What’s the number one thing to consider if you ever want to sell your business?

soldIf you are serious about selling your business one day, it’s important to have a good idea who might want to buy it. Imagine spending 10 years building a business you intend to sell only to realise you have created something nobody wants to buy. If you build a business with a buyer in mind, you have a much better chance of building something they really want.

A potential buyer could be a larger player in your industry looking to grow through acquisition. This growth might be regional – they want a presence in your city or town and it’s easier to buy you than start from scratch. It might be strategic – you have a smart product or service they could add to their existing infrastructure – for example, a large accounting firm buying a small book-keeping firm to add value to their client base. Your service or product could become a ‘nuisance’ to a competitor and they buy your company to prevent it competing or to regain lost revenues. It could be a management buy-out, when senior employees raise the funds to buy you out. It could be a competitor of a similar size wanting to grow and willing to invest to gain rapid growth through acquisition. Another type of buyer could be a private equity group or even an individual who sees great potential in what you’ve built.

I’ve sold businesses to two types of buyer. A multinational bought my advertising agency and a local competitor bought my pet care company. My father’s photocopier business sold to his senior management team.

So who might want to buy your business? What are you building that could add huge value to someone’s offering? Now is the time to start thinking about these things.

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From the desk of Liber8me.  Business mentors and publisher of Liber8 your Business:  The revolutionary planning technique that will set every business owner free

To achieve a successful exit, it helps to view your business as a product…

man in jarA successful angel investor friend explained to me the concept of exit strategy like this:

To achieve a successful exit, it helps to view your business as a product. A good business person empathises with their customer and understands their reasons for buying your product. You know what need your product fulfils in the market and who will want to buy it. You use your expertise and experience to create the best possible product to meet this need. You build a relationship with potential customers with a view to making sales.

Now, step back and look at your business as a product. Why would someone want to buy your business in the future? Which companies could take your business and create more value with it? What needs do they have that your business could fulfil? How could you build your business to make it easy for them to acquire and integrate it with theirs? This is your market and selling proposition. And just as it takes time to build a customer base for your product, it takes time to build a relationship with your potential buyer. So start now.

Excerpt from Liber8 your Business: The revolutinary business planning technique that will set every business owner free

Here’s to a successful exit!

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Do you have the right mindset to be successful, rich and free? Rate your freedom mindset here…

welcome to financial freedomAs part of my Liber8me business mentoring programmes, I spend time interviewing successful business people. My key criteria for selecting an interview subject is that the person must have built and sold at least one successful business, which has created wealth and freedom of choice for them. I ask what they believe are the key traits that have made them successful. A pattern has emerged as all interviewees mention similar traits. Ten traits stood out and I believe form the foundation of the Freedom Mindset.

Each of the ten traits is list below with a score against them.  It’s time to take the test. Grade yourself on a score of 1 to 5, where 1 means ‘not at all’ and 5 means ‘totally got it nailed’, against each of the traits. Don’t feel you have to be close to a 5 score to be successful. This is a reality check to identify the areas you will need to work on as you build your business and your path to financial freedom.

1. Vision. Rate the clarity of the vision you have for your business when it is complete and you’ve created financial freedom from it.

1                      2                      3                      4                      5

2. Self-belief. Rate your confidence in your ability to build a business that will generate great wealth and freedom for you.

1                      2                      3                      4                      5

3. Passion. Rate your passion for your business

1                      2                      3                      4                      5

 4. Being goal-orientated. Rate the clarity of the goals you have set for your business

1                      2                      3                      4                     5

5. Planning. Rate your current plan for a business that will feed you wealth

1                      2                      3                      4                      5

6. Being action-focussed. Rate your ability to take action as needed.

1                      2                      3                      4                      5

7. Determination. How do you rate your determination to succeed?

1                      2                      3                      4                      5

8. Willingness to fail. How would you rate your willingness to learn from failures?

1                      2                      3                      4                      5

9.Being wealth positive. How would you rate your willingness to be very wealthy?

