If 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.
I’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?
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/
No problem with the marketing vision for the folk at Specsavers. Not only do they have a very funny ad campaign – the ‘Should’ve gone to Specsavers’ series (my favourite is the father on the finishing line of school kids running race where he thinks the kid who comes first is his and goes crazy hugging him, while his own son plods up last). They also do some clever stuff with their marketing and sales strategies behind the scenes. On Friday I got an email from AA (automobile not alcohol version) offering me a free sight test with Specsavers plus $50 of their two for one deals. I started needing glasses for reading a year or so ago and whilst being content with my $50 pair of reading specs from the pharmacy, I thought an eye test could be a good idea. So I booked in and today went for my test, which was very thorough and examined my eyes from every angle as well as my near and far vision.
The good news for me is that my eyes are very healthy, my vision is pretty good for an old gal and the cheapo pharmacy readers are all I really need.
The good news for Specsavers is I spent $319 on two new pairs of reading glasses. Well, it was $50 off a $299 two for one deal. Plus of course I needed to spend the $70 on non-reflective coating naturally. I walked out of there somewhat dazed yet bemused by my own shopaholic tendencies. Good eyesight does not necessarily equate to good judgement obviously.
However, I was impressed at the marketing process that got me to spend this money on items I didn’t need. Let’s just recap:
Firstly the email from AA offering a free eye test. Specsavers have clearly have a partnership arrangement with this organisation, which has opened up one of the largest databases in New Zealand to them.
Then the offer of $50 off. I didn’t need to buy glasses. I was told as much by the professional who tested my eyes. But she did guide me towards the rack showing the lovely range of glasses they had, whilst telling me how much I’d enjoyed the extra comfort of an anti-glare coating. It was hard to resist. I mean $50 off. Come on. And the $299 options did look so much nicer than the $199 ones…
And to top it all off, the sales. Oh the sales. Yes by all means look at those ones, but have you seen these ones. And are you sure you don’t want anti-glare coating? Let me show you the difference, take a look through these glasses. One lens has the coating the other doesn’t. Have a look in the mirror. What a difference! Of course I bloody want the coating. Bring it on.
Sold to the lady with the trembling credit card!
Well done Specsavers on a job well done. Am so looking forward to a life without glare and the best looking readers in the cafe next week!
From the desk of liber8yourbusiness. Business mentors and experts in small business exit strategies.
Do you believe your beliefs can change the way your life works? I certainly do. The following 10 beliefs come from an article I just read at inc.com written by Geoffrey James and I was encouraged to see that I subscribe to these pretty much on a daily basis. What about you?
10 powerful positive beliefs
I always act with a purpose
I take responsibility for my results
I stretch myself past my limits daily
I don’t wait for perfection; instead, I act now
I learn more from failures than successes
I take my job seriously, but do not take myself too seriously
I use rejection to renew my humility and sharpen my objectivity
I use both negative and positive feedback to keep on target
I am careful about what I put into my mind and body
I seek out people who are similarly motivated to improve themselves
What are the positive and negative beliefs you carry around with you that influence your behaviour on a daily basis?
I had a big shock last week on my way back from Tonga. Upon the recommendation of a client I called into see a dentist for a second opinion on my troublesome tooth. The dentist was Dr Loy at the Caring4smiles practice in Epsom. After one hour with him I had committed to spending the next two years and over $20,000 with him, travelling from Wellington to Auckland to do so. When all I had wanted was advice on one dodgy tooth.
How did this happen?
Quite simply, Dr Loy told me the truth. And was the first dentist in my nearly 50 years of life to do so. It wasn’t pleasant. In fact it was quite horrifying. The truth is a very powerful thing. There are lessons to be learnt here.
But first let me tell you more about Dr Loy. His story is worth telling.
