John Denton on Preparing Businesses 'Ready For Sale'

A business that's 'ready for sale' is well worth keeping!

Nolan Penning – Former Owner – Magnum Flavours & Ingredients

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A few years before I wanted to sell my business, I attended John’s “Prepare Your Business Ready For Sale” course and this was extremely beneficial. I discovered that selling a business was a lot more complicated than I expected. After the course i joined the BOB group and John worked with me as my bob coach to prepare my company for sale over an 18 month period.

When the time came to list I was fully prepared and achieved a very satisfying result. I cannot thank John and the BOB group enough for the support and guidance. My advice to business owners, join BOB today.

Nolan Penning
Former Owner of Magnum Flavours & Ingredients

Gary Maynard – Owner – Medichill

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Logo MedichillWhen it comes time to make big decisions, to bounce ideas off people or have a focus group on a new product, that’s when it can feel very lonely for a lot of small business people. That is where I have found John Denton’s mentoring/business owners board (Bob) to be invaluable assistance. You are grouped with a wide variety of like-minded people who want to improve their business, willing to share their time and experience to potentially help you. The advice also comes un-biased with no strings attached, and sometimes it hurts! The fact that I have been a member for over 8 years and my business has improved each year is testament to the value of the group and the professionalism of John as a facilitator. I recommend the group unreservedly.

Kind Regards

Gary Maynard
Owner – Medichill

The Most Dangerous Number In Business Is

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number_one_800_clr_9875ONE

One of anything!

The numbers in a business are the instrument panel by which an owner should run his business. It still amazes me how many business owners I talk to have no idea and no interest in their numbers – until it is too late! That’s why there are many businesses out there with too many ONE’s in the business. Let’s look at just some of the areas of a business where ONE is a risk. If you have any of these ONE’s in your business, ask yourself “How can I reduce my risk?”

  • ONE major client. Even with contracts in place there are many ways you can lose the client and if you do then your business is likely to fail. Any client / customer that is greater than 15% of your revenue is a risk and reduces the value of your business.
  • ONE supplier. Again, even with contracts in place risk is real. The supplier could go out of business or cancel the contract. A supplier can find another outlet for their product or come in to your market and go direct. It happens!
  • ONE key ‘expert’. What happens if the ‘expert’ leaves the business, suffers ill-health or is poached by a competitor?
  • ONE key employee. Some businesses rely on one key person (or owner) to do everything. All the knowledge is “in their head” and that is a major risk. This is the case with “practices” that are based upon an expert. Remember, a good business is based upon systems, not an expert.
  • ONE product or service can become a problem. If that product or service goes out of date, is made redundant by a superior product or gets copied (e.g. video hire, photographic processing etc.) or people buy cheaper over the internet or from overseas suppliers, then you are in trouble. You need to innovate all the time to stay ahead of the competition.
  • ONE computer system / database with all the business records on, can be very high risk. Yes, I’m sure you do backups – but when was the last time you tested your ‘disaster recovery process? How long before you would be back up and running?

In this age of rapid change, disruption and increased competition, if you are not innovating and evolving faster than the market you are in, you could go out of business. Aim to make your product or service redundant before the competition do. (An old Sony maxim, I’m told). Look out for trends.

Finally, is your business model going out of date and you haven’t realised it yet? For help with all of these things, CONTACT US.

I could go on but I’m sure you have got the message.

I’ve used the word ‘risk’ a lot and that’s because it IS risky having ONE’s in your business.

So what do you do about it? Well the starting point is to conduct periodic “risk analysis” assessments. It doesn’t need to be onerous and is best done on a continuous basis. At your regular management or team meetings, take different parts of the business each month (or period) and brainstorm the risks with your team. It often improves the process if you have an external business consultant or coach involved in these sessions because they are not too close to the business, or emotionally attached to it, they will ask better, probing questions.

