In the words of Roy Castle, dedication’s what you need – not only to be a record breaker but one of the UK’s many thousands of small business owners.

Being an entrepreneur invariably means long hours and big decisions, but what makes them continue with the journey when the going gets tough?

Here at Business Partnership we were intrigued to read a survey of more than 800 of the UK’s business owners by AXA Business Insurance.

One figure which didn’t surprise us is that 63 per cent of small business owners are motivated by having more control over their work-life balance. After all, when you work for someone else fitting in the school run and routine appointments can be awkward.

More than a quarter of the small business owners questioned say they’re driven by the prospect of early retirement. Almost a third said that they’re keen to stop working within the next ten years, while around 10 per cent are hoping to sell their business during that period. Others have exciting plans for life after work, including moving to sunnier climes or global travel.

One fifth of small business owners are looking at a much bigger picture – they want to make a positive difference in the world – and six out of ten quizzed feel that they’re already achieving this objective.

Ten per cent say they’re helping people to lead healthier lives and two out of five feel that they’re making their customers happy, which is bound to put a smile on your face every morning.

Although financial reward is an important factor, the study revealed that it’s not a priority for most entrepreneurs. The most financially motivated age group is the youngest, with almost 25 per cent of business owners aged between 18 and 34 stating that becoming wealthy is their main priority. At the other end of the scale are 45 to 54 year olds, with two in five responding that acquiring riches really doesn’t matter.

Whatever your dreams – to turn your existing skills and learn something new by setting up your own business or achieving the right buyer and the price for your business so you can sail off into the sunset – Business Partnership’s experienced network of business brokers across the UK can help.

Visit our offices page for contact information about the regional partner in your area.

http://www.youtube.com/watch?v=WazmOr2JBzw

In the previous comment in this series, we highlighted the large number of hidden variables affecting the value of a business and thus why ‘ballpark figures’ tend to be wildly out.

Now, we look at how easy it can be for owners to improve some of those variables to make their business significantly more ‘sellable’ – and valuable. Along the way, you’ll see why it really is never too early to start preparing for a sale: the longer you have, the more sellable your business can be. (more…)

If your companies sales have stalled after a period of rapid growth, you may have fallen into The Mile Wide Trap.

Jane (not her real name) runs a public relations firm. After studying marketing at school Jane went to work at a big advertising agency and over ten years learnt a lot of marketing disciplines, including public relations, advertising, direct marketing and social media.

Jane was ambitious and decided to start her own public relations firm. Her knowledge and network allowed her to quick gain a blue chip account handling their regional dealer events. Hiring some employees the start-up agency quickly began to grow. The events were a great success, so the client asked her to handle the annual sales conference. Again this was delivered with style and creativity.

Impressed by Jane’s approach to the event, the client asked her to handle some of the creative for their next advertising campaign. Jane now had a problem, her company was in PR, not advertising, but this was a great client, so she agreed to help out with the ads.

Then the client asked her to take a look at their website. Jane’s employees had no experience with web design, but Jane had done some website jobs back at the ad agency. So not wanting to disappoint the client, Jane started to personally handle projects that her employees didn’t have the ability to execute.

Jane didn’t worry about new business development for her because the more the client asked Jane to do, the busier – and more profitable – the business became.

Then one day Jane looked at her monthly P&L statement and realized that, for the first time, their sales were flat. The next month it happened again and then again. Jane had run out of hours in the day to sell – she had inadvertently fallen into The Mile Wide Trap.

The Mile Wide Trap
The Mile Wide Trap is dangerous when you do an excellent job serving

Asking customers to pay to join a special group of your best patrons can increase your turnover, as it encourages them to buy new products and services from you and also provides a healthy boost to your cash flow.

Just ask Jeff Bezos, the founder of Amazon.com and the chief architect behind Amazon Prime. When it started Amazon Prime, in exchange for £49 a year, gave customers:

• FREE one-day delivery with no minimum order size on millions of items;
• Upgrades to express delivery (before 1pm) for just £4.49 per item;
• Evening delivery to all eligible addresses for just £7.48 per item;
• Over 350,000 popular Kindle Books to borrow for free, with no due dates.

According to TIME Magazine, more than 10 million people have signed up for Amazon Prime programs worldwide. If you do the sums, that makes Prime a £500m business for Amazon. Like most memberships, payment was upfront, but also gave Amazon a big injection of positive cash flow.

However it is even more interesting to note what membership of Prime did to the buying behaviour of the average Amazon customer. In the USA, Prime customers paid their $79 upfront and therefore were eager to ‘get their money back’. They did this by purchasing a bigger and broader array of products from Amazon. With free shipping and a $79 investment to recover, members go well beyond buying books and now get everything from tyres to jumpers. According to TIME, the average Prime customer in the U.S. now spends $1,224 per year with Amazon vs. the average non-Prime customer who spends just $505. In other words, members spend almost three times more per year than non-members.

A lot of businesses have started some sort of loyalty program, e.g. buy nine coffees and the tenth is on us. The difference with Amazon Prime is they are charging customers to sign up for their club and the fact that customers pay to join changes their buying behaviour in an effort to recover their membership fee.