Dr Loy graduated ‘cum laude’ in Dentistry in India in 1978 and started his own private practice in Bombay. He told me how he invested 250,00 rupees in this practice and his ‘uncles’ (indian term for all male relatives) told him he was crazy. The average start up cost for a business was 60,000 rupees. He went out on a limb from day one, believing that if he built it people would come. His commitment from the start was to tell people the truth about their teeth. Within a few years he had so many customers he could no longer drive his own car to work, because people would follow him trying to get an appointment. He was the dentist to the Bollywood stars and could command any price he wanted. It seems when it comes to their teeth, the truth is an important factor.
Dr Loy had a wake up call about the importance of family the day his young son asked him where the bed was at work, claiming his father must sleep at work because he’d never seen him sleeping at home. Soon after Dr Loy moved his practice and his family to Auckland where after some years working part time to spend time with his kids, he began to build his practice from scratch all over. Again, he spent a fortune on start up – renovating an old villa in Epson, believing that if he built it, the people would come. And once again, his commitment was to tell people the truth about their teeth.
Now people like me are travelling all over New Zealand to see Dr Loy, turning their backs on the dentist they’ve had for years in their home town. Why? Because he tells you the truth.
So why is the truth so powerful?
Let me ask you this. Have you ever seen a picture of your teeth? I mean all of your teeth, inside, close up with a powerful camera? Have you had someone sit with you for half an hour and tell you the history of your teeth and predict the future based on everything they see? I suspect not. I certainly had never experienced this.
It was not a pretty sight. My back teeth are a mess. A patchwork of fillings made by different dentists over the years, who have been chipping away at my teeth for decades. There is very little actual tooth left on my major molars, and what is left is a spiderweb of fine cracks spreading all over, just waiting for me to bite on a popcorn kernel and crack them wide open. This is why I was visiting Dr Loy in the first place. A big molar cracked when I bit on a chicken bone causing major pain right into my roots. There is now doubt as to whether this tooth can be saved.
Dr Loy showed me that all of my molars are the same. A timebomb of cracks waiting to explode. It’s a matter of when not if. Teeth should never be repaired in this manner he told me. There should be a building plan with long term sustainability in mind, not a lifetime of quick fixes with no care for the future. He likened dentistry to the building trade. If you keep patching up a house with no plan, eventually it will fall apart and need total gutting and re-building. But if you get a good engineer and architect in and build with the future in mind, you can keep a house in great shape forever.
In half an hour Dr Loy did two very important things. He firstly destroyed my faith in my current dentist, who has been patching up my teeth for the last fifteen years and has never once shown me what they look like. Not once. And secondly, Dr Loy gave me total faith in himself by showing me the history and future of my teeth and offering me a solution.
We need a plan, he said. We can re-build your teeth and give you a healthy mouth for the rest of your life. It will take time and money. He was completely upfront about the cost and the options. He didn’t charge me for the photos. He said he was happy for me to take them somewhere else and get another dentist to do the work if I wanted. But how could I? I left angry at all of the dentists who have been chipping away at my teeth for years without a care for the long term impact. I only trust one dentist now. And that’s the one who told me the truth.
There are lessons to be learned here for all of us in business. What is the truth your customers need to hear that your competitors are not willing to tell?
From the desk of liber8yourbusiness. Business mentors and experts in small business exit strategies. Based in Wellington, New Zealand.
This was one of the slides at my talk to the Bubbles & Inspiration audience last night. My point being that sometimes to get ahead in life you have to ask for things, even if it seems far too bold an ask. My example was when I was a secretary in an advertising agency in London I asked the Managing Director if he would pay for me to go on a creative writing course. It was a huge agency and he was a busy man. I knew I had no chance of this happening. But I asked anyway. And he said yes! Who would have thought? If I had not asked, I wonder where I would be today. On a different path for sure. So just ask. The worse that could happen is someone will say no.
At the end of my talk a lovely lady came up to me and asked if she could do my twelve month programme and, because I offered a money back guarantee, could she pay at the end of the twelve months? Of course I said no. But I loved that she asked. I knew that she’d been listening and there’s no harm in asking is there?
From the desk of liber8yourbusiness. Business mentors and experts in small business mentoring strategies. Based in Wellington, New Zealand.