Business Insight Zone

By David Finkel, AllBusiness Blogger

A recognized authority on entrepreneurship shares best practices and expert advice for launching, growing and selling businesses. 

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We just finished with our 3-day workshop on building a Level Three business and I wanted to share with you one key section that we taught there that really struck a chord with the participants. 

It had to do with actually noticing the key milestones in your business that are in their own way landmarks of your business’s growth towards Level Three.  We’re so quick to notice how far we have left to go on this journey, but we just gloss right over these key milestones that indicate we’ve taken an important success step with our business.

Here is a list of 15 of these milestones that I hope you allow yourself to notice and savor as you build your business.  As one of the business owners who was at the workshop said (he owns two successful businesses), what makes the Maui community special is that it’s about more than just the money, it’s about the connections and value system we bring to the great game of business. 

1. Your first sale.  Proves that someone will buy!
2. Your 5^th Sale.  Proves it wasn’t a fluke.
3. The first major fulfillment mistake you make, and what it taught you.
4. The date you realized you really did have something of value to offer (and that your prices just might be too low.)
5. Your first sale that comes from your system, not from you. 
6. Your 5^th sale that comes from your system, not you. 
7. The moment when you have a workable bookkeeping system that doesn’t revolve around you (but with smart controls in place to protect against bad behaviors).  It gives you weekly A/R reporting, weekly sales reports, and monthly financial statements.
8. The first time you look at your product or service and realize that, “Hey, this is a really clear and repeatable value for people.”
9. The date you realize that your business is going to make it!
10. Your first key hire. 
11. The day you write yourself your first “Oh my god, is this really happening” owners check.
12. Day you realize your business has a life beyond just you.
13. The day you return from an extended vacation and you realize that your company did better without you there for that time.
14. The first time you realize that if you were to get hit by a bus, your business would still thrive.
15. Day you start missing the good old days when you were needed to run every area of your company and you look back nostalgically.  You are on a panel at a Maui Mastermind event telling your story and you realize that part of you is actually sad that those years of struggle are behind you.  It was sure an exciting time you’ll say.

This list is intended to spark you to pay attention and celebrate those moments in your business that demonstrate the progress you’ve made.  I’m all for being ambitious and keeping your eyes on the goals you’ve set, but to be fulfilled you’ve got to regularly notice the progress you’ve made.  Milestones like these help make your progress visible.

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No comments | Category: Business information,Career,Deals,Executives,Innovation & Entrepreneurship,Management,The business brain

By Gary T. Brooks, AllBusiness Blogger

A recognized authority on investment banking and exit planning for business owners shares best practices and expert advice for growing your business while planning your exit. 

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The classic take on whether you should sell your business to a Private Equity Group (or PEG) says that you will be able to negotiate a better deal with a “strategic” buyer than with a “financial” buyer. The reason is quite simple:  A strategic buyer will pay more.   The thinking is there will be synergies between the buyer and the seller which will translate into a higher return on investment (ROI) for the strategic buyer.  The higher ROI will justify a higher price.  The common opinion about PEGs is they are merely “financial” buyers; this means they cannot take advantage of buyer-seller synergies. Therefore, the theory goes, PEGs will always pay less.

This kind of thinking may have been valid five or ten years ago, but it is somewhat outdated in today’s merger and acquisition (M&A) environment.

First of all, there are synergies that PEGs can take advantage of to create shareholder value – and thus support a higher purchase price than with a strategic buyer.  These may not be the typical synergies that one thinks of when one company buys another, but they exist nonetheless.  For example, PEGs can contribute things like cash and management expertise to help their portfolio companies take advantage of growth opportunities. This creates shareholder value and increases ROI. 

Just the fact of having cash available in this current economic environment can also tip the scales toward the Private Equity buyer.  Many strategic buyers are in a survival mode, so the recent trend for them is to divest noncore divisions and product lines rather than to spend lavishly on acquisitions.  Although some high profile companies like Cisco and Google are sitting on mountains of cash available for acquisitions, most companies are cash poor right now.  

