Do You Have What It Takes to Find Success in the 21st Century?
There is no doubt that the times are definitely changing. The COVID-19 pandemic has caused a shift across many industries, and the simple fact is that many industries will never return to the old normal. Success in the 21st century will require a good deal of adaptation and the ability to evaluate where you stand today and where you need to be tomorrow.
Flexible Thinking
One of the cornerstones of being successful in life and in business is to embrace flexible thinking. A flexible approach to problems can lead to finding new and highly effective ways of tackling problems. Being able to find success in the 21st century is about much more than simply riding the next technological wave or trend. Instead, it is about being amongst the first to use flexible thinking to spot trends and developments ahead of the competition and exploit those developments first. Technology and the world are changing faster than ever. Being able to utilize fluid, flexible thinking to identify problems and then seek out cutting-edge solutions to those problems will be a key aspect for success in this century.
A Solid Plan
Flexible thinking is essential for success, but so is having a plan. Just as business leaders needed a plan to achieve final success two-thousand years ago, the same holds true today. In many ways, evolving technology has not reshaped basic logic.
You’ll want your business plan to strike the right balance between being rigid and flexible. At the same time, you’ll need a solid business plan that includes specific written goals and concrete time frames.
Embracing Technology
The days of ignoring technology or “working around” it are simply gone. The modern business landscape has integrated not just digital marketing, but digital financial transactions as well. This trend is only going to become more pronounced in the coming years.
The business landscape means understanding and embracing the fact that commerce now has a massive digital component at every level. The pandemic has served to accelerate this fact and has very likely permanently changed how business will be conducted in the future. Whether it is meeting clients or customers online for a Zoom or Skype meeting, embracing digital marketing, or a range of other changes, it is essential for business owners to recognize change and incorporate it into their business and their long-term plans.
You can try to fight the future, but in the end you will fail. Charting the right course for the future means having the right mindset and a great support team in your corner. Business Brokers and M&A Advisors are experts at helping business owners prepare their businesses for sale. Demonstrating that your business has adapted to the dynamic and ever-changing environment will help you make your business much more attractive to prospective buyers.
Copyright: Business Brokerage Press, Inc.
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What You Should Know About Selling Your Business
There can be no doubt that selling your business stands as one of the most complex and important decisions you’ll likely ever make. It is quite often the case that a business represents decades, or even a lifetime, of dedicated work. In this article, we’ll examine some of the key steps that you should take when it comes time to sell.
One of the most important steps that any seller can take is to begin the sales process far in advance of the date that he or she plans to put the business on the market. Working with an experienced business broker or M&A advisor (and doing so preferably years in advance) is one of the single best ways to ensure that you’ll be ready to sell your business when the time comes. It will also help you to avoid the numerous pitfalls that potentially await.
A good brokerage professional can also help identify weaknesses in your business and help you address those issues; however, this is only the beginning. Your broker can help you with everything from strategy and negotiations, maintaining confidentiality and establishing the market value of your business, to connecting you with other seasoned professionals, such as accountants and lawyers.
A third key point that all sellers should consider is their own psychology. It is vital that all sellers remain flexible in their approach to selling their business and also remain respectful of prospective buyers. It is important that you put yourself in the shoes of your buyer and try to think of what they will need to feel confident in their decision.
The right seller psychology is also absolutely essential. Sellers should not attempt to rush or force a sale or overprice their business. In short, you need to keep “your head in the game” and as much as possible, keep your emotions out of the process.
Sellers also need to realize that the statistics strongly indicate that seller financing is likely. Only 75% of sellers ultimately receive their asking price, and businesses that are listed as “all cash” generally don’t sell. Reasonable sales terms will greatly increase the chances of successfully selling a business. It is common that sellers fail to realize just how much interest they can generate by financing the sale of their business. A reasonable down payment is also another way to improve the odds of selling a business. Being willing to offer financing makes a clear statement to a prospective buyer that you believe in the business and its ability to generate revenue. From a buyer’s perspective an “all cash” demand can be a red flag.
At the end of the day, an open mind and steady temperament will increase your chances of selling. You may want to sell your business and completely move on to new things. But the reality of selling a business is such that “walking away” may not be feasible. Transitioning your business into the hands of a new owner is usually more of an ongoing process than a “sign on the dotted line and receive a check” type of situation. Understanding this fact, and working closely with a business broker or M&A advisor in advance of selling your business, will help to streamline the sales process and greatly improve your chances of a successful outcome.