1                      2                      3                      4                      5

10. Giving back. Rate your desire to make a difference through your business

1                      2                      3                      4                      5

Review your scores for each of the 10 traits. In which areas do you already feel strong? Which areas do you need to work on? Keep these in mind as you continue to work on your building your business and your success.

Good luck!

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The above is an excerpt from my book Liber8 your Business: The revolutionary business planning technique that will set every small business owner free. Available now on Amazon.

What one thing will make your business more valuable to a future buyer? Build this ‘attractor factor’ for the future into your business plan today

money treeThis is an excerpt from my book Liber8 your Business: The revolutionary business planning technique that will set every small business owner free.  It’s such an important point when it comes to building a valuable, saleable business, I thought I’d share it in today’s blog:

How to command a premium price when selling your business:

Your reputation may get you noticed but by a potential buyer but it won’t get you that premium price. Business is business, at the end of the day. And once the buyer has made their approach, their focus will quickly switch from appearance to substance. They will have three words buzzing round their head from the minute they start looking at the inside of your business. Their focus is Return On Investment (ROI).

The sooner you demonstrate your company’s ability to make acceptable future profits, the closer you will come to sealing the deal you want. If you are serious about selling your business, your business plan should have clear goals for ‘locked in’ forward revenues – money committed to the business for a reasonable future period. A buyer will look at your turnover/profits from past years. They will probably find them interesting and give encouraging nods and praise how well you have done. But they really want to know what’s going to happen next. What profits can they expect when they own the business? You need to convince them their investment is as risk free as possible And the best way is to show them the amount of income that is ‘locked in’.

 Planning for forward revenues

How do you lock in future income? You need clients who have committed to buy for an agreed period in advance.

Sign them for the future

When I sold my advertising agency, a primary attraction for the buyer was the knowledge my key clients had signed three-year contracts, agreeing to a set amount of spending with the agency for each of those years. The buyer could see the worth of the future business they were buying and not just on projections based on past performance. The contracts significantly lessened the risk of losing those customers and their revenue streams.

Contracts

Most of us don’t want to sign contracts. We much prefer the freedom of taking our business where we want, and when we want. To convince your customers to sign contracts for future business, you’ll need to construct an attractive proposition that offers benefits in return for their commitment. For many businesses an effective way to do this is to create ‘packages’ whereby you offer a customer a pre-determined level of service for a set fee each month. You can also have a tiered approach to packages, so customers can choose from a range of different monthly fees depending on the level of servicing or type of products they want included in their plan. A tiered package plan could look something like this:

Starter Small Medium Large
List features included List additional features List additional features List additional features
From $125 per month From $245 per month From $450 per month From $850 per month

The benefits of signing onto a monthly plan should be made very apparent to customers. Typically you would have a higher hourly rate for those not on plans and over time be able to demonstrate to a client how they are better off with a set fee than running up ad hoc charges.

 Memberships

A popular method of locking in projected income is the membership model. It’s a more subtle and often complicated approach to secure forward sales, but it can be done. Gyms have been doing it for years. A common tactic for them is holding annual fees at the level of foundation membership – in other words, as long as you don’t take away your patronage, you avoid price increases. Loyalty cards are a simpler version – think of the cafes that create a sense of membership by giving you a card that entitles you to a free coffee after so many visits. The smart café operators quickly learn the percentage of customers who return to use the cards.

Keeping customers loyal and restricting churn can be time-consuming but if you can show your potential buyer you have repeat customers, and can quantify it, they’ll see extra value in your business.

Remember! A buyer wants future earnings, not past performance.

Avoid one-off sales

A business based on one-off sales is destined for hard work, not only for its daily survival but also when it comes to finding a buyer. In my advertising days, I came across many design companies that worked mostly on a project basis, designing a brand identity for a client and then struggling to get exclusivity on future projects. As an advisor to such companies these days, I always ask them to think of ways to lock clients into contracts – whether it’s for services (such as providing web hosting) or through methods of payment (monthly retainers, for instance).