When you have identified the risks, categorise them by using the LIKELIHOOD / IMPACT process. Assess how likely things are to occur and then assess the possible impact on the business. For most businesses it is sufficient to score IMPACT and LIKLEIHOOD as HIGH, MEDIUM or LOW. Then prioritise the risks starting with the ones which scored HIGH on both LIKLIEHOOD and IMPACT. Now brainstorm ways to mitigate the risk.

As they say – forewarned is forearmed!

As well as assessing the ONE risks, think of trends and external risks, such as the falling Australian Dollar, rising unemployment, the downturn in the mining, resources and manufacturing sectors and things like government legislation.

If you need any help with risk analysis or anything else in your business, just get in contact with us through the CONTACT US tab.

 

Be Brilliant At The Basics – The Business Essentials

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Some years ago I was present at a Dr Ric Charlesworth (AO) presentation to the Australian Institute of Management (AIM) in Perth.

Ric is an amazing person and a successful Australian sports coach, and more. He told us how he coached the Hockeyroos to two Olympic gold medals and how we can use his coaching principles in business. One of the many tips he gave that stuck in my mind, which I often discuss with clients, was “be brilliant at the basics”.

He explained that the most dangerous time for a team was when they were winning with just a short time to go. Complacency could lead to some sloppy mistakes and cost them the game. His strategy at this stage was to get everyone to focus back on the ‘basics’. Know what the essential things are and keep doing them ‘brilliantly’.

It works in business too. When times are good we often get lax, sloppy and complacent. When the economy gets tough or the market changes, and we don’t do the basics, we struggle. Ric’s way would be to be brilliant at the basics of business – the business essentials. It’s not rocket science. Things like:

  • Know where you are going and have a plan to get you there
  • Know your target market and focus on giving the customer what THEY want
  • Give exceptional “memorable” customer service
  • Implement excellent marketing and sales conversion systems
  • Get the business running like a ‘Swiss watch’ with systems and processes
  • Do rigorous financial management
  • Know your numbers and make better and faster decisions
  • Strive for excellence in everything you do
However, to master these things remember this;
“IF IT’S TO BE, IT’S UP TO ME!” and “FOR THINGS TO CHANGE, FIRST I MUST CHANGE!”
 
Ric also said a key for a business owner or manager to be successful was to be humble enough to admit that they don’t know it all.  Learn, practice and get a good coach.
I cover this and a whole lot more when I facilitate Business Essentials workshops and webinars! 

 Click Here to find out more about the Business Essentials workshops and seminars.

 

Formula For Success In Hitting Business Targets

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DNA of Business. Achieving business targetsYou set your business targets like you’ve been told to, but you just don’t hit them! Why?

Often business owners are told by well-meaning coaches, consultants and advisors (including me) that they need to set goals and targets in their business and personal lives. In business they will be financial goals, production goals, customer satisfaction goals etc. and all kinds of Key Performance Indicators (KPIs). All of that is true of course. However, why do so many fail to achieve their goals?

We know we NEED to do it. We know HOW to do it and we have the RESOURCES to do it. Still nothing happens. Why?

Whilst running one of my workshops many years ago, and getting in to a discussion about this, I realised there were other factors that came in to play to do with mindset, emotion and desire. I explain it with this simple formula!

PM (%) represents your Personal Motivation factor to achieve the goal on a scale of 0 to 100 %. If your personal motivation is up over 80% then there is a very good chance you will achieve your goal.

You calculate your personal motivation factor from 3 things;

D = Desire – your level of Desire for the outcome of achieving the goal (on a scale of 1 to 10 where 10 is high). How much do you really want to achieve the goal? Is there a burning desire within you to get there? Would you climb mountains, swim oceans and overcome all obstacles to get there? A bit of an exaggeration but you know what I mean. Rate yourself 1 to 10

E + B – your Expectation and Belief that you can achieve the goal. Again, on a scale of 1 to 10, how much do you really BELIEVE and EXPECT you can get there. For example, do you have the required KNOWLEDGE, SKILLS, TRAINING, RESOURCES, CONFIDENCE, etc.? Rate yourself 1 to 10.

Now multiply the two ratings and get a percentage personal motivation factor for achieving your goal.

