Confessions of a Business Owner: The business was driving me instead of me driving the business

Are you driving your business or is your business driving you?  You can continue to be stuck in the owner’s trap and stay on the treadmill or choose to get your business back on track.

That was the 2^nd confession from Jeff Clarkson, a former client of mine of where he was at before we met.  He wanted more than a job; he wanted a business that would work without him but wasn’t sure how to get there.

It was while having a cold beer during a gripe session with a friend of his (a current ActionCOACH client) that his friend recommended that he speak to me about how the ActionCOACH system could help him through his struggles.  .

Jeff had been the owner and President of Florida Bonded Pools here in Jacksonville for over 10 years.  It was the oldest pool company in Jacksonville started by his father over 50 years ago.  He had success in turning their struggling family owned business with 1 million in sales to a profitable company with sales ranging from 4.5 million to 6.5 million in annual sales.  Even with this success he was frustrated &wanted more.

As John Warrillow wrote in his book Built to Sell,  Jeff was caught in the owner’s trap. He was doing a lot of the selling and business always got slow when he was away.   Customers only came directly to him when there was a problem and his employees couldn’t make a decision without asking him first. 

He definitely felt trapped.  He was afraid that he was going to fall into the same trap that his dad had fallen into when he was spending more time at the business than at home.  Jeff wanted more than a job he wanted a business that could work without him.

It all starts with ActionCOACH’s definition of a business … with the simple idea that as a business owner you started or bought yourself something that’s more than just a job …

I see a business as … A Commercial, Profitable, Enterprise, that Works, without You … Let’s look at this more closely;

Commercial means that you sell something that people value, they want to buy;

Profitable means that you understand enough about business finance that you can possibly increase your profits without even increasing your revenue or lowering your expenses.

That Works and can work without you means that you have a system and a team that you can trust.”

You can’t have a business that works without you as the owner until you first have a business that works. Prior to that, it’s got to be both commercial and profitable … 

So, let’s take a look at the 6 Steps that Jeff learned to create a business that could work without him.

Step 1 - Mastery: 
This is about going from Chaos to Control … it’s about going from breaking even or losing money, to truly making a bankable cash profit.  It’s about making sure delivery happens so you don’t get customer complaints and, it’s about taking back control of your time

Steps 2 – Niche
Now this is where you start to make the real money … working your Niche is about getting a bunch of new leads, quickly reworking your sales conversion rates, getting your repeat business numbers up and then, boosting your average dollar sale.  This is truly about building a marketing machine that drives profit straight to your company’s bottom line. 

Steps 3 – Leverage
The next step is all about Systems … it’s about working ‘ON’ your business and not just ‘IN’ it.  Here you’ll start to see your business going from being people reliant, to being systems reliant …truly starting to free up your time and give you control over the growth of your business.

Step 4 – Team
They say team stands for ‘Together Everyone Achieves More’. When you’ve already got your Mastery, Niche and Systems in play, it’s time to lead a team that will ultimately run the company without you.  At the team stage you start to get a true business by getting it to begin to work without you.

Step 5 – Synergy
Here you’ll start to step back from the day to day, start handing over control. You really begin to ‘turn up the volume’ as they say … now that everything works, it’s time to do it bigger, better and more often … all the while keeping an eye on your team, your systems and your company making sure it can handle the growth.

Step 6 – Freedom / Results
This is about you – First, it’s about you enjoying the fruits of your labor and then it’s about diversification and investment.  Now that it’s all working, you can start to invest more time with your family, at your hobbies (or, even to find a hobby), or even work on investing your income or buying other companies where you can use everything you’ve learned all over again.

Confession # 2:  The business was driving me instead of me driving the business

Solution:  Jeff stopped and asked for help.  He was able to develop a more valuable company that was system based and not dependent on him by learning ActionCOACH’s 6 Steps Business Success System.

Over the next few blogs we will look a bit closer at each of these 6 Steps to create a more valuable and sellable business.

