means placing an ad on the internet or in the newspaper. This is not the case. That may have been the preferred method of advertising a business years ago. But not now.

Today there are better, more sophisticated and proven methods available to expose your business to the most suitable prospects. Successful business brokers know that there are at least four basic methods of maximising exposure of the business to a wide target audience.

These are:

Database marketing

Acquisition letters (direct mail)

Optimised website advertising and

Press advertising.

Each of these four categories contains sub sections to optimize market exposure.

Don’t fall into the trap of trying to save a few dollars on advertising. It always pays to do it properly. Allocate an appropriate budget towards marketing your business. Often business owners will spend a small amount each week on advertising their business when just a few larger-sized ads will create more response and more qualified buyers.  And in a shorter period of time.

Without exception, every successful business broker will tell you that a proper marketing campaign will expedite the sales process significantly and is critical in producing a successful sale for maximum value.

Value for any asset is determined through supply and demand. We can create demand for your business by developing a marketing program that will get lots of potential buyers wanting to know more, in confidence. In fact, the right kind of marketing will give you control. Rather than you feeling like you’re inviting the buyer to acquire your business, you’ll have them asking you to sell them your business.

However it’s achieved, it’s essential that potential buyers are alerted to the fact that your business is for sale.

Benchmark Business Sales and Valuations

Be Totally Honest

If you want to get the best possible price for your business, there’s no doubt that you must be completely honest.

Not only honest with the buyer. Or your business broker. But you have to be honest with yourself.

Before placing a business on the market you need to be brutally honest with yourself and acknowledge what the business is really worth in the market today. A business is not necessarily worth what you think it’s worth. Or what you may need to pay out all debts.  It’s worth what the market will pay.

By being honest and realistic with yourself, you’ll save a lot of time and disappointment. Providing misleading, not disclosing, information, or keeping something secret doesn’t work. In fact, such tactics make the situation worse.

It’s tempting to keep some things secret from buyers. But that’s futile. They’ll probably find out all your secrets anyway. It’s a standard part of any business transaction these days that the buyer will conduct some kind of Due Diligence to verify not only the financials, but all other aspects of the business as well. In this process, the buyer will be able to really get to know all the details and workings of your business.

So it’s pointless to “cover-up”. All it does is postpone the inevitable. There are no “wood ducks” out there anymore. You will not “get lucky” and find some sucker who’ll want your business. It just does not happen.

What does work is following the simple steps outlined in the series of tips in these blogs. There are no shortcuts – but planning ahead will make selling the business much easier. And much quicker. Being honest with yourself about the worth of the business and being honest and open with potential buyers, is the only way you can achieve an outcome that will be wholly satisfactory.  For both you and the buyer.

Benchmark Business Sales and Valuations

Nikki Katz is Australia’s best Business Broker