It’s Time To Embrace CSR (Corporate Social Responsibility)

If you are unfamiliar with CSR or corporate social responsibility, you are certainly not alone.  In the coming years, you’ll be hearing a lot about CSR.  In this article, we’ll look at CSR and how, when implemented with sincerity, it can positively impact your company and its operation.

Building Your CSR Locally

One of the key ways that you can build your CSR is to think about ways to help your community.  Contributing to local community programs, for example, is a great place to start.  Everything from personal involvement to direct financial support can help build your company’s reputation within your community.

Your Connection to the Environment

A second way to build your CSR is to show that your company is thinking about its impact on the environment.  Recycling is important but so is using eco-friendly packaging and containers.  Additionally, embracing low-emission and high mileage vehicles is another good step as this lowers your company’s carbon footprint.

Advertising and Good PR

A third area to consider is how your company interacts with the marketplace.  Using responsible advertising, business conduct and public relations is a savvy move.  Likewise, providing fair treatment of your shareholders, suppliers and vendors and contractors will all help to improve your CSR.

Yet, one of the single most important areas of corporate social responsibility occurs in the workplace.  The advent of social media has helped fuel the dispersal of information.  If your business isn’t treating its employees in a fair manner and/or has unsafe work conditions or unfair employment practices, the word will eventually get out.  There has never been a more important time to treat your employees well.

Embracing CSR serves to increase shareholder and investor interest.  In short, it is expected.  Socially-conscious companies are considered smart and stable investments.  A company that has fully embraced CSR will find greater buyer interest and even a higher selling price when the time comes to sell.  Most buyers want excellent customer loyalty with no skeletons hiding in a company’s closet.  They also are seeking happy and loyal employees, low employee turnover and for a company to have a good reputation within a community.  CSR helps achieve all of these goals and more.

Ultimately, corporate social responsibility works to create additional value.  When you invest in CSR, you are investing in achieving a higher selling price and making your business more attractive to sellers.  Summed up another way, you can’t afford not to think about this topic.

Copyright: Business Brokerage Press, Inc.

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You Know the Old Saying About Loose Lips? How Does It Impact You?

The saying “loose lips sink ships,” doesn’t have ancient origins.  While it sounds like one of those sayings that has been around forever, the saying was actually invented during World War II.  It was taken quite literally.  The idea was that a lack of secrecy could lead to the loses of actual ships or other wartime deaths.  So in other words, this saying was serious business.  It should come as no surprise that this saying is alive and well in the business world.


Few things are more important than safeguarding your business from leaks.  Leaks can, simply stated, spell disaster for your business.  Leaks can be particularly damaging if you are looking to or are in the process of selling business.  A leak that you are planning on selling your business can have a range of consequences.  Everyone from employees to customers, suppliers and, of course, prospective buyers and competitors could all take notice and this could have ramifications.

 

Yet, confidentiality stands as a bit of a Catch-22 situation.  Sellers want to get to the best price possible for their business and that means letting prospective buyers know that the business is for sale.  The greater the number of potential buyers contacted, the greater the chances of receiving top dollar.  However, the more potential buyers that know you are interested in selling, the greater the risk of a leak.  Clearly, this situation represents a considerable dilemma.

 

As a buyer, you may discover that owners can be overly, perhaps even irrationally concerned, about leaks.  It is important to remember that for most owners, the business represents their largest asset and often their greatest professional accomplishment in life.  In other words, they have a lot riding on their business.  It is important to remind sellers that the less time a business is on the market the lower the risk of a leak.  Also, the longer the negotiations go on, the greater the risk of a leak.

 

Sellers should always remember to keep all important documents related to the potential sale or sale literally under lock and key.  Everything should be considered confidential and only transferred to buyers in a highly secure fashion.  Confidential information shouldn’t be emailed or faxed, as this makes a leak much easier.  Sellers and buyers alike should remember that they shouldn’t discuss the sale or potential sale with anyone.  Confidentiality should be stressed at all times.

 

Working with a business broker is one way to dramatically reduce the risk of a leak occurring.  For business brokers, confidentiality is a cornerstone of their operations.  Business intermediaries require buyers to sign very strict non-disclosure agreements.  While loose lips may sink “ships,” there is no reason that your business, or the one you are interested in buying, has to be one of those ships.

 

Copyright: Business Brokerage Press, Inc.