The traditional retail model accepts that future earnings will be based on past performance and projected growth modelling. Most shop owners still seem happy for a customer to buy an item and walk away. But a buyer will still pay more for guaranteed earnings or, at least, income that is based on more than random chance. Having a decent database of customers, with information on how much they spend and when, is better than telling a prospective buyer you know nothing about where you money comes from. Imaginative retailers come up with clever ways to encourage repeat business. If you’re in retail, put some effort into finding a concept that suits your business and it’ll pay dividends.

LIBER8ING EXERCISE: THINK ABOUT FUTURE EARNINGS

Whatever type of business you have, take a few minutes to think of its future earnings. Do you already have a way of securing future revenue? If not, what could it be? How could you build a base of guaranteed future earnings from your clients to increase the value of your business to a potential buyer? Could you re-design your offering into ‘packages’ so that customers sign up for a monthly fee?

Excerpt from Liber8 your Business: The revolutionary planning technique that will set every business owner free.  Purchase the book here www.Amazon.com

My 5 biggest business blunders and what you can learn from them

oopsI’ve noticed when I’m working with clients that my greatest wisdom and biggest ‘aha’ moments come when I’m sharing a story about something really dumb that I did.  I think it was Winston Churchill who said ‘life is too short to learn from all your own mistakes’.  In business, I’ve made plenty and one of my jobs as a mentor is to help my clients to avoid making the same mistakes as me (they will have enough of their own to learn from, I can at least save them a little pain!).

So here are five of my doozies.  Read, weep and learn!

1.    I wrote my own employment contract

My first business was an advertising agency.  I’d prepared a business plan whilst at a business school in Hawaii.  I’d started my career as a secretary and then became an advertising copywriter.  I was a creative person with zero business skills.   When it came to employing my first staff member it never occurred to me that I needed a proper legal document written in accordance with the employment laws.  No, I just thought I should write down what I expected and get us both to sign it.  This actually worked fine with my first employee who was a young student fresh out of university and even more naïve than I was.  He just wanted a job in advertising and was willing to work his butt off to make it.  He was also very talented and happy to do whatever it took to make the place successful.  Lucky me!

My second employee proved not so lucky.  A young designer on his second job -not quite so talented, not willing to work so hard and with a huge drama hook waiting to explode.  I worked him very hard, demanded a lot of him, was fairly intolerant of his mood swings and plunked my high expectations fairly on his resentful shoulders.  One day (after using the f word many times in a shrieking voice) he walked out and didn’t come back.  Instead a personal grievance claim arrived from his lawyer.  In the letter his lawyer called my employment contract ‘a joke’.  He was right.  It was… but I wasn’t laughing!

Lesson:  Do not do your own HR.  Get your employment contracts approved by an employment lawyer.  Get help recruiting people and be sure to be clear on your expectations from the outset.  Make sure you hire people for their cultural fit as well as their technical skills.

2.    I got creative with my book keeping

A copywriter with no business experience… yup… that was me!  I realized I needed to keep track of the money stuff so I bought an MYOB accounting package.  I then merrily set about inputting all the data myself.  And when I was too busy I got my young copywriter apprentice to do it.  Two creative copywriters doing the books – brilliant!  Before long we realized we didn’t know what we were doing (really?) so I put an ad on Student Job Search and got an accounting student to do it for me.  Turns out he didn’t know what he was doing either.  By the end of two years in I had no way of knowing how we were going financially, no way of reporting.  It was more like BFM (Big Fat Mess) than MYOB.  Thankfully at this point I hired the most amazing person who not only tidied up my books, she became my right hand person and taught me how to run a business the right way – with an annual budget and monthly reporting.

 Lesson:  Do not do your own books.  Even if you do know what you are doing, as the business owner you should be spending your time on income generating activities… not on book keeping!  Learn how to manage your business using an annual budget, sit down every month with someone (ideally outside your business) and explain your results to them.