If you would like to learn more about you too can get an "actionable" business education to improve your business's operations, sales,& bottom line contact ActionCOACH Steve Goranson at 904-739-0200. www.actioncoachjax.com

Steve Goranson has owned and operated the Northeast Florida of ActionCOACH since 2014. ActionCOACH is the World's #1 Coaching franchise with of 1000 offices in 50 different countries. They coach over 15,000 business each week.

Steve's commitment is to assist small business owners, to spend less time working "in" their business and more time working "on" their business so they can build a more valuable and sellable business. In the end, you’ll be spending less total time working, will be making more money and will have truly created the company and team you always dreamed of. In addition we will help you put the FUN back in your business and your life.

Call his office to schedule a free 1/2 hour Phone Strategy Session 904-739-0200

Six Power Ratios to Start Tracking Now

Doctors in the developing world measure their progress not by the aggregate number of children who die in childbirth, but by the infant mortality rate – a ratio of the number of births to deaths.

Similarly, baseball’s leadoff batters measure their “on-base percentage” – the number of times they get on base – as a percentage of the number of times they get the chance to try.

Entrepreneurs buying businesses also like tracking ratios, and the more ratios you can provide a potential buyer, the more comfortable they will become with the idea of buying your business.

Better than the blunt measuring stick of an aggregate number, a ratio expresses the relationship between two numbers, which gives them their power.

If you’re planning to sell your company one day, here’s a list of six ratios to track in your business now to use in creating a score card for potential buyers:

1.      Employees per square foot

By calculating the number of square feet of office space you rent and dividing it by the number of employees you have, you can judge how efficiently you have designed your space. Commercial real estate agents use a general rule of 175–250 square feet of usable office space per employee.

2. Ratio of promoters and detractors

Fred Reichheld and his colleagues at Bain & Company and Satmetrix developed the Net Promoter Score^® methodology.  It is based on asking customers a single question that is predictive of both repurchase and referral.

Here’s how it works: survey your customers and ask them the question, “On a scale of 0 to 10, how likely are you to recommend <insert your company name> to a friend or colleague?”

Figure out what percentage of the people surveyed give you a 9 or 10, and label that your ratio of “promoters.” Calculate your ratio of detractors by figuring out the percentage of people surveyed who gave you a score of 0 to 6. Then calculate your Net Promoter Score

The average company in the United States has a NPS of between 10 and 15 percent.  Reichheld found companies with an above-average NPS grow faster than average-scoring businesses. 

3. Sales per square foot

By measuring your annual sales per square foot, you can get a sense of how efficiently you are translating your real estate into sales. Most industry associations have a benchmark. For example, annual sales per square foot for a respectable retailer might be $300. With real estate usually ranking just behind payroll as a business’s largest expenses, the more sales you can generate per square foot of real estate, the more profitable you are likely to be.

4. Revenue per employee

Payroll is the number one expense for most businesses, which explains why maximizing your revenue per employee, can translate quickly to the bottom line. Google, for example, enjoyed a revenue per employee of more than one million dollars in 2015, whereas a more traditional people-dependent company may struggle to surpass $100,000 per employee.   

5. Customers per account manager

How many customers do you ask your account managers to manage? Finding a balance can be tricky. Some bankers are forced to juggle more than 400 accounts, and therefore do not know each of their customers, whereas some high-end wealth managers may have just 50 clients to stay in contact with. It’s hard to say what the right ratio is because it is so highly dependent on your industry. Slowly increase your ratio of customers per account manager until you see the first signs of deterioration (slowing sales, drop in customer satisfaction). That’s when you know you have probably pushed it a little too far.

6. Prospects per visitor

What proportion of your website’s visitors “opt-in” by giving you permission to e-mail them in the future? Dr. Karl Blanks and Ben Jesson are the cofounders of Conversion Rate Experts, which advises companies like Google, Apple and Sony on how to convert more of their website traffic into customers. Dr. Blanks and Mr. Jesson state that there is no such thing as a typical opt-in rate, because so much depends on the source of traffic. They recommend that rather than benchmarking yourself against a competitor, you benchmark against yourself by carrying out tests to beat your site’s current opt-in rate.