Copyright: Business Brokerage Press, Inc.
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5 Tips for Dealing with Customer Complaints
Companies of all sizes frequently fail to handle customer complaints appropriately. In the digital era, where complaints can be seen by hundreds, thousands or go viral to millions, it is essential that customer complaints, especially serious ones or ones backed by considerable emotion, are treated seriously and dealt with in a timely manner.
If you are failing to provide good customer service, this should be corrected. After all, offering decent customer service is neither costly nor overly complicated. At its core, good customer service can be reduced down to listening to the customer, letting the customer know that his or her complaint has been acknowledged and cataloged, and then working to remedy the situation if possible.
A good positive attitude and staying calm when dealing with irritated or dissatisfied customers can go a long way towards keeping a customer happy and halting them from expressing their feelings in an online public forum. Let’s look at five tips for dealing with customer complaints in an effective manner.
Tip #1 – Take a Proactive Stance
A good attitude and a proactive stance can go a very long way towards diffusing an unhappy or angry customer. A disappointed customer wants to know that he or she is being heard and that steps are being taken to remedy their situation. Clearly communicating that you are working to fix the situation and doing so in a positive manner will diffuse most negative customer scenarios.
Tip #2 – Take Quick Action to Fix the Problem
Once a customer is calm and is feeling a little better about your company, there is still more work to do. When you state that a problem will be addressed, it is essential that the problem is indeed addressed. This is vitally important for the reputation of your company. A failure to follow up on a promise to fix a situation could actually backfire and leave customers feeling as though they were initially manipulated.
Tip #3 – Always Stay Calm
If a customer is unhappy enough to write an email or post a negative review online, then they are obviously displeased. However, if a customer is angry enough to pick up the phone and call, you can be fairly certain that the customer in question is rather upset. This anger may boil over on the phone call. That’s why customer service people need to be ready to deal with that anger in a calm and collected fashion. Customer service team members or salespeople should never match the anger of a customer. Instead, they should focus on demonstrating that they are committed to fixing the problem. It may benefit you to invest in employee training so that employees are ready to deal with angry or disappointed customers when the time arrives.
Tip #4 – Look for Customer Dissatisfaction Problem Patterns
If the same complaints and issues come up again and again, then it is very likely that there is a larger problem that must be addressed. Numerous customer complaints from different customers shouldn’t be treated as a “headache.” Instead, it should be viewed as a great opportunity to improve your goods and/or services. Once you have detected a negative customer service pattern, be sure that you and your team move quickly to remedy the problem. Your business will be stronger for doing so in the long run.
Tip #5 – Track Your Success
It is important to never assume that you have successfully addressed customer service issues until customers have, in fact, verified that the situation is resolved. For this reason, it is wise to follow up with customers and ask for feedback via either questionnaires in the mail, email follow ups, or even phone calls.
Customer complaints that are not appropriately addressed can fester and become larger problems. The time, effort, and money you invest in boosting the quality of your customer service team will yield significant positive results for the long-term.
Copyright: Business Brokerage Press, Inc.
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Net Income Effect of Overstating & Understating
Business owners sometimes make value judgements that affect net income. Legitimately, some income statement entries are estimates. If you overstate or understate such entries as inventory, net income can be shifted up or down. That may give the owner, prospective buyers and/or the IRS a distorted idea of how your business is doing. At worst, a business owner may be accused of fraud or tax evasion.
Why Net Income Matters
Investors and lenders study financial statements to decide if a business is a good risk. The income statement, which shows how much a business earned in a given period, is particularly important to investors. Public company dividends are paid based upon net income; dividends divided by the number of shares yields earnings-per-share. Overstating net income can make earnings per share better. It may also affect performance-based bonuses. Conversely, understating net income can make a company look less profitable, and therefore less desirable. Even so, there are reasons business owners deliberately opt to understate it.
Distorting Revenue
The top of the income statement deals with revenue for the period. Income includes cash sales and credit sales, which are accounts receivable as credit sales are income a company has earned but haven’t received yet. Some of that debt may never be paid, for example when customers refuse to pay or go bankrupt. By looking at how many bills went unpaid in the past, a company can estimate how much of current debts will also go unpaid. Understating the amount of bad debt makes both the income statement and balance sheet look stronger and healthier. For every debt not written off, net income gets a little bigger. Likewise, if a company understates the amount of bad debt anticipated, that makes the revenue and net income figures higher.