3.    I hired someone to do my selling

In year 3 things were gunning along famously.  We’d trebled in size and moved offices three times to keep up with growth.  We’d won our first major contracts with blue chip clients and put our name on the map.  I thought it would be good not to be the one to go out there doing all the selling.  So I hired a business development manager.  He was very expensive and impressed me hugely in his interview with his sales stories.  Within six months it was obvious he couldn’t sell advertising, even if he could sell other stuff.  Rumors came back that potential clients were not impressed with him… he didn’t know the industry well enough to think on his feet or wax lyrical about why our agency was better than any of the others.  He was damaging our reputation and I had to get rid of him.  It wasn’t his fault.  It was mine.  It was too soon to hire someone to do my job for me…. I was still the best person to sell our agency.  I had the experience and the passion.  I went back to hiring other internal roles to free up more of my time elsewhere and threw myself 100% into business growth.

Lesson:  In the early years of business, the owner is the best person to do the selling. No one else will have quite your domain knowledge, experience or passion.  Even if you don’t think you are very good at sales – find a way to make it enjoyable, get some training and focus on being passionate about what you do. 

4.    I burnt myself to a frazzle

In about year 4 I was the queen of burning the candle at both ends.  The business was getting bigger and bigger and with every stage of growth my worry seem to grow to meet it.  I was working long hours and not sleeping well.  I developed what a dear friend called ‘my purple people eaters’ – the imaginary monsters that were going to bring my business down – the employees who were not performing, the clients who were not happy and about to leave, the bills we wouldn’t be able to pay, the suppliers who were bound to let us down – I was living in the world of imaginary enemies and it began to play havoc with my health.  I began to have panic attacks to the point where I feared giving presentations (not good for the head of a leading advertising agency).  I would burst into tears for no real reason.  I was picking fights with my husband and neglecting my friends.  My life was seriously out of balance.  I felt so bad I wanted out.  I wanted to leave my business and go get a job where someone else would take all the stress.  But even that didn’t seem a viable option with a new overdraft and a growing team of people depending on me for their livelihoods.  Something had to change.  Some regular visits to a hypnotist showed that I was suffering from severe stress and I needed a break.  I had no choice but to take a month off and go to Europe.  With a clear head I realized it was time to trust my team and hand over some of the worry.  My life was more important than my business.

Lesson:  You cannot do it alone.  As soon as you start growing your team you need to find a way to share the load.  Focus your energy early on the processes and systems that will enable others to take over big chunks of the work. Share your problems with your team, encourage them to step up and find solutions to these problems.  Reward those who shine for you.  Introduce bonus schemes for clearly met objectives and teach your team to enjoy the game of business alongside you.

5.    I tried to control the big guns

When my business had grown big enough to afford the really senior people, I came face to face with my own ego.  And she wasn’t pretty, I can tell you!  Instead of trusting them to get on with their jobs, I tried to control them the same way I had more junior folk.  I stamped my foot when they wouldn’t do it my way, I threw my toys out and then apologized many times before I finally got the lesson.

Lesson:  When you are ready to hire senior people, make sure your culture and processes are firmly in place.  Have a very clear induction programme that shows how things are to be done in your company.  Get their agreement to your values and vision.  Hire for their cultural fit as much as their talent. And then… let go.  Once you have given them the context, let them do things their way.

So there you have it.  Five of my blunders… many more where they came from!  I hope you enjoyed hearing about my downs.  As I’ve said many times, business is a roller coaster and for every great high there’s a screaming low waiting to snaffle you up.  The trick is to become resilient and build a well systemized business with a great team to help your ride out the storms.  Easier said than done huh?

If you’d like to share your journey with other like minded business owners you might love our Acceler8me Programme.  Click here to apply for more information.