An example will help. Let’s say you set a goal to achieve a business turnover of more than $5 million per annum in three years. You rate your DESIRE at 10 out of 10, but your BELIEF and EXPECTATION is only a 3 out of 10. Then your personal motivation factor, and chances of achieving it are 30%.

Now that you know this, you can do any one of a number of things: delete the goal, lower the goal or INCREASEDNA Of Business your BELIEF and EXPECTATION. This latter one is where someone like me comes in to coach, advise and motivate you to get the BELIEF up. This would probably involve planning, training, realistic time-frames, building CONFIDENCE etc. When you know where the problem is, you can work on it.

We set and plan goals with LOGIC but we need EMOTION to motivate us to achieve! As a business owner / leader you have the additional challenge of getting your whole team’s DESIRE, EXPECTATION and BELIEF up. That’s a part of LEADERSHIP!

Want to learn more or get help then get in contact with me. A chat over coffee (if you are paying) can often be the starting point. CONTACT ME

Lessons From The Boat Race

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Business Ready For Sale - Boat RaceWhat management and leadership lessons can we learn from a boat race.

Consultants and coaches please comment below and let me know!

An Australian company and Japanese company decided to engage in a competitive boat race to show mutual respect and solidarity between the two nations. Both teams practiced hard and long to reach their peak performance.

On the big day they felt ready. The Japanese team won by a mile. Afterward, the Australian team was discouraged by the loss. Morale sagged. Top management decided that the reason for the crushing defeat had to be found, so a consulting firm was hired to investigate the problem and recommended corrective action.

The consultant’s finding: The Japanese company team had eight people rowing and one person steering; the Australian company team had one person rowing and eight people steering.

After a year of study and millions spent analyzing the problem, the consulting firm concluded that too many people were steering and not enough were rowing on the Australian company team.

So as race day neared again the following year, the Australian company team’s management structure was completely reorganized. The new structure: four steering managers, three area steering managers and a new performance review system for the person rowing the boat to provide work incentive.

The next year, the Japanese won by two miles. Humiliated, the Australian company laid off the rower for poor performance and gave the managers a bonus for discovering the problem!

And the moral of the story (apart from being a bit of Friday frivolity) is …

And now you are here on my site – have a look around 🙂

Is Your Business ‘Ready For Sale’?

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business ready for sale checklistAt some point every business owner exits their business!

Will YOU exit with equity and have your biggest pay-day ever? 

Do you have a ‘business ready for sale’ checklist for your business?

(O.K. I’ll cut to the chase – I run half day workshops in Perth on getting your business in to a ‘ready for sale’ state. Click the button for details)

Register Here

Don’t wait until you are forced to sell by circumstances and only get a low return for all the blood, sweat, tears and time you have invested in the business? Or worse still, close the business down.

The simple truth is that if you haven’t got all your ducks lined up in your business before you put it on the market then you are likely to be very disappointed with the outcome when trying to sell your business. And I say ‘trying’ because in the current business sales market you have to have all your ducks lined up to sell a business.

Buyers are buying businesses but they are doing much greater due diligence than they did years ago. There are a lot more businesses for sale than there are buyers. This means that buyers can be much more selective about the business they buy.

If you want your business to stand out, sell quickly and get the maximum sell price, then make sure that everything is very well prepared and ‘ready for sale’ BEFORE going to the market.

The other benefit of getting your ducks lined up is that (as I keep saying) a sell a businessbusiness that’s ‘ready for sale’ is well worth keeping. Build your business as if you are going to keep it forever, but could sell it tomorrow.

“So” you ask, “what are these damn ducks you keep talking about?”

The ‘ducks’ are basically a checklist of things to have ready! Areas I cover in my “Preparing a Business Ready For Sale” half day workshop, include;

  • Legal entity, ownership, business names versus trading names (often out of date)
  • Financials and accounting (obvious, but often a major headache at appraisal time!)
  • Systems and procedures (often totally absent, out of date or incomplete)
  • Customer records and databases (much of the goodwill is in this area)
  • Sales and marketing – systems and records (absolutely crucial and often non-existent!)
  • Suppliers (done on a handshake – may not be good enough)
  • HR and employment (a mystery area to many business owners)
  • Premises (can be a minefield)
  • Reason for sale (may be obvious to you but a buyer will see it differently)
  • Other – the business needs to be assessed through the eyes of a buyer…..