Unlike strategic acquirers, Private Equity Groups are sitting on a sizable war chest of cash.  According to an Ernst & Young report, PEGs currently have between one half of a billion and one trillion dollars in available cash to invest in buyouts and other transactions.  For more information on this, please see my post titled, “Private Equity in 2010 – An Optimistic Outlook.” I have seen a number of transactions where the price offered by a PEG was less than the offer made by a strategic buyer, but the higher cash component of the PEG’s offer made it the more appealing option for the seller. 

The most compelling change over the last few years is that many Private Equity Groups are no longer pure financial buyers.  These days they act more like strategic buyers, because they are strategic buyers.  In most of the private equity transactions that I have been involved in recently, we were able to identify a private equity group with a portfolio company in the same or a similar industry as the seller.  We had a buyer – the portfolio company – that could take advantage of all the synergies that a strategic buyer could. As well, we had a buyer – the Private Equity Group – that was able to provide the necessary funding to close the transaction in a short period of time and with a minimum amount of hassle. 

So selling your business to a Private Equity Group with a portfolio company in the industry rather than to a strategic buyer will usually be the better choice for most sellers.  In my opinion, this type of acquirer can offer a seller the best of both worlds.

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No comments | Category: Deals,Economics,Finance & Real Estate,The language of business

By Paul McCord, AllBusiness Blogger

A globally recognized authority in prospecting, business development, and personal marketing shares best practices for selling and leading top sales teams.

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Seldom do I review a book that has been on the market for years, much less decades.  But I ran across my old beat up copy of the Psychology of Sales Call Reluctance: Earning What You’re Worth in Sales and decided since the book was in such poor condition I’d order the newest edition.  After reading it again, I thought I’d do my small part to encourage as many sellers and sales leaders as possible to pick up a copy and set aside some time for some serious—and potentially highly productive—reading.

Authors George W. Dudley and Shannon L. Goodson are psychologists who have spent decades researching one of the key barriers to sales success—call reluctance.  The Psychology of Sales Call Reluctance: Earning What You’re Worth in Sales (Behavioral Sciences Research Press, Inc: 5^th Edition 2007) is designed to help sellers and sales leaders recognize the issues that are keeping them from prospecting effectively and to overcome them. 

Dudley and Goodson argue that sales call reluctance isn’t as simple as the fear of rejection it is so often claimed to be, but instead can be any one or any combination of twelve different issues that prevent sellers from fully engaging in prospecting. 

After first dealing with the difference between true call reluctance and call reluctance impostors (things that may look like call reluctance but aren’t, such as low motivation or low goals), the authors get down to business by laying out in detail the twelve root causes of call reluctance. 

These prospecting killers are:

1. Doomsayers:  those who over prepare for the worst case scenario
2. Over-Preparer:  spends time preparing to prospect, little time prospecting 
3. Hyper-Pro:  in Texas we’d call them all hat, no cattle—spends all their time on the show of success, no time on becoming successful
4. Stage Fright:  avoid group presentations
5. Role Rejection:  buried guilt or shame about being a salesperson or self-promoter
6. Yielder:  hesitant to be seen as intrusive or forward
7. Social Self-Consciousness:  afraid to market to upscale prospects
8. Separationist:  resistant to selling and marketing to friends
9. Emotionally Unemancipated:  resistant to selling and marketing to family
10. Referral Aversion:  uncomfortable asking for referrals
11. Telephobia:  fear of using the phone to connect with prospects
12. Oppositional Reflex:  a need for a great deal of approval but having very low self-esteem

Like a great many other sellers, I can spot myself in this list—my self-diagnosis is Over-Preparer and Role-Rejection (one of the role rejection issues the authors discuss is a seller’s discomfort with self-promotion as many sellers have been brought up to believe that self-promotion is unseemly and socially unacceptable).

Along with the description of the call reluctance issue, Dudley and Goodson include some self-diagnosis questions and typical work behaviors associated with the issue that will help you determine if you—or one of your sellers-is a victim of the particular prospecting killer.

The authors don’t leave you hanging.

Of course the book would be useless if it only diagnosed the illness without giving an appropriate and effective prescription to cure it. 

Dudley and Goodson lay out in detail six procedures (and a couple of minor ones) to counteract and correct the dozen call reluctance issues.   