Bought to you by liber8yourbusiness.  Small business mentors and publisher of Liber8 Your Business. The revolutionary business planning technique that will set every small business owner free

Business mentor tip #89 – What to think about NOW if your business is ever to be saleable…

soldHere’s another extract from my very soon to be released book, Liber8 Your Business… talking about the critical factors of the ‘build-to-sell’ model (note, in this chapter in the book I talk about 3 models).  I cannot stress enough how important it is to starting thinking about this NOW rather than when it’s too late.  Check out these 5 critical factors and get in touch with me if you need help…

Critical success factors of the build-to-sell model

1. Set your end goal. Decide how much you want to sell it for and by when, and work backwards. In my book, Liber8 Your Business, I show a simple formula for working out your potential end value, with a link to the online calculator.

2. Name your buyer. It’s important to have a good idea who might want to buy your business in your early planning. Imagine spending 10 years building a business you intend to sell only to realize you have created something nobody wants to buy. If you build a business with a buyer in mind, you have a much better chance of building something they really want.

A potential buyer could be a larger player in your industry looking to grow through acquisition. This growth might be regional – they want a presence in your city or town and it’s easier to buy you than start from scratch. It might be strategic – you have a smart product or service they could add to their existing infrastructure to create additional revenue streams. An example of this might be a large accounting firm buying a small book-keeping firm to add value to their client base. Your service or product could become a ‘nuisance’ to a competitor (read more on a strategy called ‘kicking sand in the gorilla’s face in the Liber8 Your Business book) and they buy your company to prevent it competing or to regain lost revenues. It could be a management buy-out, when senior employees raise the funds to buy you out. It could be a competitor of a similar size wanting to grow and willing to invest to gain rapid growth through acquisition. I’ve sold businesses to two types of buyer. A multinational bought my advertising agency and a local competitor bought my pet care company. My father’s photocopier business sold to his senior management team. A good friend has built three recruitment agencies. The first sold to one of the original partners, who bought out the other partners. The second sold to a multinational looking for regional representation in her city. The third is in its early days of growth and I’ll watch with interest who buys it (I have no doubt it will sell because I know the founders expect this and will build with this in mind). Another type of buyer could be a private equity group or even an individual who sees great potential in what you’ve built.

So who might want to buy your business? What are you building that could add huge value to someone’s offering? Now is the time to start thinking about these things.

3. Remove the dependence on you. To make your business attractive to your future buyer, it cannot be dependent on you. That’s a key message I want you to learn from this book:  No one will outright buy a business that’s dependent on its owner.

If the buyer takes you out of the picture and no business remains, they will either insist you stay in the business or they will walk away. So whatever your strategy is, whatever your end goal, whatever that picture is of your shed or your man on the moon … it needs to not have you in it. I did that at my agency by making sure the clients loved the business but weren’t dependent on me. In the last few years, I hired two senior guys and put them in charge of our biggest clients, so my buyer could see the clients were not reliant on me.

4. Start building a team as soon as you can. I couldn’t afford to bring in those big guns until later in my business growth. I started by hiring people I could afford, with a couple of youngsters straight from college. I trained them to do things exactly the way I wanted. I call it ‘training your clones’ (learn more of this strategy in the bonus chapter called The Acceler8or Approach to business development at the end of the book). I kept building my team that way until we could afford to hire more senior people. And then we had to make sure we had a really strong culture to manage senior people.

 5. Secure future earnings. Getting all our key clients on fixed-term contracts was another critical strategy that worked. They all had two or three year contracts so when the buyer looked at my business they saw a high level of spend committed for the next three years. This was an important lesson I learned from my businessman father. Remember I told you about his photocopier business and how he sold it and retired soon after his fiftieth birthday? One of the best secrets to success he shared with me was, ‘you’ve got to have a back end.’ To explain, he gave the example of his own business. While the sale or lease of each copier was worth a lot of money (especially in the 1970s when these huge machines were a relatively new addition to business productivity) the real value came from the additional contract that went with each machine. This locked the customer into buying all their ink, toner and paper for the life of the machine, as well as regular paid servicing – which meant that, for every machine sold, my father had income guaranteed for the next 10 years, enabling him to predict with complete accuracy his future income. You can see why this made by father’s business attractive for a buyer. They could see a guaranteed return on their investment. It made sense to me when I started my own business, and I hope it does to you too. It will get you a higher price when you come to sell!