Amazon however did not invent the pay-to-join-our-club business model. Think about golf clubs. To join you pay a joining fee, which then acts as a barrier to leaving, dues are also paid a year in advance. Wallasey Golf club also insist members put £50 “behind the bar” every year to encourage use of the club. So as with Amazon Prime customers, becoming a member also changes buying behaviour regarding other items. When compared to someone playing 18 holes at a public course, the average golf club member is much more likely to buy balls from the shop, lessons from the pro, and dinner from the dining room.

Customers who pay upfront for a premium charge card tend to pay for a much broader and deeper set of services on their card, than people using an ordinary free card.

So do you have an elite club that your customers would pay to join? What does that require to provide a compelling offer as Amazon Prime?

If you build it right, not only will the club itself turn a profit, but it will also provide a boost to your cash flow and create a legion of sticky customers, who buy more because they paid to become a member.

Paul Dodgshon is a Regional Partner in Business Partnership, who have been helping business owners sell their businesses since 1979. You can learn more about Paul and Business Partnership here.

We can say with certainty that, at some stage in the future, you will not be running your business. So whether you plan to sell or pass it to family; now is the time to ensure that your business isn’t all about you. The latest research of 2300 companies from the Sellability Score* provides two key factors that are linked to the probability of getting an offer for your business when it’s time to leave.

1: You’re almost twice as likely to get an offer if your business can survive the “walk under a bus” test.

Ask yourself, “If I am out of action for three months and unable to work, would my business keep running smoothly?” The more your staff and customers need you, the less valuable your company will be to a buyer or even a family member (they know more than most how the business relies on you!). Try the following:

• Spend less time at the office. Start by not working evenings or weekends, and don’t reply if employees call. Once they get the picture, the best ones will start making more decisions independently;

• Keep a list of questions asked by staff, especially after your absence.

These will expose your weakest employees, the ones that need training (and what that should be) or that need to find another job.

As for you, it might come as a shock to find out how much your business has become such an essential part of you. However if you’re going to leave your business one day, you need to look at it as an way of making money, not as something that defines who you are.

2: Companies with a management team (as opposed to a sole manager) are getting offers at almost twice the value.

If you don’t have a management team, hiring a “right hand” is a good first move. A second-in-command can help you balance the demands of running your company and will advance your targeted exit time.

Here’s a four-step plan for hiring a right hand man (rhm), and thanks to advice from Silicon-Valley-based Bob Sutton, author of Good Boss, Bad Boss, for these views.

a: Identify someone internally. “The research is clear,” says Sutton. “Unless things are totally screwed up, internal candidates have a strong tendency to outperform external leaders.”

b: Give your rhm prospect(s) a special project, one that allows them to demonstrate their leadership skills to you and the rest of your team. If your candidate or one of your candidates excels, it will be clear to your team why he or she was selected.

c: Communicate your choice. If you pick a rhm from an internal pool, explain your choice to the rest of your team. At the same time, wrap your arms around those you passed over and make it clear how much you value their contribution.

d: Shift from manager to coach. “The transition from manager to coach is a gradual evolution where the goal is to ask more questions, spend more time listening, and spend less time talking and directing,” says Sutton.

Paul Dodgshon is a Regional Partner in Business Partnership, who have been helping business owners sell their businesses since 1979. You can learn more about Paul and Business Partnership here.

*The Sellability Score is a cloud-based software tool that allows a business owner to assess the “sellability” of their company. The researchers at The Sellability Score analyse the data from 2300 companies in a variety of countries to understand trends in the business market, with a special focus on how privately held owner managed businesses sell.

From sole traders to multi-national PLCs, the act of putting a business on the market can, in itself, damage a company at the very time that you are trying to maximise its value. What are the risks, and what can be done to reduce or eliminate them? (more…)

Warren Buffett has a philosophy, he invests in businesses that have a ‘moat’ around them – a moat that is hard for their customers to swim across and requires a large siege for a competitor to breach. Why? Because this protection allows the business to control it’s pricing.

Big companies can lock out their competitors by out-spending them in infrastructure or marketing, but, as smaller businesses, can we be smarter about ring-fencing our customer base? Here are four ‘spades’ you can use to dig a deeper moat around your business.

Expertise – Get qualified
Is there a certification or qualification that could differentiate your business? E.G. a Canadian company that disposes of radioactive waste decided to get licensed by the Canadian Nuclear Safety Commission. It was a lot of paperwork and training, but the certification is now a barrier against competitors joining the market.

Is there a certification or qualification you could obtain that would reduce competition?

Create an army of raving fans
Delighted customers will defend your business against the competitors entering your market. Apple know this and companies like Trader Joe’s in the US also defend their market share in the bourgeois bohemian (bobo) market, despite many, many stores trying to compete. Conduct a Net Promoter Score to find out if you have delighted customers.

Get your customers to integrate
Is there a way you can get your customers to integrate your product or service into their DNA and become key to their operations?

To change a Customer Relationship Management (CRM) system costs very little. Free trial software is everywhere!

So the real cost of changing CRM software is when a business starts to integrate it into the way they work, customising procedures and reports and training staff. Ask a sales manager to change his CRM