Entrepreneurs looking to purchase a business have a healthy appetite for data. The more data you can give them – in the ratio format they’re used to examining – the more attractive your business will be in their eyes.

Interested in learning how to create a score card in your business that will help you to predict not only the direction your business is going but how valuable it is to potential buyers? 

Contact ActionCOACH Steve Goranson to schedule a free 1/2 hour Phone Strategy Session at 904-739-0200.

Steve Goranson has owned and operated the Northeast Florida of ActionCOACH since 2004.  ActionCOACH is the World's #1 Coaching franchise with over 1000 offices in 50 different countries. They coach over 15,000 business each week worldwide.

Steve's commitment is to help small business owners to develop actionable ideas that will allow them to spend less time working "in" their business and more time working "on" their business so they can build a more valuable and sellable business. In the end, you’ll be spending less total time working, will be making more money and will have truly created the company and team you always dreamed of. In addition we will help you put the FUN back in your business and your life.

Call his office to schedule a free 1/2 hour Phone Strategy Session 904-739-0200 www.actioncoachsteve.com

How to Get Rich in 3 (Really Difficult) Steps

Becoming wealthy may not be your primary goal, but if it is, there is a reasonably predictable way to get rich in America.

Step 1: Ignore Your Parents

Parents around the world typically encourage their kids to get educated so they can get a ‘good job.’ This may mean becoming a doctor or lawyer, although neither tends to be a path to significant wealth. High-paying professions provide an excellent income stream, but two insidious forces undermine the professional's ability to create significant wealth: tax and spending.

Tax

It is difficult to become wealthy on the basis of a salary alone. Since income is taxed at the highest possible rate, you're left with not much more than 50 cents on the dollar.

Spending

The other problem with having a high income is that it creates a ‘wealth effect’ that triggers spending. Thomas J. Stanley, the famous author of the research-driven classic The Millionaire Next Door, points out that some professionals—in particular, lawyers—spend a large portion of their income to give the impression that they are successful, in part because they do not enjoy much social status from their job. In other words, when you earn $500,000 a year, you buy a Range Rover or send your kids to an elite private school at least in part because you want people to think you are wealthy.

Step 2: Start Something

Most wealth in America is created through owning a business. Recently, Mass Mutual looked at the proportion of business owners that make up a number of wealth cohorts. They found that 17 percent of people with between $100,000 and $500,000 to invest were business owners.

Keep in mind that there are about 8 million employer-based companies in the United States, meaning that the incidence rate of business ownership (the natural rate at which you find business owners in the general population) is about three percent. Said another way, if you grabbed 100 people walking down the street, on average three of them would be business owners. On the other hand, if you took a random sample of 100 people with investable assets of between $100,000 and $500,000, 17 of them would be business owners, meaning you're over five times more likely to find a business owner in the $100,000 to $500,000 wealth segment than you are to find an employee in the same segment.

The trend becomes more pronounced the higher up the wealth ladder you go. If you look at wealthy investors with between $500,000 and $1,000,000 in investable assets, you'll see that the proportion of business owners in this segment goes up dramatically—to27 percent.

The Very Rich

Among investors with between $1 million and $10 million in investable assets, the proportion of business owners jumps to 52 percent. As for those investors with $10 million to $50 million sloshing around in their bank account, 67 percent are business owners; and for investors with $50 million dollars or more in investable assets, 86 percent are business owners.

Simply put, if you meet someone who is very rich, it's highly likely they are (or were) a business owner.

Step 3: Get Liquid

The next step for you as a business owner is to focus on improving the value of your business so that you can sell it for a premium. Just being a successful entrepreneur is typically not enough to become rich. You have to find a way to take the equity you have locked up in your business and turn it into liquid assets. When it comes to selling your business, the three most common options are:

·         Acquisition: This is the headline-popping way some entrepreneurs choose to trade their shares for cash. When Facebook acquired WhatsApp for $19 billion, founders Brian Action and Jan Koum got very rich.