And what it all boils down to is this:

A business with committed future revenue that is not dependent on its owner to deliver that revenue is a business worth investing in.

So please, please, please do think about it.  Get in touch with me if you need help with it… laura@liber8yourbusiness.com
Be free and happy
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From the desk of liber8yourbusiness.  Business mentors and publisher of Liber8 Your Business… coming soon, register your interest here: www.liber8yourbusiness.com
To join a group of committed business owners on a fast track journey to a saleable business, click here for more information:  http://www.liber8yourbusiness.com/the-acceler8me-programme/

Freedom is knowing you’d keep doing what you are doing if you knew you were about to die

STEVE-JOBS1

I just watched this amazing speech from Steve Jobs when he knew he was going to die.  It moved me as I expect it will you.  Watch it by clicking link below then come back and tell me what you think.

http://youtu.be/a5SMyfbWYyE

Understanding freedom and how important it is to us as human beings is becoming an obsession of mine.  Freedom is the very essence of happiness.  Life is a gift, we don’t have long in the scheme of things.

So what is your answer to the late Mr Jobs’ question?

From the desk of liber8yourbusiness. Small business mentors and publisher of Liber8 Your Business:  The revolutionary business planning technique that will set every small business owner free.  Get your copy here https://liber8yourbusiness.com/

The ten traits of wealthy entrepreneurs. What are they and do you have them? Score yourself here

financial freedom imageOver the past two years I have interviewed over forty successful entrepreneurs.  My criteria for an interview subject is that they must have built and sold at least one successful business.  Many of them have been serial entrepreneurs – having created more than one business and learned many lessons along the way.

As I’ve talked to these people it has become apparent that they all share certain traits that ultimately lead to their success.  If you want to succeed at your business (of course you do), you could do worse than focus on developing the traits exhibited by the rich and free.  Work out which ones you have in abundance and work on the ones you don’t.

Take a look at the traits listed below and grade yourself on a score of 1 to 5, where 1 means ‘not at all’ and 5 means ‘totally got it nailed’, against each of the traits. Don’t feel you have to be close to a 5 score to be successful. This is a reality check to identify the areas you will need to work on as you grow your business.

10 Traits of wealthy entrepreneurs:

  1.  Vision. Rate the clarity of the vision you have for your business when it is complete and you’ve created financial freedom from it.

1                      2                      3                      4                      5

  1. Self-belief. Rate your confidence in your ability to build a business that will generate great wealth and freedom for you.

1                      2                      3                      4                      5

  

  1. Passion. Rate your passion for your business

1                      2                      3                      4                      5

  1. Being goal-orientated. Rate the clarity of the goals you have set for your business

1                      2                      3                      4                      5

  1. Planning. Rate your current plan for a business that will feed you wealth

1                      2                      3                      4                      5

  1. Being action-focussed. Rate your ability to take action as needed.

1                      2                      3                      4                      5

 

  1. Determination. How do you rate your determination to succeed?

1                      2                      3                      4                      5                     

  1. Willingness to fail. How would you rate your willingness to learn from failures?

1                      2                      3                      4                      5

  1. Being wealth positive. How would you rate your willingness to be very wealthy?

 1                      2                      3                      4                      5

  1. Giving back. Rate your desire to make a difference through your business

1                      2                      3                      4                      5

Review your scores for each of the 10 traits. In which areas do you already feel strong? Which areas do you need to work on?   And what plan can you put in place to lift your game in your weaker areas?

In my book, Liber8 Your Business, I go into more detail about these traits and show you how to develop your strength in the areas you need to.  To be notified of the book launch just click here https://liber8yourbusiness.com/

From the desk of liber8yourbusiness. Small business mentors and publisher of Liber8 Your Business: The revolutionary business planning technique that will set every business owner free.

