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Start-up Advice

Don’t Go into Business Wearing Rose Tinted Spectacles

Buying a business can be stressful. Know what you are getting into.

Bob Power

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It must be emphasised, right at the outset, that buying a business can be extremely stressful. Moving from being an employee to an employer is a big void, and becoming the boss scares many employees from taking this route. You are now in control of the business, so you must accept the risks and liabilities of the business. If you get it right (which can take up to six months) you will reap the rewards, but if you get it wrong you can end up with major problems (and end up going belly-up).

Unfortunately, at the present time the failure rate of small businesses is high (some say 70% go bust in the first two years). The good news, however, is that although many successful business owners failed in their first endeavours into business, they learnt from this experience and on the second or third time around achieved their objectives and rewards. Finally, thinking you are the boss, without acknowledging that the bank manager and clients/customers control your destiny, is the pathway to disaster.

Well-known financier Warren Buffet has stressed that going into business is akin to marriage, and his words of wisdom are “Don’t rush into marriage, take your time.”

Buy right

Bearing this point in mind, the following factors must be considered when starting, buying and owning your own business. Bear in mind that many of these points form the basis of business failure if they are ignored.

  • When in doubt, walk away. If you don’t understand the industry you are entering, don’t do it. You must understand the product/service of the business as well as the legal entity being used for the business.
  • Watch the jargon and legalese used in legal documents – if you don’t understand, get clarification. Don’t sign documents when you do not understand the terms – let the signer beware.
  • The essential requirements necessary for success centre around (but are not limited to) having at least: adequate capital, necessary business knowledge, sufficient resources and sound management skills.
  • Be honest with yourself. Take the time to asses yourself, your business idea, capital, market and competition. Ensure that you have the right mental approach, aptitude and money to start your own business.
  • Paying too much for the business, by not getting advice on how to value a small business. What is a business worth? What a buyer is prepared to pay for it and the seller is prepared to accept.
  • Let the buyer beware. Understand that the seller will tell you the truth, the whole truth and anything but truth. He will dress up the business to hide vital flaws. Do your homework and check out the business carefully, with the help of professional advisers, if necessary.
  • Do your due diligence. You must do your homework to understand what you are really buying. A seller will state that he has the best business in town, so – why sell the goose which lays the golden egg? Dig deep. Know what you are paying for.
  • Always recognise that: cash is king, information is power, profit is sanity, turnover is vanity and the spoken word is cheap. The lesson? Get everything agreed put into writing and signed by both parties as soon as possible. Notes from meetings can be extremely valuable if a dispute arises.
  • Ascertaining when you enter business who the competition is, and how long they have they been in existence. Preferably look for a niche market, but often there are many businesses in competition to you.
  • Knowledge of security and putting in place the necessary preventions is a necessity. There have been substantial increases in crime in small businesses in recent times. You have a legal obligation to protect your staff, family and yourself.
  • It is a reality that many owners of small businesses are guilty of some form of crime, such as tax/VAT evasion, using the business credit card for personal use, over charging for fees etc. Is it worth it? Sleep easier at night, be honest.
  • Fine tune your negotiation skills. You can make or lose a lot of money depending on your negotiation skills, so negotiate everything! Let the seller put his price on the table first, and then negotiate. If you are not prepared to negotiate, you could get bulldozed into matters you had no intention of conceding.
  • From a financial perspective it is necessary to –

ü  Know how to earn money, to cost products, to prepare budgets, to control spending, to manage income, expenses and profit.

ü  Keep to the business plan, understanding the difference between income and cash flow, picking up warning signals from cash flow and having adequate insurance. In simple terms, more must come in than goes out.

  • If profits/dividends don’t cover loan repayments, you are in trouble!
  • Don’t be shy to ask for advice. Even highly successful business owners have mentors.

There is no doubt that the rewards for running a business can be great, and far better than achieved as an employee. However, you must really know the risks you are taking. An important reward is that if you prudently build up a business, its value will grow and eventually you will be able to sell at a good price, and with more experience you can move into a bigger business. Alternatively, you will be better geared to expand your existing business.

You may think you are the boss, but as stated, so does the bank manager and your clients and customers. Who is right? Without clients you have no business.