·         Re-capitalization: A minority or majority "re-cap" occurs when you sell a stake in your company (often to a private equity firm) yet continue to run your business as both a manager and part owner, with a chunk of your wealth in liquid assets outside of your business.

·         Management Buyout: In an MBO, you invite your management team (or a family member) to buy you out over time, usually with a mixture of some cash from the profits of your business as well as debt that the managers take on. There are other, less common ways to turn your equity into cash (e.g., an IPO), but the key is turning the illiquid wealth in your business into diversified liquid wealth. The best part about selling a business is that the wealth created is taxed at a very low rate compared to employment income, so you get to keep most of what you make.

You might argue it is better to keep all of your wealth tied up in your business as it grows, but that can be a risky proposition—just ask Lululemon's Chip Wilson or BlackBerry's cofounder Mike Lazaridis. If you keep your money locked up in your business, it also means you may not be able to enjoy the benefits of wealth. You can't use illiquid stock in a private company to buy an around-the-world plane ticket or a ski chalet in Aspen. You actually have to get liquid first.

There are many good reasons to build a business; and for you, wealth creation may not be as important as making an amazing product or leading a great team. But if money is what you're after, there is no better way to get rich than to start and sell a successful business.

In creating a more valuable business, it is always the little things that get the big results. Our Business Health Check will give you invaluable insights into the many areas of your business that if tweaked will increase the value of your business.  By completing the Business Health Check, you will receive a Free Report based on your answers, prepared by our team of highly skilled Business Coaches.  CLICK HERE to take your Business Health Check Now

Steve Goranson has owned and operated the Northeast Florida of ActionCOACH since 2014. ActionCOACH is the World's #1 Coaching franchise with of 1000 offices in 50 different countries.  They coach over 15,000 business each week.

ActionCOACH Steve Goranson's commitment is to assist small business owners, to spend less time working "in" their business and more time working "on" their business so they can build a more valuable and sellable business. In the end, you’ll be spending less total time working, will be making more money and will have truly created the company and team you always dreamed of. In addition we will help you put the FUN back in your business and your life.

Steve's clients are feeling happy because they are focused on their goals, they're feeling more successful because they are reaching their goals, and they are feeling more free because their businesses are starting to work harder than do. 

5 Ways To Attract The Attention Of a Buyer for Your Business

In any negotiation, being the person who makes the first move usually puts you at a slight disadvantage. The first-mover tips their hand and reveals just how much he/she wants the asset being negotiated.

Likewise, when considering the sale of your business, it is always nice to be courted, rather than being the one doing the courting. The good news is, the chances of getting an unsolicited offer from someone wanting to buy your business are actually increasing.

According to the Q2, 2014 Sellability Tracker analysis released in July 2014, 16% of business owners have received an offer in the last year, which is up 37% over Q1. Said another way, you’re 37% more likely to get an offer to buy your business today than you were at the beginning of the year.

Big companies are buying little ones for a lot of reasons and the current market conditions are accelerating their appetite: interest rates are low and stock markets are high, which provide the ideal platform for acquirers to realize a return on their investment from buying a business like yours.

So how do you ensure you are on their shopping list? 

Here are five ways to get noticed by an acquirer:

1. Win an award

Getting recognized as the “Widget Maker of the Year” by the Widget Makers Association is a great way to get the attention of acquirers in your industry.

2. Hire a PR person

Engaging a public relations professional to tell your story to the media can get you on the radar of buyers in your industry.  A lot of media relations professionals focus on the big mainstream publications, and while these are important, ensure that your PR firm also targets trade publication and industry-specific websites that are read by acquirers in your industry.

3. Host an event

 Consider hosting an event (e.g., conference, tradeshow, summit) for your industry and invite representatives from potential acquirers to attend. Being invited to an industry event can be flattering for acquirers and it is a good way to get them to notice you as an industry leader.