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Top Four Statistics You Need to Know About Ownership Transition

If you own a business, then ownership transition should definitely be a central topic in your planning.  A few years ago, MassMutual Life Insurance Company conducted a very interesting and thought-provoking survey of family-owned businesses.  Obviously, family-owned businesses have their own unique needs and challenges.  The MassMutual Life Insurance Company survey certainly underscored this fact.  While the survey was conducted a few years ago, the information it contained is more relevant and actionable than ever.  Let’s take a closer look at some of the key conclusions and discoveries.

Founder Control

One of the most important findings of the survey was that a full 80% of family-owned businesses are still controlled by the founders.  The survey also discovered that 90% of family-run businesses intend to stay family-owned in the future.

Lack of Leadership Plans

Leadership is another area of great interest.  Strikingly, approximately 30% of family-owned businesses will in fact change leadership within just the next five years.  Moreover, 55% of CEOs are 61 or older and have not chosen a successor.  When a successor has been chosen that successor is a family member 85% of the time.  Succession is often a murky area for family-owned businesses.  A whopping 13% of CEOs stated that they will never retire.

Failure of Proper Valuations

According to the survey, valuation is another surprise area.  55% of companies fail to conduct regular evaluations, meaning that they are essentially flying blind in regards to the true value of their company.  Adding to the potential confusion is the fact that 20% of family owned businesses have not completed any estate planning and 55% of family-owned businesses currently have no formal company valuation for estate tax estimates.

Lack of Proper Strategic Plans

The financials for family-owned businesses are often just murky as their succession issues.  The MassMutual Life Insurance Company survey also discovered that 60% of family-owned businesses failed to have a written strategic plan and a whopping 48% of family-owned businesses were planning on using life insurance to cover estate taxes.

Simply stated, many family-owned businesses are not organized properly and are, in the process, not fully taking advantage of their opportunities.  In short, family-owned businesses are frequently insular in their approach to a wide range of vital topics ranging from succession and leadership to valuation, planning and more.  In the long term, these vulnerabilities may serve to undermine the business making it harder to sell when the time comes or opening it up to other problems and issues.  Family-owned businesses are strongly advised to work with professionals, such as experienced accountants and business brokers, to ensure the long term profitability and continuity of their businesses.

Copyright: Business Brokerage Press, Inc.

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Reasons for Sale

The reasons for selling a business can be divided into two main categories. The first is a sale that is planned almost from the beginning or by an owner who knows that selling is or should be a planned event.  The second is exactly the opposite – unplanned; the sale is motivated by a specific event such as health, divorce, business crises, etc. However, in between the two major reasons, are a host of unpredictable ones.

A seller may not even be thinking of selling when he or she is approached by an individual, group or another company, and an attractive offer is made. The owner of a business may die, and the heirs have no interest in operating it. A company may bring in new management who decides to sell off a division or two; or maybe even decides that selling the entire business is in the best interests of everyone.

A major competitor may enter the market, forcing an owner to elect to sell. And the competition may not just be another company. The owner of a business may realize that an external threat is such that the company will lose a competitive advantage. New technology by a competitor may outdate the way a company produces its products. Two competitors may merge, placing new pressures on a company. The growth of franchising and big box stores can promote themselves on a much larger scale than a single business, no matter how good it is. National advertising can create the perception that a large business’s pricing, inventory or service is better than the smaller competitor, even if it isn’t.

Although these issues may not push a business owner or company management to consider selling, they are certainly causes for consideration. Unfortunately, most sellers fail to create an exit strategy until they are forced to. Professional athletes want to go out on top of their game, and business owners should do the same.

Copyright: Business Brokerage Press, Inc.

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You’re Experiencing Burnout, Now What?

A large percentage of business owners are not just owners, but also operators.  Owning a business can be exciting and rewarding, but it is also a tremendous amount of unending work.  In the end, the “buck” stops with you.  With that realization comes a significant amount of stress.  It goes without saying that stress can lead to burnout.

A business with a burnt-out owner can spell doom.  Even if you are lucky and have invested the time to surround yourself with an amazing team, you will only have so much time before you have to jump back in and be very proactive.  Otherwise your business will begin to suffer.

Let’s face it, as the owner, you can take a vacation.  But your burnout might not let you even enjoy said vacation.  This is even more true if you are stuck checking your texts and your computer all day long, trying to manage things from out of town.

The First Step is Acceptance

When dealing with burnout the first, and most important step, is to admit that you are in fact, burnt out.  This condition may be the result of mental and physical fatigue.  While most people might not immediately connect issues, such as health and diet, with burnout, there is often a connection.