Obviously I can’t cover all of these in detail here, however I cover ‘getting your ducks lined up’ in my half day workshops. To find out about my next workshop;

Register Here

Learning from the many mistakes I see business owners make in my role as a business broker puts me in a great position to help other business owners to prepare their business ‘ready for sale’ and avoid the same mistakes. My 10 years running my training and development business has prepared me to deliver that learning to business owners. Please check out my services on this website and contact me if I can be of help.

Once again, to learn about ‘getting your ducks line up’ – click the button to get details of my next half day workshop!

Register Here

“Helping business owners prepare their business ‘ready for sale’ – and selling them!”

5 Common Myths About Selling A Business!

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Relaxed Retirement

The biggest frustrations for me as a ‘business ready for sale’ coach and as a business broker are the beliefs business owners develop around selling their business.

Very often these beliefs are etched in to their minds by well meaning accountants, bookkeepers, business coaches, friends and the media.

If you want the real facts about having a business that’s ready for sale ….

Attend my half day workshop on preparing a business ready for sale!

CLICK HERE FOR DETAILS OF THE NEXT WORKSHOP

What are those common beliefs and mistakes owners make?

(1) I’ve had my business for 30 years and my accountant says it must be worth a $million
WRONG! Whilst longevity is a factor it doesn’t affect the market value very much. It may help to make it more attractive to a buyer and therefore easier to sell. On the other hand it can also be a negative if the business hasn’t kept up to date!

(2) My accountant says my business is worth 5 times earnings before interest, tax, depreciation and amortization (EBITDA)!
WRONG! With the best will in the world, very few accountants are able to put a market value on a business. Why not? because they are not out there in the market place day after day selling businesses. Also, there is no set multiplier (properly called an ROI factor) or ‘rule of thumb’ for different types of business. Yes, the adjusted net profit (sort of EBITDA) is one part of it, but the the risk to that profit determines the ROI factor (multiplier). This is explained in detail in my half day workshop with lots of real examples.

CLICK HERE FOR DETAILS OF THE NEXT WORKSHOP

(3) It’s a waste of money engaging a broker or lawyer and using a sale agreement. I’ll just write something up with the buyer.
WRONG! You most definitely need a good business broker or lawyer involved to protect both parties and avoid litigation after the sale. Dollars invested now can save you a fortune and a lot of problems post sale.

(4) My business is a simple one. As long as the buyer offers me the asking price that’s all I need to agree.
WRONG! There are numerous things that need to be discussed and agreed at the offer stage. Then everything needs to be in the buy / sell agreement before both parties sign. Failure to do this thoroughly can end up in litigation after the sale.

(5) That’s it, we’ve signed the sale agreement so I can slow down now and book my flights to Bali!
WRONG! The seller has an obligation to the buyer to keep running the business as they always have until settlement. Many sales fall through because of things which come out in due diligence! Sometimes the buyer will not get finance. It’s not over until the money is in the bank! If you let the business slow down and then end up keeping it …….

This is just a very small list of the things that need to be dealt with when selling a business. 

How can you avoid making these mistakes and sell your business in the shortest time, for the least hassle and for the most dollars?

Start by attending my next half day workshop on preparing a business ready for sale!

CLICK HERE FOR DETAILS OF THE NEXT WORKSHOP

I am a business ready for sale coach and business broker and dedicated to helping business owners prepare their businesses “ready for sale” – whether you want to sell or not, because a business that’s ready for sale is well worth keeping!

I tried to sell a business privately and failed because I made all the mistakes! Then I learned the correct way from one of the best brokers in Australia. I then practiced as a broker with the firm that sold my business for 5 years. All of that learning and experience is the value add that I can bring to you!