Each discussion of a call reluctance issue is accompanied by a list of the countermeasures effective for treating it so you know what your illness is as well as the correct prescription to deal with it. 

A countermeasure is designed to change your thoughts, your feelings or your actions. Every call reluctance issue has multiple countermeasures–at least one countermeasure to deal with your thoughts and at least one to deal with your feelings, and almost all have a countermeasure to help change your actions.

Countermeasures are too complex to go into any detail here, but an idea of where the authors go with countermeasures can be gathered through some of the countermeasure’s names: Thought Realignment, Threat Desensitization, Thought Zapping, and Fear Inversion.

The Pros:

The Psychology of Sales Call Reluctance:

• Presents a research based assessment of the causes of sales call reluctance
• Provides detailed tested and proven prescriptions for dealing with the identified call reluctance issues
• Helps distinguish between true call reluctance and those actions that appear to be call reluctance but aren’t

Unlike most sales trainers and consultants who claim to know the cause of call reluctance, Dudley and Goodson have moved well beyond the “fear of rejection” assumption and have provided sellers with a well researched discussion of its causes and cures.  That alone is worth every penny of the book’s cost.

More importantly, the proposed cures really seem to work, which is far more than can be said for the old “just do it” formula so often prescribed by motivational speakers.  A real, workable, effective solution makes the book priceless.

The Cons:

Unfortunately there are cons—both in style and execution.

Let’s take the less important style cons first:

1) The authors skewer sales trainers, psychologists, and motivational speakers for claiming they have ‘the answer.”  Dudley and Goodson are just as guilty if not more so since they make such an issue of beating their straw man sales trainers, psychologists and motivation speakers about the head and shoulders unmercifully. 

2) The authors try too hard to turn a semi-academic work into something more akin to literature.  They get far too carried away trying to make their similes and metaphors cute and unique that they are almost laughable.  Yes, a minor point, but one that after awhile becomes weary. 

Now to the far more important execution issue: the diagnosis and prescriptions are going to be very difficult for a great many sellers to handle on their own (not to mention that an even greater number of sellers will never make it through the tedious detail of the book).  Many, if not most, sellers will have to have someone to both guide them through the book and to hold them accountable for executing the prescriptions.  I think far more sellers will be successful using Dudley and Goodson’s research if they work in conjunction with their manger, a coach, or mentor. 

If you’re a seller, I encourage you to get a copy of the book, work through it, and then find someone—a manager or coach probably—to work with you to diagnose your call reluctance issues (if you have any) and then work through the countermeasures.

If you’re a sales leader, even more this book should not only be on your bookshelf, but should be in your hands—you just might find it solves many a vexing problem your sellers have had.

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No comments | Category: Books,Business information,Marketing & Sales

By Chris Marentis, AllBusiness blogger

A globally recognized authority in Web marketing strategies shares best practices to help companies use new technology to enable dramatic growth.

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It’s no secret that social media has arrived as the tool for effective business marketing. As online searches for local businesses reach an all-time high and social media networks seem to grow overnight, local businesses are feeling the pressure to step into the world of social marketing in an effort to obtain cost effective, high quality leads.

While getting involved in social media is a great first step, this alone is not enough for Internet marketing to take your business to the next level, or to achieve the online marketing presence required to stay competitive in your local market. The key is to create your own lead generation platform that provides a steady source of high quality leads. These are the kinds of leads you cannot achieve through a lead service company or traditional channels.

Why rent leads or share them with other competitive businesses in your market when you can create your own stream of direct leads? With a properly integrated Internet marketing platform you can have at your fingertips local, paying customers who want the services you provide.

Because social media is so easily accessible and fairly straightforward, many businesses are hopping on the Twitter/Facebook/LinkedIn bandwagon in an effort to stay current. The problem is these businesses have no idea what they are doing; without a proper strategy, social media is essentially a waste of time. In order to make social media work for your business it must be part of the winning Internet marketing formula to dominate local searches:

Social Media Website structure SEO = Local Search Domination

To expand on this: 1. Social Media—Distributed content in social networks with the right keywords throughout the pieces, whether they are articles, blogs, Tweets or videos. 2. Web 2.0—Google Adsense, RSS feeds, social bookmarking and other ways to promote prospect participation online. 3. SEO- Search engine optimization woven throughout each and every piece of communication from the business, beginning with a properly structured and keyword-optimized website, and continuing throughout all distributed content.

