Keeping due diligence simple is not a simple task!

Busy week this – starting work on the due diligence questions related to a small acquisition we are making on behalf of a client. Trying to keep it simple and appropriate to the size of business and transaction, but considerable work to reduce the usual ‘War and Peace’ type document to something sensible.

Also finalising the business plan to source the necessary funding for the acquisition – three years of projected cashflow, profit and loss and balance sheets, tempering the client’s natural enthusiasm – and optimism – with a dose of reality so that the lenders will see ambition within a well researched and conservative plan.

Turning dreams and ambitions into columns of figures that tell the right story is something I’ve always enjoyed. Even in the current climate it is still possible to find the right investor if the plan is good enough and seeing that story unfold is a source of great satisfaction.

Its a truism that 20% of sales people get 80% of the business.

I don’t know where that statistic comes from but I do know that it works for me.

A lot of people give up on a prospect after a couple of  calls that go nowhere but I learned from experience that being persistent often pays off.

Obviously you need to temper your persistence with a strong dose of realism so that you dump any prospects who are either never going to be converted, will be too much trouble as customers or who can’t pay (different to won’t pay!), but those who you see as genuinely worthwhile potential customers or clients – just keep them in the diary.

I recently had a very successful meeting with the MD of a clothing firm that I first met five years ago. At the time they were undecided about how they wanted to progress but I was convinced we were right for them and kept plugging away at keeping in touch. Not always as regularly as I would have liked and sometimes with little apparent result, but over time an email here and a phone call there started to bear fruit.

The MD was interested in our services but was very busy – often travelling overseas – so I just kept on trying, by now making sure I contacted him regularly, but not too often to become a nuisance. If he put me off because of a trip I would enquire in my next email how the trip went and so on – keeping his attention by talking about his interests. And so after five years and countless emails and calls I finally got the appointment – and a second meeting and eventually a new client.

Don’t give up on the worthwhile ones and if you get a call from me – expect me to keep calling!

I’m often told “My business is unique”. Usually it isn’t.

One of the great things about my business is the number of different and fascinating people I can meet in the course of advising them or negotiating with them on behalf of clients.

Just in the past few weeks these have included: a nightclub on the South Coast, a golf and conference centre owner with very ambitious exit plans, an electrical distributor in Mumbai, a fashion clothing label wanting to move into retail, an equipment rental company on Ibiza and a more mundane  IT reseller – which was actually the most interesting business wise, a £4m MBO.

While each of these businesses has unique aspects, every business has to run to the same principles in order to be successful.

As soon as a business owner grasps that and starts to do the right things (whether they like it or not) it doesn’t matter what they are selling, they stand much more chance of making a healthy profit.

Enthusiastic young entrepreneurs are a joy to work with

Spent part of today advising two very young entrepreneurs about business plans, cashflow forecasts and web site design and answering a hundred other related questions. Absolutely brilliant to see two early twenty somethings pitching a very credible business that makes use of their experience and plays to their strengths as individuals.

Importantly, although they are brimming with enthusiasm and just want to get started they recognise the need to plan, to raise some initial working capital and to take advantage of all the advice and support they can get.

Two future Richard Bransons by the look of it!

Buying a business needs the art of negotiation

Visited a very pleasant part of Kent today to negotiate the purchase of a small design agency on behalf of our web design/developer client.

It was a relatively small transaction and pleasant people to boot, but still a proper negotiation required to get the result our client wanted.

Negotiation is a real art – especially so in the corporate world.

I’ve always enjoyed it and think this is down to the preparation:

• always make sure you know exactly what result you are aiming for,
• be well prepared,
• have some minor points you know you can giveway on in order to maintain your position on the main issues,
• always try to get to the magical win-win result.

When acquiring businesses it’s important that no one feels ‘shafted’ in the process as the negotiation is only the start of a long process and there’s plenty of opportunities for those who feel slighted to cause problems along the way.

Things are looking up by Adam Hawkins http://anodizeproductions.com

Things are looking up for trading with larger companies.

How can smaller business make the most of this trend?

A growing number of Britain’s manufacturers reported buoyant trading conditions over the past three months.

A new survey published by EEF, the manufacturers’ organisation, and BDO Stoy Hayward said that this is on the back of rising demand in overseas and UK markets.

The second quarter EEF/BDO Manufacturing Outlook report indicates that the broad-based recovery, which began at the end of 2009, has gathered pace. Output and order balances hit their highest levels since the survey began 15 years ago.

According to EEF, manufacturing is responsible for 55% of UK exports and its productivity regularly outpaces economic growth. All of this helps the UK maintain its position as the world’s sixth largest manufacturing nation.

How can smaller businesses benefit?

If you have pulled back from selling to manufacturing businesses because of the recession, now is the time to pick up the threads and start prospecting again. However, be prepared for big businesses to expect longer payment terms so either get agreement for faster payments before you start or factor this into your cash flow so that you don’t get caught out.

For more ideas, take a look at some of our case studies about business recovery.

Do you have examples of business picking up? Let us know ….

More money by Adam Hawkins http://anodizeproductions.com

So the recession is officially over.

Hooray!

Now for the really hard part – surviving the post-recession downturn that most pundits expected and most firms are now experiencing.