Pre-register for a copy of Liber8 Your Business here: https://liber8yourbusiness.com/

Find out about working with Laura here: http://www.liber8yourbusiness.com/one-on-one-mentoring-programme/

Listen to the brand guys… and change the name of your book!

books save livesSo the book is written… yes, it’s finished and off to proof reading next week.  Yipee!  One year and two months in the making.  That’s approximately three hundred 5 am starts, 70,000 words and a heck of a lot of late nights.  It ain’t no breeze this book writing thing.   But it’s done, my editor is happy (so far) and it moves onto the next stage.

Now we are into publishing and soon my baby will be off to be designed.  It will have a sexy cover and fabulous interior… can’t wait to see it.  But the question of what to call it came up again last week.  I’ve been calling it The Liber8 Factor – The revolutionary planning technique that will set every small business owner free.  Made total sense to me – it consists of eight stages, each with an exercise to take the reader step by step through my proven blueprint for building a business you can sell one day for millions.

But my brand designer says it should be called Liber8 Your Business.  Keep it simple, he says. This is what it does.  If it sounds like a duck and walks like a duck, call it a duck.  Call a spade a spade. Or something like that.

I’ve been sitting on it for a few weeks now and I’ve come around to it.  Liber8 Your Business… the first of the Liber8 Series.  Soon (well another several thousand 5am starts) there will be a series of Liber8 business books:  Liber8 Your Sales, Liber8 Your Marketing; Liber8 Your Team; Liber8 Your Social Media; Liber8 Your Presenting Skills… and many more besides (I’ll be taking a vote later in the year for the most popular title to come of the rank first).

I hope you like the title… I’ll be posting another excerpt soon.

Keep the feedback rolling in.

From the desk of liber8yourbusiness. Business mentors and publisher of Liber8 Your Business.

Wake up peeps! It’s March… you’ll be needing these 7 steps to the most practical budget…

budgetOne of the first questions I ask a business person who wants to work with me is… ‘do you use an annual budget?’  Would it suprise you if I say the answer is nearly always ‘no’?

Most small business owner operators do not manage their business by the numbers.  Which is CRAZY!!

I know, I used to be one of them (a budget athiest). This was many moons ago, before a wise person taught me the power of the budget. Now I realise you simply can’t be successful in business without one.  Hallelujah!

So … Your budget is the map of your business, it sets the targets and the parameters within which you have to work.  If you do a good budget and create a plan to achieve it year on year, you will grow a business with direction and discipline.  If you don’t… you’ll be in danger of spending too much money and too much time on things that don’t really matter, and too little money and too little time on the things that do.

So believe me when I say in my most Shakespearean tone … Get Thee A Budget Forthwith!

There is an entire seminar in the liber8yourbusiness programme to walk you though the best way to do this, and how to link it in to your long term goals.

But here are the 7 key steps:

  1. Decide what profit you want/need to make this year.  (Wait for my next blog on why profit is the only number that counts at the end of the day).
  2. Then put in your expenses for the year, using last year’s expenses plus some extra for growth.
  3. This will tell you what your Gross Profit needs to be (Gross Profit minus expenses = profit).
  4. The put in your cost of sales based on last year’s margin (Sales minus cost of sales = Gross Profit.  The margin is the % difference).
  5. This will tell you what your sales income needs to be to meet profit targets.
  6. Then spread all the numbers out across the 12 months, allowing for a ramp up across the year as your sales and marketing plans kick in.
  7. This is your budget.  Beside each budgeted figure each month there should be an ‘actual’ column. This is where you put in what actually happens each month so you can see how you are tracking against budget.

Of course you need an awesome plan to achieve your targets each month. That’s the game… set the targets, plan the attack and achieve them.

If you want to know more on how to do this and all the planning you need to achieve targets.. email me at laura@liber8yourbusiness.com for more information about one of my programmes.  Getting wise will most defintely accelerate your path to getting a viable, saleable and valuable business.

From the desk of liber8yourbusiness.  Business mentors and experts in small business exit strategies.