When these essential pieces are in place, you are well on you way to dominating your local market. Because it is still early in the game, as a local contractor you have a huge opportunity to become known as the expert in your niche. You can make it to the very top of the local search engine listings if you actively implement this winning formula.

Much like during the times when the Yellow Pages was brand new and people could snatch up the best advertising spots before competitors swooped in, local contractors who seize this internet marketing opportunity now gain an important advantage.

Chris Marentis is the Founder and CEO of GenNext Media Corp., an interactive media and marketing services company. He is a former CEO of Clearspring Technologies and SVP of America Online. Marentis is also the publisher of the contractor marketing site Best Contractor Leads. He recently launched Surefire Social for Contractors, which guides home services contractors to increase profitable lead generation by leveraging next generation distributed web platform technologies and applications like social media to dominate niche markets.

Photo by webtreats used under a CC-Share Alike license.

No comments | Category: Marketing & Sales,Social media,Uncategorized

By Paul McCord, AllBusiness Blogger

A globally recognized authority in prospecting, business development, and personal marketing shares best practices for selling and leading top sales teams.

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“Hey, Paul, what do you have new and exciting for me?”

“I’ve had trainers come in and do sessions on cold calling, referrals, and networking and just recently had an all day session on using Social Media.  I’m really looking for something really new and cutting edge that can really get my people excited.  Do you have any training like that?”

“You’re not telling me anything new.  Isn’t there anything new and exciting that’s going to ignite sales?  We’ve had all the standard stuff; we need something radical, something really cutting edge.”

I hear these comments more often that I’d like as there is a segment of the population that is always looking for the newest, most innovative, original prospecting, selling, presentation, and customer service methods, techniques and strategies.  And even those who aren’t asking for something unusual or different are attracted by the idea of finding something really new, different, ground-breaking.

We live in a world obsessed with the new, original and different.  The old is so yesterday; the new is what’s going to give us the ANSWERS to the great questions of sales and marketing.

But there’s a serious problem with this drive for new, different, and unique.  A lot of the new is nothing but crap and a lot of the old are solid, proven methods and techniques that work because they are in line with how humans think and act.

As a graduate student I encountered this same type of thinking.  For anyone seeking to become a tenured professor producing new and original material is mandatory.  The problem is there isn’t that much new and original worth the paper it’s written on.  But producing worthwhile material isn’t the key to academic success—being able to defend the material—no matter how flimsy the defense or how outrageous the material—is the key to staying around long enough to become tenured.

Now, years later, I find the same situation in the training arena.  As trainers we have to make a name for ourselves in order to get the training and speaking contracts, in order to sell more books, in order to demand larger and larger fees.

How do we make a name for ourselves?  One way is through producing new and original material; new methods, new strategies, new concepts, new ideas, or new principles.   And just as with the academic, it really doesn’t make any difference if the new ideas, concepts, strategies and methods work as long as we can convince enough people that it is worth paying the price to give it a shot.  It’s even better if we can get a concept, principle, strategy or process named after us—that just might be the real ticket to the big time.

The problem is so much of this new and original is nothing other than the old put in a shiny new package which is often prettier but less effective than the old package—or, just a likely, pure old fashioned bullshit.

On the other hand, a great deal o f what is considered old and dated is still the best thinking in a great many areas of sales and sales management.  Want some quality material?  Get yourself a copy of Think and Grow Rich, SPIN Selling, How I Raised Myself From Failure to Success in Selling, Solution Selling, or Major Account Sales Strategy.  Before reading the newest, hottest sales guru, spend some time reading Zig Ziglar, Brian Tracy, or Tom Hopkins.  Too old fashioned for your taste?  Well, they haven’t been around training salespeople and managers since God was just a boy because they don’t know what they’re talking about.