Bob Power is the owner of Power Corporate Consultants and an expert on buying and selling a business, amongst other things. He is also the author of Let the Signer Beware and How To Buy a Small Business.

Company Posts

3 Companies With Memorable Slogans, And How To Create Your Own

Three companies that have enjoyed these benefits as a result of creating memorable business slogans are Nike, Carlsberg, and Apple. Let’s look at each one now.

Jeff Broth

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A good slogan serves many valuable roles in business. First, it reinforces recognition of your brand. After hearing it a few times, your consumer instantly thinks of you when hearing it again. If it’s catchy enough, they may even find themselves saying or singing it in their head, reinforcing your brand even more.

Slogans also share a little bit about your company. For instance, if your slogan is funny, it says you have a sense of humor. If it contains your goal or mission, it tells the consumer what is important to you. Some slogans share the problems the company is trying to solve or the consumer its trying to help, making it easier to identify the target market.

Finally, a slogan sets you apart from your competitors. It differentiates you from all of the other companies who offer similar services to you. And if it’s memorable enough, it puts you ahead of them in your consumer’s minds.

Three companies that have enjoyed these benefits as a result of creating memorable business slogans are Nike, Carlsberg, and Apple. Let’s look at each one now.

Company #1: Nike – Just Do It

nike

Though many people use Nike’s ‘Just Do It’ slogan as a reminder that they can do amazing things if they just put their mind to it, its author, Dan Wieden, reports that this line actually has a grim beginning.

In fact, it was an idea he derived from a statement made by Gary Gilmore, a double murderer who, before being executed by a firing squad exclaimed, “Let’s do it!” Still, it has stuck in consumer’s minds and is undoubtedly one of the most memorable slogans of all time.

Related: Registering a Trademark

Company #2: Carlsberg – That Calls for a Carlsberg

Carlsberg

Initially, Carlsberg’s slogan was ‘probably the best beer in the world.’ Many consumers came to know and love this slogan; however, in 2011, the company rebranded and created a new slogan: ‘That Calls for a Carlsberg.” The goal of this new slogan, according to CEO Jorgen Buhl Rasmussen, was to encourage the consumer to do good things and then enjoy a Carlsberg after as a reward for a job well done. Both have stuck in the minds of consumers, albeit with some discrepancy as to which one is most preferred.

Company #3: Apple – Think Different

apple

Apple is a company known for thinking (and creating) outside the lines, so its ‘Think Different’ slogan fits it perfectly. According to Rob Siltanen, creative director and managing partner at the company that helped design this Apple pitch, though there are many accounts of how this slogan was created, its true inventor is Craig Tanimoto. Siltanen says that Tanimoto came up with the idea to use black and white photos of some of the most revolutionary people and events of all time and, atop each one, simply display the words ‘Think Different.’ Catchy, right?

Related: Smart Marketing Ideas For Small Businesses

How to Create Your Own Memorable Slogan

These are just three examples of how creating a memorable slogan can help your company get — and stay — in the minds of your consumer. So, how do you come up with this type of campaign?

One option is to get some of your company’s best talent together and see what slogans you can come up with. Have everyone submit one or two ideas and talk them out. See if any jump out at you and, if not, use them to inspire you to come up with even more possible ideas.

Another alternative is using a slogan generator. This enables you to come up with a simple, memorable slogan using keywords related to your brand. Just go through the list and of results and see which ones stand out. You could even pick your top two or three and let your social media followers vote as to which one you should select.

If you find yourself at a dead end and unable to come up with a memorable slogan, or if you lack the creativity or the time, you can also hire a marketing firm to help. Give them a little insight about your company and see what slogans they create. It may cost you some money to take this route but, as companies like Nike, Carlsberg, and Apple have taught us, a good slogan can really propel your brand.

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Start-up Advice

Dear Family And Friends Of Entrepreneurs…

Young entrepreneurs often struggle to establish their businesses as they are not getting the support they need. Sometimes it is not only the obvious support of financiers and supply change developers which is lacking –but also not having that critical “home-ground support” can negatively affect the success of your venture. How can family and friends support entrepreneurs?

Lusanele Mahlutshana

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Entering the market as a newbie entrepreneur is a brave step, and having your family and friends share in your vision for success is critical.  Once you have convinced them that being an entrepreneur is in fact “a real job” – one that requires a lot more sacrifices and hard work than a salaried worker – you can continue to encourage them to support your journey, to ultimately share in your success.

