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Why Does Your Business Need a Mentor?

Running a business of any kind is a lifestyle. It’s not only a job or hobby, but it’s a way of being. The truth is the majority of business owners never mentally leave their work.

How many hours?
One of my favourite quotes says that “Entrepreneurs are willing to work 80 hours a week to avoid working 40 hours a week” (Lori Greiner), and if you have an entrepreneurial spirit, you know exactly what this means.

The silence of your room
On top of the amount of work, lots of self-employed creatives tend to be lone rangers. Don’t you just love your studio and atelier where only silence (optionally your favourite music) and creative muses are invited? Then again, you have to face the harsh reality, where you need to make new contacts and find clients interested in working with you and spending their money on your masterpieces. This business, marketing and selling stuff might cause you headache, I know. However, self-development gurus say that running a successful business requires from you to be physically and psychologically pain free.

Why you should work with a mentor?
Therefore one of the ways to avoid aches and pains in your business and feel supported on that less artistic part of your journey is to work with a mentor. It’s always easier to have someone who will show you the way and present shortcuts towards gaining adequate knowledge. It’s also beneficial to listen to someone who isn’t emotionally attached to what you do. Certainly you will sometimes need someone to slap you on the back saying “Great job!”, but there will also be moments when you will have to rely on someone else to graciously kick your butt. No doubt this will motivate you to venture beyond your comfort zone and prevent you from repeating the same mistakes over and over again.

What’s really great about learning from an expert is that you don’t need to reinvent the wheel. You will be given simple solutions that have worked for them in the past. So all you will have to do is implement them into your own venture. Cool, isn’t it? Also, referring back to the earlier statement above about the 80 hours per week, some mentors will be able to help you by creating systems in your business that require you to work less hours. Will you?

Let them be your authority
What’s really important while choosing a mentor is that you have to perceive them as an authority. The world is full of coaches, but finding the right one requires some effort. Not only do you have to like and trust them, you also need to be convinced that their goal is to make you a leader in your market and even in your own household. Here’s the most important thing; your mentor must be a leader who will empower you to become one yourself.

One of the people that inspire me personally in my business and my life is sir Richard Branson. When I read his latest book Like A Virgin: Secrets They Won’t Teach You at Business School I felt that I could only reach the stars if I wanted to. I also realised that I wasn’t dreaming big enough. My “big” dreams felt small in comparison to his vision of introducing mankind to space and underwater tourism!

It was the same with a Strong Woman: The Truth About Getting to the Top by Karren Brady. When I read her book I felt that I can also be a successful business woman, who raises two small kids at the same time.

To think over…
Honestly point out the areas which aren’t the strongest sides of your business and your life. Then you can start searching for experts in those fields. For example, if you wish to be better at business side of photography, find a photographer who is willing to give business lessons. If you need some help with your marketing, look for someone who is a marketing coach and so on. Then don’t forget to take action and implement your newfound knowledge into your business. Otherwise your (good) mentor will be obliged to kick your butt.

P.S: Have you got the desire to become a mentor? You can become one by supporting the Café Dream Community. Visit Café Dream site for details.

What You Need to Know When Selling a Business

CHAPTER 1, PART 1 – INTRODUCTION / GETTING READY

Overview

Every business is eventually sold or shut down… you don’t get to not do this!

But most businesses that are put up for sale NEVER SELL!

The purpose of this column is to help Business Owners plan and execute a successful internal or external succession/transition of a business, and to help buyers find and successfully buy worthwhile businesses. We will teach practical “street level” nuts and bolts about how to do this, but we do not intend to make you a legal or tax expert. You will still need your attorney and C.P.A., but you will know how to spot key issues, and you’ll know the major options available to you. This should translate into a major advantage for you when the time comes to transition your business.

Get ready first. We’ll provide more details in future articles, but here’s an overview.

Sellers

If you are not really a willing seller, with realistic price and terms expectations, then you are probably just wasting your time. Know what your business is realistically worth. Some companies are worth two times annual revenues for example, but most are not. Is your company for sale, but only if you can get X times annual gross revenues?

Know your tax situation, and what to do if you are sitting on a potential tax disaster. For instance, if your company is a “C” corporation (or has been within the last 10 years), then the wrong sale structure means some sellers might owe the IRS more than half of the total sales price for the company? Do you know if you have this problem? If so, do you know how to “fix” it?

What about payment terms? They affect both taxes and risk for both sides. The buyer can afford to pay more if the risk is less, or the tax effects are better. Ultimately, the “Price” is not the “Price” — terms are crucial. What counts is the after-tax cash-in-pocket you get to KEEP after you leave!

Perhaps MOST important: Be emotionally ready. This is your baby — are you really ready to part with it?

Contractually protect what you are selling. Can some or all of your employees leave and take key accounts with them after you sell? Can you realistically sell a company that might lose large blocks of its business in that manner?

Make it easy for successors to preserve what you are selling. Customer retention post-sale is crucial. How can you help the buyer keep what you just sold?

Make the buying decision easy for your successors. Start by preparing a short summary of your business as follows:

First, be able to answer three questions:

1. WHO’s your best buyer (make a list of top prospects)?

2. WHY would they want to buy YOUR business?

3. Why NOW? If your business is so wonderful, why are you for sale?

Create defensible pro-forma cash flow spreadsheets that show the true benefits of ownership you have received in the past.

If you receive benefits of ownership other than just profits and salary, make it easy for potential buyers to see it. Provide explanations for all the adjustments you need to make.