Inaccurate Inventory
Revenue minus cost of goods sold determines gross income. Various other additions and subtractions turn gross income into net income. Cost of goods sold is based on the difference between beginning and ending inventory. If a company overstates inventory, indicating they have sold fewer items, cost of goods sold shrinks and net income gets larger. If a company understates inventory, net income becomes smaller than it really is. Business owners may err in that direction to pay less in taxes in a given year. Or, inventory may be deliberately overstated to pad net income.
Problems with the Accuracy of Financial Statements
While a business owner can tout the success of a business, their financial statements are the proof that an investor or lender will ultimately rely upon. Inaccurate financials may result in:
Ruining buyer trust – If a buyer believes that an owner intentionally withheld or falsified information, the buyer may just choose to walk away from the deal, even if it truly was an honest mistake.
Delaying the process – When a buyer or a financial advisor that they have hired discovers an error, the sales process can grind to a halt. The sale of a business can be delayed for weeks or a month or more while an owner and the prospective buyer try to reconcile the error and/or dive deeper into the financials.
Loss of financing – A buyer who is relying on outside financing or investors to raise funds for a purchase might lose their opportunity to obtain funds, causing the deal to collapse.
Legal liability – In the event that the sale is completed without a material error being discovered prior to closing, a business owner could one day run the risk of a claim or litigation for fraud, even though the error may be an honest mistake.
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The Top Ten Ways to Avoid Wrecking a Deal
Finalizing a deal is usually a complex process, and there is a good deal of room for error, misunderstandings, miscalculations, and good old-fashioned wild cards. That is why it is critical to carefully think through the deal process well in advance. In this article, we’re going to explore the top ten steps you can take to avoid wrecking a good deal.
- Confidentiality – At the top of our “how not to wreck a deal list” is confidentiality. It is vital that everyone involved in the deal takes steps to avoid a breach. Experienced business brokers are experts at maintaining confidentiality.
- Flexibility – The second tip on our list is to be flexible. A lack of flexibility can absolutely destroy a deal. You shouldn’t go into a deal expecting to have all of your terms met.
- Be Open to Negotiations – Just as it is critical to be flexible, it is also important to embrace the concept of negotiation. Sellers are used to being their own bosses, but when it comes to successfully selling a business, no factor is quite as important as a willingness to negotiate.
- Advance Preparation – Next on our list of musts to avoid wrecking a deal is to prepare for the sale well in advance. Sellers will want to make sure that they have several years of records as well as legal and accounting documentation ready and well-prepared. You can be 100% certain that any serious buyer will want to see your records and take a look at your financials.
- A Reasonable Selling Price – An inflated price will decrease the number of buyers that take a serious look at a business. Additionally, an unreasonable price may make a seller look uninformed. Business brokers and M&A advisors are experts at handling valuations. One of the single best ways to boost your chances of finalizing a sale is to establish a fair and justifiable price for your business.
- Maintain Operations – Far too often sellers lose track of the day-to-day operations once their business goes on the market. It is absolutely vital that sellers continue operating their business as though it may never sell. The bottom line is that it can take months, or even years to sell. The last thing any seller wants is for their business to lose value when they are in the process of trying to sell.
- Keep up the Momentum – A lack of momentum can kill a deal. Working with a business broker or M&A advisor is an easy way to make sure you maintain momentum throughout the process.
- Consider Your Buyer’s Needs – Serious buyers will need a variety of information from sellers in order to obtain financing. You can expect buyers to need appraisals of assets, information on environmental regulations, and more. Sellers should have this kind of key information ready and waiting.
- Encourage Competition – Another great way to avoid wrecking a deal is to achieve leverage via buyer competition. In general, it is a good idea to create a competitive situation – one in which prospective buyers know that there is more than one interested party. Brokerage industry professionals understand the delicacies of presenting this information.
- Seller Participation – Finally, sellers must stay involved in the entire process, and that includes being willing to assist during the transition. Showing a willingness to help during the transition period will help to foster goodwill and trust.
There are many reasons why a deal could potentially fall apart. You may not be able to control every single variable, but by following the ten key tips outlined in this article, you will be well on your way to increasing your chances of successfully completing a deal.
Copyright: Business Brokerage Press, Inc.
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