Start Taking Care of Yourself

Owning a business means work and lots of it.  That may mean that you are not taking enough time or thinking enough about your own health and well-being.  Consider improving your diet to include more fresh foods and reduce or even eliminate fast food, which has been proven to negatively impact health.  You should also consider investing in air and water purification systems.  A recent medical study showed that indoor air pollution can harm not just the lungs but even the kidneys as well.

In the end, you are the key element in the success or failure of your business.  If you are suffering from aches and pains, headaches and fatigue, then you, as the heart of the business, are ultimately harming the business.  Putting your health first is a way for you to safeguard the health of your business.

Consider Putting a #2 Person in Place

Many business owners have a great “right hand person” that can take over if the owner becomes sick, but that is not always the case.  Keep in mind that when it comes to selling your business, having that key team member will be essential to your potential buyer.  If it’s possible to start cultivating that person now, by all means do so.

You may be saying, “But I’m a health nut and I still feel burnt out.”  Again, owning a business is demanding, and the years can weigh heavily.  It is important, especially before burnout sets in, to step back and look for ways to streamline your operations and delegate responsibilities.  Small changes can have a big long-term impact.  Additionally, streamlining your operations will make your business more attractive when it comes time to sell.

In the end, if taking a vacation, streamlining your operations, and improving your health regime doesn’t yield big results, it might be time to consider selling your business.  There is no rule that states that you must operate your business until retirement.  Don’t be afraid to walk away if necessary.

Copyright: Business Brokerage Press, Inc.

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Invest in Creating Happy Employees & You’ll Be Rewarded

The time, effort and money you invest in keeping your employees happy is well worth it for your bottom line.  Oftentimes business owners fail to consider the fact that unhappy employees can, and do, negatively impact every aspect of their operation.

Your employees are your front line in dealing with your customers.  If your employees are not pleased, don’t kid yourself, it shows.  Unhappy employees not only negatively impact the overall experience of your clients but can also make customers worry that something is wrong with your business.  Whether fair or not, many customers may believe that a lack of employee happiness reflects on you as a business owner.

Some owners believe that their employees should share their dedication to the business; this is the wrong approach.  At the end of the day, the business belongs to the owner(s) and not the employees.  Business owners should refrain from becoming irritated or angry because employees do not match their own levels of enthusiasm.  Instead, business owners should strive to help employees become as invested as possible.  But at the same time, they need to always remember that employees realize that they don’t own the business.

Every business is different, and what it takes to create happy employees, of course, varies.  Determining the best way to facilitate employee happiness is a prudent step.  Take the time to evaluate your business and the role of your employees in it.  At first, this may sound like quite the challenge, but determining what can help foster employee happiness is as easy as placing yourself in the shoes of your employees.

What would make you happier if you were an employee?  Massive pay increases may not be in the cards.  But still there are low cost or even free “upgrades” that you can implement.  Periodically rewarding employees for a job well done with gift certificates or half-days off can go a very long way in building employee morale.  When it comes time for you to potentially sell your business, you want a prospective buyer to see a lot of happy and enthusiastic employees.  After all, isn’t this what you would want to see if you were buying a business?

Also consider requesting anonymous employee feedback.  If you are having trouble figuring out how to solicit this feedback, you can hire a third-party company to assist you.  When you read feedback from your staff, you will most likely be shocked and surprised what you learn.

Ultimately, there is no replacement for respect and kindness.  Many business owners worry about employees taking advantage of them and may take an overly harsh attitude towards employees as a result.  As long as employees realize that you have high standards and expect employees to uphold those standards if they want to keep their jobs, you shouldn’t have any significant problems.  Employees know when they are valued and appreciated.  They will, in turn, pass on this feeling of appreciation and value to your customers.

Copyright: Business Brokerage Press, Inc.

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Keys to Improving the Value of Your Company

The first key is to have your accountant take a look at your accounting procedures and make recommendations on how to improve them.  He or she may also help in preparing financial projections for the coming year(s).  Getting your company’s financial house in order is very important in establishing the value of your firm.

The second key is to review the reputation, image, and marketing materials of your company.  Certainly, the quality of your product or service is paramount, but how your firm presents itself to customers, clients, suppliers, etc. – and the outside world – is also very important.  The appearance of your facilities and customer services – beginning with how people are treated on the telephone or in the waiting/reception area – are the kind of first impressions that are critical in dealing with your customers or clients.  Don’t forget about the company’s Web site; in many cases, it is the initial introduction to your company.  Now may also be the time to update your marketing materials.  The image of a company can help create a happy workforce, improve customer service, and impress those that you deal with – all of which can increase the value.