I’m not saying that we shouldn’t pursue new avenues, new study, new thinking.  I believe we have a tremendous amount to learn about sales and marketing, about how people make decisions, how they purchase, how to connect and relate to them.  I think we’ve really only begun to plumb the world of sales and marketing.

And certainly there’s some great (and original) thinking going on today—look at Charlie Green, Dave Brock, Jill Konrath, Jonathan Farrington, Sharon Drew Morgan, and many others.  All of these men and women are contributing their original thought and helping us become better sellers, sales leaders and marketers.  But even within this illustrious group you’ll find the vast majority of their material builds on the best thinking of the past rather than trying to reinvent sales and marketing.

Don’t be conned by the claims of new, of ground-breaking, of revolutionary from the latest sales guru.  As Ecclesiastes says, there’s really nothing new under the sun.  Instead of seeking the new, seek the proven; instead of looking for the original, look for the effective; instead of trying to find the easy way, find the way that is ethical and works.

Just because it’s the old time religion doesn’t mean it won’t work in today’s marketplace; just as because it is new and different doesn’t mean it will work.  In fact, if it is new, original and ground-breaking, chances are great it won’t work.

No comments | Category: Uncategorized

By Jonathan Farrington, AllBusiness Blogger and Sales Leadership Coach

A globally recognized business coach, mentor, author and consultant shares the best practices for sales leaders striving for success in today’s market.

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You probably know that I am vociferous evangelist for referral selling: I have written extensively about it; co-presented with two of the world’s leading authorities on the subject, Joanne Black and Paul McCord, and regularly lecture on it.

Here are some interesting facts that may surprise you:

• 85% of all sales people do not generate enough quality referrals
• Sales people who actively seek and exploit referrals earn four to five times more than sales people who don’t
• Referral business closes and converts more than 70 percent of the time

So, why is referral based selling so powerful?

Quite simply, because a referred customer is already pre-sold on the credibility of the sales person, their company and the relevance of the products/services sold. These types of opportunities are much warmer than a cold-call based opportunity because it maximizes the goodwill, inherent in the relationship between the referred customer and the referring person.

By association, sales people are consequently perceived in a different light compared to those that have made contact ‘out of the blue’. The costs of selling to a referred customer are reduced because they are easier to see, and are likely to be reasonably well qualified so that the probability for converting the business is much higher.

Generally speaking referred prospects will accelerate through the sales pipeline at a much faster rate than other types of opportunities, and they will also be more receptive towards providing future referrals.

What are the biggest barriers to getting referrals?

If asking for referrals has not been included and communicated in the sales process, this will deter sales people’s focus as they will see asking for referrals as a ‘nice to do’ rather than a ‘must do’.

This in turn usually means that there is no rigorous method for measuring and monitoring how many referrals are generated and what the conversion ratios are for closing referred customer business.

Energy goes where attention flows, so without specific attention to this sales people are unlikely to invest their energy in this direction. (Even if they are firm believers in the positive impact that referrals can create!). For many sales people asking for referrals is uncomfortable because they feel unsure about how to do this effectively, and they aren’t confident they will get their desired response. If people don’t know how to do something and they believe that what they are doing will damage their existing relationships, then it’s better to avoid it all together. Additionally, if sales people make the common mistake of asking for referrals too early on in the relationship this can result in more refusals that further erode sales people’s confidence.

Therefore, to optimise the use of referral-based selling the following components are vital:

1. Asking for referrals and acting on them needs to be incorporated in the overall sales process
2. Metrics around referrals should be sought and evaluated on a regular basis, because this contributes towards furthering the rationale for generating them
3. Development and training needs to be delivered to the sales team so they can maximize the impact of referrals and feel confident with this skill

Jonathan Farrington is a globally recognized business coach, mentor, author, consultant, and sales strategist, who has guided hundreds of companies and thousands of individuals around the world towards optimum performance levels. He is the CEO of Top Sales Associates, Chairman of The jf Corporation and Senior Partner at the JF Consultancy, based in London and Paris.

He also posts his highly popular daily blog for dedicated business professionals HERE.

No comments | Category: Marketing & Sales,Uncategorized

You may recall that some friends and I put together a panel for this year’s South by Southwest Interactive conference, which was held here in Austin back in March. Well, now the votes have all been tallied, and I’m happy to report that our panel made the list of favorite sessions!