Strong leadership can make a huge difference to success or failure – never more so than today, so here are some things to consider:

1. Understand the big picture in your industry or sector – be sure of the true position.

2. Adjust sales forecasts to accurately reflect the true circumstances. Review every month.

3. Cashflow must be maintained, but it’s catch 22 because that can take resource away from sales and other vital activity. Deploy your people to be effective TODAY.

4. Target cuts carefully – at waste rather than core activity.

5. Keep an eye on the future – don’t act precipitously. Short term cost savings can result in being under-resourced when the upturn comes. Judgement is crucial.

6. Focus on customers – understand and try to help resolve your customer’s problems.

7. Innovate. If cashflow allows don’t stop all R&D. New products and services will help boost turnover and profit when markets improve.

8. Look for opportunities. Asset values are low and research by McKinsey & Company shows that effective acquisitions during a downturn “created significant value”.

9. Motivate. Make certain that you get staff on your side to retain the best and make sure they don’t leave as soon as the jobs market improves.

10. Action. Don’t be paralysed by fear, focus on your USP and take appropriate action.

Anything you’d like to add ? Leave your comments below ….

Pricing is one of the main issues that keeps a business small and prevents expansion.

Most businesses I work with have a problem with pricing. The smaller the business, the bigger the problem.

Nigel Botterill, owner of the hugely successful “The Best of” franchise as well as several other businesses summed it up beautifully in a talk in Cambridge recently. He described a scenario around a family celebration that involved having 300 irreplaceable photographs and slides scanned and put on a DVD in order to put them in a book. He was told the job would take about 10 days. Nigel asked the audience what they would charge to do that job.

What goes through your head when you are asked for a quote?

Are you worried about overpricing? Do you think its better  to have plenty of work and make just a little profit rather than risk losing the work? What would you charge? How would you approach it?

• Do the sums on a day rate x 10?
• Work out a price per photo and a price per slide?
• Do you have a different way of approaching this pricing issue?

The answers in the room varied from a few hundred pounds to £5k. What do you think?

I’m a great fan of Seth Godin’s blog and he recently posted a comment about people being afraid of buying apples in case they made a mistake and wasted their time or their money.

I come across this all the time with business owners who are so innundated with offers from coaches and consultants with promises ranging from improbably increased profits to all their dreams coming true that they end up doing nothing.

Nothing is not quite the right term.

They end up worrying and working longer hours to try and turn around a business that they have invested in heavily, both emotionally and financially.

However, I know from years of working with business owners that having someone who can negotiate with banks and creditors and get them a better deal can often make all the difference. Most business owners can look at someone else’s business and spot what needs to be done to improve it but they’re often too close to their own trees to see the shape of the forest.

Most of us don’t really worry about buying the wrong sort of apple. If we don’t like one sort we chuck it out and try another variety but choosing someone to help you turn your business around requires a lot more investment in time and money. That’s why we’ve found a source of funding that may mean you don’t have to risk your own money on finding out if we’re any good or not.

If you’d like to try our type of apple give me a call on 01480 830282.

The law, taxes, sales, marketing, finance, HR and health and safety are just some of the areas you need to be aware of, and that’s as well as your own speciality in terms of the products or services you are selling!

In a large corporation you’d have specialists to look after all of these functions but in most SMEs the owners/directors have to wear several hats and often need to find specific information quickly and easily.

In pre-internet days, information was a valuable commodity. The modern type of encyclopaedia first made an appearance in the early 1700’s and until the advent of the www finding information was a time consuming activity, usually involving many reference books that had to be kept updated.

Now that almost any information is freely available via the various search engines, the problem is often finding too much. There are 72 million references to employment law in Google!

You might be one of the hundreds of businesses that employ freelance consultants to look after various specialisms but these are largely driven by your awareness of knowing what needs to be done or the questions that need to be answered.

Very often you just need some basic information to help you to decide whether you should seek specialist advice or whether you can handle a situation yourself. So where do you turn when you want quick, reliable information?

Many professional or membership organisations offer free information services and there are several specialist Business Information Services that can be accessed by subscribers. The leading Business Schools also offer access to their on line information banks through a membership service.

The British Library http://www.bl.uk/collections/business/business.html search facility allows you to find links to the many sources that are listed in their catalogue and of course local Business Link Services have free information services too.

If you find that you are constantly distracted from your main tasks and always looking for information on new projects and ideas, it may be a sign that, in common with many of the most successful entrepreneurs, you have Attention Deficit Disorder! Business coach David Giwerc has made a study of this condition and finds there are many cases where rather than being a disadvantage, it gives an entrepreneur an edge.

Take a look at the chart below & see if you have the typical signs!

Signs of ADD
Distracted, seems to always have something new to think about
Starts several projects at the same time, may not complete any of them
Distorted sense of time. For example, will spend hours playing a video game without realizing how much time has passed.
Visual thinkers
Hyperactive
Hands-on learners

Characteristics of an Entrepreneur
Constantly has new ideas for how to improve the business
Flexible. Approaches problems from several different angles, always ready to change direction if that is what is needed
Immerses him or herself in the job and often does not realize how much time has passed
Visionaries who paint a picture for others
Always on the go
Hands-on managers

We often find that our clients value the way in which a Mercantile consultation can focus on what needs to be done to bring about the desired change, leaving the business owner or entrepreneur free to do what they do best and keep the business running while the changes take place.

Your business may be eligible for a grant that could pay for us to work with you so if this kind of partnership is something you’d like to explore, just give me a call on 01480 830494.

Check out some of our case studies to see what we do.