A third key is to get rid of outdated inventory – sell off any extra assets such as unused or outmoded equipment.  The proceeds can be used in the business.  If there are any assets that should not be included in the value of the company, such as personal vehicles or real estate, you might want to separate them from the assets of the company.  This is especially important if you are considering placing the company on the market.  A prospective purchaser expects everything they see to be included in the sale.  If a portrait of your grandfather is your personal property, delete it from any list of company furniture, fixtures, and equipment; and if the business is for sale, remove it entirely.

Another important key is to resolve any pending items.  For example, if the company has a trademark on any of the important products, and the paperwork for registering is sitting on someone’s desk, now is the time to complete the filing.  Trademarks, patents, copyrights, etc., can be very valuable, but only if they have been properly recorded and/or filed.

Contracts, agreements, leases, franchise agreements, and the like should be reviewed.  If they need to be extended, take the appropriate action.  A contract with a customer has value and if it is scheduled to expire soon, why not get it renewed now?  The same is true for leases.  Favorable leases for a long period of time can be a valuable asset.  Do your key employees have employee agreements?

The key factors outlined above not only build value, but they also increase the bottom line.  If you are considering selling your company at some point, these key issues will come back many-fold in the selling price.  A professional business intermediary can help with other factors that can influence the value of the business.

One other hidden benefit of building the value of your company is that you never know when the Fortune 500 Company will come “knocking at your door” with an offer that you can’t refuse.  At that point, it’s probably too late to work on some of the issues mentioned above.

Copyright: Business Brokerage Press, Inc.

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Around the Web: A Month in Summary

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A recent article posted on Business2Community.com entitled “How to Close the Deal and When to Walk Away When Buying or Selling a Business” explains the business sale process and how to differentiate between a good deal and a bad deal during the process. Closing a deal involves quite a bit of legwork, including producing a letter of intent, doing due diligence, acquiring financing, signing a purchase agreement, and actually closing the deal. These items can be easier with the help of a business advisor, broker, or attorney, but emphasis should be placed on the due diligence aspect: knowing the business inside and out is vital to a successful sale.

Walking away from a deal can be difficult for a motivated buyer, but is sometimes necessary to avoid emotional and financial disaster. The following red flags help to signify that it’s time to walk away:

  1. Inconsistencies
  2. Neglect
  3. Undisclosed Problems
  4. Poor Credit Rating
  5. The Industry is in Decline

Being prepared is one of the best things that a buyer can do in the business sale process. Whether preparation proves a business deal is worth it or uncovers red flags, it will be worth the effort.

Click here to read the full article.

 

A recent Axial Forum article entitled “3 Reasons an M&A Advisor is Worth the Cost” presents impressive statistics regarding the utilization of M&A advisors in the sale process. 100% of owners that used an advisor when selling their business stated that the advisor had a positive impact on the sale, with 84% of these sellers achieving a sale price equal to or higher than the advisor’s initial estimate.

While these types of statistics are expected among industry insiders, many business owners will still hesitate to hire an advisor for the sale of their businesses. As the article outlines, advisors can help to identify weak links in a business’ management team, find quick ways to increase cash flow, and whip financials into shape, among many other things.

Click here to read the full article.

 

A recent Forbes article entitled “The Question Every Owner Should Ask: Is Now The Right Time To Sell The Business?” explains why choosing to sell sooner is actually better in a lot of ways than putting off a business sale for a few years. The author goes on to explain how when exits are planned for some arbitrary point in the future, owners often never seem to make it there, ending up wanting to sell but never actually selling. The article goes on to explain five important reasons to consider selling now:

  1. You May Be Choking Your Business
  2. Money is Cheap
  3. Timing Your Sale is a Fool’s Errand
  4. Cyber Crime
  5. There is No Corporate Ladder

Being an owner gives so much power over the path a business takes, whether it’s a sale or acquisition or even the owner staying on to work on the business for an extended period. The beauty of this is that the owner has the choice over whether or not to sell, but also the choice on what to do after. Starting another business is a common route to take for successful first-time entrepreneurs after an exit, so the sooner a sale occurs, the sooner they can get started on another business.

Click here to read the full article.

 

A recent article posted on the Axial Forum entitled “7 Reasons to Perform Sell-Side Due Diligence” talks about why sell-side due diligence can be a useful and productive technique within the M&A process. While buy-side due diligence is much more common, sellers can take advantage of this practice to maximize the value presented to potential sellers so that they can ultimately get more out of the sale.