You may sometimes see this referred to as “free cash flow”, “available cash flow”, or EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). Regardless of the terminology used, the objective is to determine the true financial benefits of ownership.

If you are selling more than just customer accounts, create a pro-forma balance sheet as well.

Know how much business you do with your top accounts, and how you are going to ensure that they stay with the company after you are gone.

Know your vendors and how they are likely to react when you retire.

Be ready with all of these answers in advance, with most of them written down — perhaps even prepare a presentation book.

Put your best foot forward, but don’t misrepresent and don’t predict the future. You don’t know how the buyer will do in the future, and you don’t want to do anything that “predicts” results. Doing so can even be grounds for rescission of the transaction if things don’t work out for your successors.

Be ready before you have the first meeting.

Have abbreviated material ready to discuss and/or show, and be ready to provide more detailed information as soon as mutual interest is established and a confidentiality agreement has been signed.

This is probably the biggest sale of your life — you owe it to yourself to be ready.

What about “Price”?: “Price” deserves special attention, partly because it often quite an emotional issue. “Price” can be much more than just money to a seller. It can even be subconsciously seen as a measure of the value of a person’s life’s work.

One way to keep things in perspective is to keep in mind that the sale has to make financial sense to the buyer or you will not have a sale. It will have to “pencil out”.

What about payment Terms?: Terms are crucial to how a sale will “pencil out”. In fact, terms are often more important that price. In addition to a major impact on annual cash flow, terms affect both risk and taxes for both sides.

Win/Win Negotiations: Most likely you do not HAVE to sell, at least to one specific buyer. Likewise, the buyer most likely does not HAVE to buy your business. That means the sale is likely to fall apart as soon as either party perceives the sale to be a “lose”. Terms are often the key to a “win/win” result. Creative terms can even be a “win/win/lose”. (The “loser” is the IRS.)

Editor’s note: This is the first installment in a series of columns on buy/sell arrangements for any company, valuation and tax issues, shareholder internal buy/sell agreements, related estate planning, employment contracts and non-competes.

The authors will give you practical street-level understanding of the fundamental legal, tax and financial concepts you need to know about regarding the biggest financial events in the life of your business — there is nothing else like it available.

Since many business owners are buyers, and every business is eventually sold or shut down, this is a must for everyone who owns, plans to buy, or will eventually sell a business.

You’ll learn better ways to buy, sell, merge or internally perpetuate a company from a team of experts responsible for hundreds of successful business transactions. You do not need to be a technical expert, but you need to know enough to guide your attorney and C.P.A. This will teach you how.

In addition to the essential foundation on buy/sell arrangements for any company, this material covers related estate planning, valuation and tax issues, shareholder buy/sell agreements, employment contracts and non-competes, all as essential parts of a comprehensive package of business documentation.

Are You Building A Mailing List To Grow Your Internet Business?

Before internet marketing, local entrepreneurs and grocery stores depended on repeat customer support to grow their businesses. In reality, these businesses were actually developing a list of shoppers and buyers who were really loyal customers.

In small towns or villages, the customer has access to the local grocery store or businesses through foot traffic and can walk in and interact with the business owner during the posted hours or if they run into each other at the local fair grounds. This sometimes intimate contact encouraged loyalty.

With repeat visits, the business owner and customer have now established a relationship. Because business is conducted in a face-to-face manner, the business owner can now market his products through word of mouth and often has information to share with the customer.

The customer is now privy to information on product clearance, reduced price on goods, or new products coming.

Whereas most businesses of old were the local grocery store, today’s business owners now have the potential to reach a large number of customers with their products and services through Internet Marketing. This type of reach is global.

Internet marketing however is a lot less warm and friendly to a potential customer. This is in part because the customer does not know who he or she is dealing with and will need to be convinced in order to enter into a business relationship.

On the other hand, whereas local marketing was limited to the number of customers the marketer could attract, internet marketing is global and can reach millions of customers worldwide – hence the potential to build a huge customer base.

Building a huge customer base is possible through various marketing tools including, but not limited to:

• Social media

• E-mail

• Auto-responder

• Search Engine Optimization

Social Media is basically people talking to each other on the internet. Facebook, Twitter, My space are some of the sites that people exchange information. The information posted at these sites has the potential to become viral depending on popularity and demand.

E-mail is another way to communicate with potential customers. This is an excellent way to build a mailing list that your business can use to send information regarding products and services over and over again.

Auto-responder service is another tool that helps you to manage your mailing list. As your customer base grows into the thousands, it becomes difficult to manually send e-mail to such a large list. This is where an Auto-responder comes in to manage your mailing list for you by sending out e-mails with various offers on your behalf.

Search Engine Optimization (SEO) is a type of software that recognizes a website using specific keywords that a customer types into Google search, Yahoo or Bing. If the keywords are high-ranking, then the website becomes highly ranked once they search engines know the site is there.

While tools such as social media, e-mail marketing, auto-responders and SEO all help to grow your business for you, in order to get the customer to genuinely like you and to build a relationship, you have to be trustworthy in your dealings with them, both on and off line if you want to build a successful online presence.

To help develop a relationship with the customer, the internet marketer should be prepared to:

• Offer an incentive to customers to encourage repeat business

• Be willing to give something of value away for free

• Sell something the customer is looking for.

• Offer payment options the customer can afford

With internet marketing, the onus is on the business owner to establish a relationship with his/her customer, and to get to know them. Customers need to feel they can trust the marketer to provide quality products that meet the criteria of what they are looking for.

To build a successful business, we need to attract and retain customers who will keep coming back month after month and year after year. This is true for the brick and mortar business as well as for the on-line business.