Here’s the item from the SXSW site:

The Numbers Are In: 2010 SXSW Interactive Attendees Rate Their Favorite Sessions

Our panel’s average rating was 4.57 on a 1-to-5 scale. I like that score, but I’m sure we can do better. Which reminds me that the Panel Picker process for SXSW 2011 has started …

No comments | Category: SXSW

Yes, I’ve made this joke before, when Visa Inc. was getting set, late in 2007, to dwarf the Blackstone IPO. But it’s worth making again, since the Agricultural Bank of China is now planning an IPO on the Hong Kong and Shanghai exchanges that could be nearly as big as VISA plus Blackstone:

Temasek to invest up to $300 million in AgBank IPO (Reuters)

. . . AgBank’s Shanghai-Hong Kong listing will be the world’s largest ever IPO if it exceeds $21.9 billion. . . .

If AgBank raises more than the $23 billion it hopes, it will be the world’s largest ever IPO, beating out ICBC’s $21.9 billion dual listing in 2006. . . .

What does the AgBank IPO mean? A couple of things:

• It’s a reminder that, even though China’s economy has cooled somewhat, business in China continues to boom.
• Overall, there’s a deeper appetite for IPOs now than there was six, twelve, or eighteen months ago.
• Some companies, because of their wealth (Blackstone), their name recognition (Google), or both (Visa) can “make their own weather” in the IPO markets — forging ahead even when broader conditions aren’t ideal for run-of-the-mill offerings. Given its vast scale and deep pockets, AgBank belongs in that category.

Now all we have to do is pop some popcorn, sit back, and see how investors react to the AgBank offering when it happens in early July.

No comments | Category: Economics,IPOs

It’s unmistakably summer here in Texas. But anytime is a good time for spring cleaning, in my book. This week I’ve found myself clearing out all kinds of junk things from the many trouble spots where information / documents / ephemera tend to gather:

• Computer desktops (work PC + my laptop);
• Inboxes (work, personal, Twitter DMs, LinkedIn invitations, Facebook messages, etc.);
• The file stand on the desk in my office;
• The stack of “to be looked at” papers on my desk at home;
• Browser bookmarks (Firefox and Chrome);
• The nightstand where I put books and magazines; and
• Whatever other corners I’m forgetting.

Here’s the thing: I’m lazy. Well, no, I work very hard in some ways, but I can be lazy about filtering out information when it first comes to my attention. I download a white paper, bookmark an article, set aside a magazine — thinking, of course, that I’ll get to it “later.” (Believing in the myth that we’ll have more time later is, by the way, a known cognitive bias wired into the human brain.) That particular type of “later” never comes . . . so things pile up.

Time to unpile them. Here’s the simplest sorting system possible:

• Big Deal — This is stuff that actually moves some kind of needle: Does it earn you money? Does it teach you something you desperately need to know? Does it solve some Big Problem in your life? Is it a message from someone important to you? Then do it.
• No Big Deal — Everything else. Throw this stuff away without ceremony. Or, if you can’t stand to, just file it.

Yes, I’m being cursory, but that’s on purpose. It’s too easy, otherwise, to get mired in the many trivial details that assault us, rather than focusing on the few things that actually move us ahead.

Once you’ve made the Big Deal / No Big Deal parse, then you can do the other smart stuff — delegating as appropriate, filing efficiently, building your task lists, executing against your larger plans. But if you’re anything like me, all of that will go much smoother once you’ve cleared the decks of all the junk.

One more tip, borrowed from “The Cult of Done Manifesto”:

Banish procrastination. If you wait more than a week to get an idea done, abandon it.

So, don’t worry about all the “interesting” things you’ve collected over the past several days / weeks / months / presidential administrations. Just focus on what’s important now . . . and toss the rest.

Like I’m doing now.

What do you do to keep the clutter from piling up? And how often do you do “spring cleaning”?

~

Related post:

• “In economic terms, inventories represent waste.”

~

Photo by cogdogblog.

8 comments | Category: Blog housekeeping,Productivity