John Denton

 

Before You Open Your Mouth

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TheThinkerBefore you open your mouth in a meeting, or in a conversation with someone at work or socially, consider applying this triple filter first! This has been attributed to Socrates and goes something like this;

In ancient Greece, Socrates was reputed to hold knowledge in high esteem. One day an acquaintance met the great philosopher and said, “Do you know what I just heard about your friend?”

“Hold on a minute”, Socrates replied. “Before telling me anything I’d like you to pass a little test. It’s called the Triple Filter Test.”

“Triple filter?”

“That’s right”, Socrates continued. “Before you talk to me about my friend, it might be a good idea to take a moment and filter what you’re going to say. That’s why I call it the triple filter test. The first filter is Truth. Have you made absolutely sure that what you are about to tell me is true?”

“No,” the man said, “Actually I just heard about it and….”

“All right”, said Socrates. “So you don’t really know if it’s true or not. Now let’s try the second filter, the filter of Goodness. Is what you are about to tell me about my friend something good?”

“No, on the contrary.”

“So”, Socrates continued, “you want to tell me something bad about him, but you’re not certain it’s true. You may still pass the test though, because there’s one filter left: The filter of Usefulness. Is what you want to tell me about my friend going to be useful to me?”

“No, not really.”

“Well”, concluded Socrates, “if what you want to tell me is neither true nor good nor even useful, why tell it to me at all?”

If everyone in the workplace / family / social group applied this filter before they spoke, what do you think would happen?

Ponder on this story and think about if you should apply it in your business and / or life!

Are you strong enough to do it?

Is it worth doing? What difference would it make to anything?

I’d be interested in your thoughts.

Feel free to add your comments below.

CLICK HERE FOR DETAILS OF GROUP DISCUSSION AND MENTORING SESSIONS

Preparing A Business For Sale – A Legal Perspective

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By Helen Kay of Rise Legal

It is important to be well prepared and organised well in advance of putting your business on the market for sale. This will not only avoid costly delays but could also maximise the value of your business.

Helen Kay from Commercial Law firm Rise Legal has provided some tips to assist you in preparing to sell your business….

Be clear on exactly what you are selling

If the business is being sold, you should prepare a detailed schedule of all the plant and equipment and furniture, etc. that is included in the sale as well as a separate schedule of what is excluded.

You must let the buyer know which (if any) of the plant and equipment is subject to hire purchase agreement or equipment lease, etc. If you are unsure, your lawyer can conduct a search for you at the Personal Properties Securities Register.

You should be one step ahead in contacting the relevant companies and obtaining discharge certificates or arranging for the transfer of the hire purchase agreements, etc.

Formalise any important contracts

If your business is reliant upon certain key suppliers, customers or employees you should make sure (where possible) that formal written agreements are in place before the sale as this could enhance the value of your business to a prospective buyer:

  • convert any verbal agreements into written agreements as soon as possible; and
  • review any existing contracts with suppliers and customers to ensure they are still current and can be easily assigned to the buyer.

Get your lease in order

  • If you lease your business premises it is important to review your current leasehold arrangements and determine:
  • How long is left to run on your lease – If your lease has expired and you are holding over, or if there is only a short period left to run, you may consider negotiating a new lease or an extension with your landlord.
  • What the assignment conditions require – Your landlord could be entitled to withhold their consent to the assignment of lease if these conditions are not satisfied, so it is important to be aware what they are and what the landlord can ask for.

This is just a snap shot of some of the things you should think about getting organised prior to sale.

(Please note that this article has been provided for information purposes only and does not constitute legal advice.)

For further information or for your FREE SELLER’S CHECKLIST please contact Helen Kay at Rise legal. Contact Helen via www.riselegal.com.au

RiseLogo With extensive experience in assisting her commercial clients buying and selling business, Rise Legal’s Managing director, Helen Kay, will be happy to assist.

Liability limited by a scheme approved under Professional Standards Legislation

For more general information on preparing your business ready for sale and increasing its value, see John Denton’s half day seminars by clicking Seminars & Workshops

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