Sell-side due diligence can help to uncover and improve:

  1. Weak financial and operational data systems
  2. Overextended employee resources
  3. Unclear financial narrative
  4. Unhelpful “tax guy”
  5. Multiple entities and no consolidation
  6. Likely purchase price reductions
  7. Ineffective tax structuring

In the end, due diligence is part of any M&A process. But with so many things factoring into a successful sale, both buyers and sellers have a responsibility to know the business inside and out if they want to get the most out of a transaction.

Click here to read the full article.

Copyright: Business Brokerage Press, Inc.

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The Rise of Women Business Owners

The National Foundation for Women Business Owners (NFWBO) identifies trends relating to the small business climate for women.  New studies examining the role of female entrepreneurs by the NFWBO have yielded some surprising and eye-opening results.

A joint IBM, NFWBO study of the top fifty women business owners as well as 10 additional “up-and-coming” business owners reached several interesting conclusions.  The women in the study covered a diverse array of industry categories including 27% in manufacturing, 25% in retail and 10% in real estate.  46% of the women inherited a business and over 50% started their own businesses, with 34% starting businesses themselves and another 17% starting businesses with others.

A Preference for Flexibility

One key part of the study centered on the fact that women business owners, in general, appear to prefer smaller operations.  Among the 8 million women-owned businesses in the U.S., a full 75% are one person operations.  Through ownership of these businesses women achieve a high level of flexibility in their work schedules.  It is believed that this flexibility improves the odds of women keeping their home lives satisfying and rewarding.

Overall, millions of women are ignoring the notion that small businesses do not equate with success.  While NFWBO research indicates that fewer than 1% of small women owned businesses generate over a $1 million in sales, there is no doubt that women are showing their strength in numbers.

Tackling Loan Issues

One major obstacle women business owners have faced comes in the form of bank loan inequities.  Recently, for the first-time women owned business are experiencing access to business loans on par with male owners; this may be due in part to the increasing number of women in high bank positions as well as banks now seeing the previously untapped potential of women-owned businesses.  The NFWBO has also discovered that women tend to direct loans towards business growth.

Internationally Owned Businesses

On an international scale, the NFWBO studies have shown that women business owners often come from similar backgrounds and express the same concerns regarding business issues.  Today, female business owners represent between one-quarter and one-third of the world’s independent business owners and have become increasingly vocal as evidenced by female participation at an international conference in Paris sponsored by the Organization for Economic Cooperation and Development (OECD).

A Trend Towards Progress

To date, many obstacles have been overcome.  Simply stated, the future looks very bright for women-owned businesses around the globe.

Copyright: Business Brokerage Press, Inc.

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The Tremendous Importance of Simply Saying, “Hello!”

Far too many customers have grown to expect poor customer service.  Whether its rude employees and customer support or impersonal robotic phone system responses, customers are often shocked when they receive pleasant customer service.  In such a climate, it is clear that businesses that simply treat customers well are taking advantage of a huge opportunity.

If you’ve ever personally called a credit card or cable company looking for help, then you already know that it can be something of a depressing and even Kafkaesque experience, leaving you feeling drained.  More than likely you don’t feel too positive about any automated experience that bounces you around from one hold menu to the next.  Summed up another way, hold music is never a fun or rewarding experience.

Communication is Always Changing

In the “old days” a telephone call was often a customer’s first experience with a business.  Now, the game has, of course, changed, with most customers first experience being via the business’s website.  While we can’t predict with 100% accuracy how businesses with be communicating with their customers in the future, we do know one fact for certain.  The human touch will likely be valued for a long time to come.

Your Website is a Valuable Tool

The initial point of communication with a client, whether it is via telephone or your website, is of critical importance.  If a customer has trouble finding key information about your business, such as your location, hours of operation or an easy to understand menu of what goods or services are offered, then they will take their business elsewhere.  Consumers don’t generally wait for businesses to get their “act together.”  They simply move on.

Simply stated, you want your business’s website to be very user-friendly, streamlined and intuitive as possible.  Keep in mind that you understand your business and what it offers, which means you may not be the best judge in spotting flaws in your website presentation.  For this reason, it is best to test your website designs with many different potential users who have little or no information about your business and what goods and services you provide.

In the end, every single client is valuable.  For every client you lose represents both a potential loss of revenue and revenue being placed in the pocket of your competitor.  Don’t let customers slip away simply because there wasn’t a friendly voice answering the phone or your website lacked clarity.

Copyright: Business Brokerage Press, Inc.

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