4. Join a board

If an executive from a company you think would make a natural buyer for your business is serving on a board of directors, consider joining the board. Serving on a board together can be a great way for an acquirer to notice you and your company without you having to say you’re for sale.

5. Grab lunch

Consider inviting a senior executive from a potential acquirer to share a meal under the guise of discussing trends in your industry. At the very least, you may glean some useful information about how big companies are seeing your industry evolve. At best, your lunch mate may realize that your company could play a key role in helping them grow.

The sale of your business is a delicate dance where it is usually better to be the courted, rather than the courter. Acquirers are on the hunt for new businesses, and having them notice you will put you in a position of strength when you get to sit down at the negotiation table.  

To determine the Sellability of your business find our your Sellability Score.  Get a free report  identifying how sellable your business is now the 8 areas you need to focus on to increase your business value now.  Click Here to learn more.

Will your business be more valuable this time next year?

For many, January is a time of rebirth and resolutions. It’s a month to reflect on last year’s achievements and to set goals for the year ahead.

Some people will set personal goals like losing weight or quitting a nasty habit, and most company owners will set business goals that focus on hitting certain revenue or profit milestones.

But if your goal is to own a more valuable business in 2014, you may want to make one of the following New Year’s resolutions:

• Take a two-week vacation without checking in with the office. When you return, you’ll see how well your company performed and where you need to make a key hire or create a new system.
• Write down at least one process per month. You know you need to document your systems, but you may be overwhelmed by the task of taking what’s inside your head and putting it down in writing for others to follow. Resolve to document one system a month and by the end of the year you’ll own a more sellable company.
• Offload at least one customer relationship. If you’re like most business owners, you’re still your company’s best salesperson, but this can be a liability in the eyes of an acquirer, which is why you should wean your customers off relying on you as their point person. By the time you sell, none of your key customers should think of you as their relationship manager.

• Cultivate a new relationship with a new supplier. Having a “go to” group of suppliers is great, but an over-reliance on one or two suppliers can create a liability for your business. By spreading some of your business to other suppliers, you keep your best suppliers hungry and you can make a case to an acquirer that you have other sources of supply for your critical inputs.
• Create a recurring revenue stream. Valuable companies can look into the future and see where their revenue is going to come from. Recurring revenue models can vary from charging customers a small amount for a special level of service to offering a warranty or service contract.
• Find your lease (and any other key contracts). When it comes time to sell your company, a buyer will want to see your lease and understand your obligations to your landlord. Having your lease handy can save time and avoid any nasty surprises at the eleventh hour in the process of selling your company.
• Check your contracts and make sure they would survive the change of ownership of your company. If not, talk to your lawyer about adding a line to your agreements that states the obligations of the contract “surviving” in the event of a change of ownership of your company.
• Start tracking your Net Promoter Score (NPS). The NPS methodology is the best predictor that your customers will re-purchase from you and/or refer you, which are two key indicators of a healthy and successful company. It’s also why many strategic acquirers and private equity companies use NPS as a way to measure the health of their acquisition targets during due diligence.
• Get your Sellability Score. All goals start with a benchmark of where you’re at today, and by understanding your company’s Sellability Score, you can pinpoint how you’re doing now and which areas of your business are dragging down your company’s value. 

A lot of company owners will set New Year’s resolutions around their revenue or profits for the year ahead, but those goals are blunt instruments. Instead of just building a bigger company, also consider making this the year you build a more valuable one.

The Self-Employed See-Saw by Brad Sugars

This week I wanted to share with you something from Brad Sugars founder of ActionCOACH.

As a self-employed person, your business life will feel just like a seesaw. While it’s often true that the self-employed can make more per hour than they ever could as employees, the challenge comes down to how many hours are actually used in the background, working ON the business and how many hours are spent in the foreground, working IN it?

When you’re self-employed, you’ll spend half your life chasing the work, doing marketing, sales, and administration.  It’s a lot of work, especially when all of the production and planning has to come from you… In fact, you’ll have so much work to do that every day will be a conveyor belt of non-stop activity… you’ll feel like you never get anything “done” because there’s always so much to do.

So why do we call this a see-saw? Doing the day-to-day work is one side of the seesaw and sales and marketing is the other and if you’re self-employed, one side must be up while the other is down… and vice versa.

Does this sound familiar? Chase the work, do the work, chase the work, do the work, chase the work, do the work… and so on. If it does, you know what it’s like to be self-employed.

It’s this seesaw that stops a self-employed entrepreneur from ever really getting ahead. It’s simple, you may not have a “job” but you’re still in a situation where there’s no real leverage. You still need to do the work or it won’t get done.

It’s this seesaw that gets self-employed people to make one of two decisions. To either give it up and go back and get a job, or to take the plunge and jump in the deep end of business and make the decision to grow, to move up the ladder.

This means becoming a business owner who creates systems and hires employees to do the work IN the business while the owner works ON it.

If you are interested in learning more from Brad. Check out his free monthly webinars at

Do you have a Black Belt in Business?

What does it mean to earn a black belt in the martial arts?  To become a trained killer.  No,  martial arts training is a lot more.  It's a form of self-defense and exercise.  But, most importantly, it is a philosophy or a way of life.

I got involved in the martial arts at a very early age, but didn't receive my Black Belt in Tang Soo Do Karate until I was almost 30.  I found martial arts was not only a great form of exercise and self defense, but also taught me how to survive the battles of business and life.  When I look back, what I really learned was the importance of goal setting, focus, determination, and the use of systems.

Each martial art has a series of belts or levels, which each student strives to reach before they can become a black belt.  This systematized approach provides students a process to gain mastery over a particular level of skills before moving on to the next level.  Showing the importance of setting end goals with milestones along the way to keep you on track.

My sensei (Karate instructor) taught me that each level you reach before a black belt, you are just learning Karate but once you become a black belt, you are now doing Karate.  Once you reach black belt, you now have the knowledge and wisdom to apply what you have learned.  The journey doesn’t stop there.  There are new goals and milestones as you reach for the higher levels of being a black belt.  As a business coach, I have found this same systematized approached can also be applied to any business.  

When do you get your black belt in business?  When are you “doing” business instead of learning business?  At ActionCOACH we have a definition for this scenario, “A commercial profitable enterprise that can work without you the business owner”. 

So, how get a black belt in business?  Let’s take a look at the 6 belts you must master before you can be a black belt in business.

White Belt:  At this level, the emphasis is on basic business mastery over time, team, & money.  It’s about getting the chaos out of your business and getting organized.  It’s about making sure you can make payroll and that your employees understand their roles & responsibilities in your organization.  It’s where you learn to delegate tasks to your team, so you can concentrate on developing higher level skills needed to obtain your business black belt.

Yellow Belt:  This level is where you work on creating predicable cash flow in the business.  You develop your Niche and USP (unique selling proposition), so you can start selling on value and not price.  You find out why your business is unique and valuable to your customers.

Green Belt:  At this level, you are working on creating efficiencies in your business.  You are starting to develop systems that will run your business so you don’t have to.

Blue Belt:  Here you learn how to get the right people “on the bus”-- the right team players, who will run your systems that will run your business.

Red Belt:  This level is where we start to see all your hard work come together.  You’ll start to see the synergies of your systems and team develop.  Now, you start grooming your general manager who will run your business for you.

Black Belt:  Now you’ve made it!  You’ve created a commercial profitable enterprise that works without you.  You are now an entrepreneur with a business black belt!  You are  generating passive income from the business.  You can now take the skills and knowledge which you have learned and apply them to other businesses or start investing your profits, so your money is making money.

To learn more about how you can turn your business into a Black Belt business, sign up for our next free webinar.  Check out my latest workshops and seminars www.actioncoachseminars.com