Get a job

In some communities, being an entrepreneur is not recognised as a profession. Therefore, those who pursue enterprise development are seen as irresponsible or lazy as it is not regarded as ‘real’ employment. Societal pressure to attain certain material possessions thus prevents them from pursuing their true passion.

This kind of resistance discourages a lot of entrepreneurs, making their pursuit for success even more difficult.

Related: How To Deal With Unsupportive Friends And Family

Finding out who your real friends are

Financial support is the most obvious support needed by entrepreneurs due to a lack of capital and start-up funding, as well as irregular payments and long periods of being cashless due to procurement holdups and fluctuation in the market for your product or service. Not everyone will stick with you in these times – and that’s OK. You may end up finding out who your real friends are, and these are the people who will give you emotional and social support to keep you focused and motivated.

“I know a guy….”

Another issue is friends and family looking for discounted prices as they know the owner. This means that they don’t see the value of the product or service, nor do they respect the owner. By asking for products and services for free, or at a reduced price, they end up taking advantage of their relationship with the entrepreneur and do not financially support his/her the business.

Related: How To Immigrate With Your Family By Starting A Business In The UK

So, if you have friends or family who are business owners, set an example by supporting them in the following ways:

  • Be willing to pay the full price of the product or service offered.
  • Be kind when giving negative feedback – make sure it is constructive.
  • Compliment them on good products or service. Share positive reviews on your social media pages.
  • Share and promote their business among other people.
  • Be patient and willing to help them establish their businesses.

Be prepared to listen to their dreams, hopes and frustrations. Sometimes, they just need an ear to vent about a bad day. Support them with a word of encouragement to keep going.

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Start-up Advice

Why Embrace The Struggle?

Entrepreneurial success hinges on your ability to approach challenges with the right mindset.

Gil Sperling

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Self-help and business coaching advice is littered with platitudes, which makes it difficult for entrepreneurs to know what they should take to heart. However, one universal truism that most successful entrepreneurs attribute to their success is their willingness and ability to endure the struggle.

It’s a lesson I learnt first-hand when building our ad-tech and Facebook Marketing Partner business, Popimedia. One of our sternest tests came when we moved into new premises and took on more staff to accommodate our exponential growth. Then, amid new and significant financial commitments, some of our pipeline never materialised.

It was at this time that my son was born, and our family had just moved into a new house. To preserve the business, we were forced into retrenchments and directors didn’t take a salary for a while. And, with a lower head count it became difficult to deliver on client deadlines. Needless to say, my personal and professional level of discomfort was at an all-time high.

We reviewed our operations and streamlined where we could. More importantly, though, the experience taught us a number of invaluable lessons.

Lesson #1: Reframe your context

Our leadership approach, our business mindset and our attitude needed to be drastically reframed.

There is a quote that has always stuck with me, which is: “The antithesis of comfort is struggle.”

Related: 6 Of The Most Profitable Small Businesses In South Africa

I believe a person is moulded by the way they deal with struggle. That’s why I’ve always been inclined to welcome a proverbial punch to the face, and use as a mantra the phrase, “comfortable being uncomfortable”.

Being “uncomfortable” forced Popimedia into rapid innovation – and it was this innovation that led to a sea-change in the business. We learned how to scale, how to improve service levels, how to do what we do better, faster, more efficiently.

As a result, and without increasing our staff complement, our year-on-year growth has topped 100%. What was, at the time, the business’s greatest challenge became its greatest ally, and our biggest lesson.

Lesson #2: Fail fast, and learn from it

Obviously, this approach is not about making life difficult for the sake of personal and professional growth. It’s about understanding what is: expecting it to be difficult and taking a constructive approach towards failure and struggle.

There is one guarantee in business: you will experience failures, and you will struggle.

Central to this is your ability to recognise your failures for what they are, and quickly. This allows for a rejigging of processes, attitudes, operations, and sometimes even objectives.

My personal attitude to failure was reframed by simple sales stats. I came to understand that rejection was inevitable – but when it does happen, it brings with it opportunities. I always ask: “Why don’t you want my product? How is it not meeting your needs?” This way, “failure” is transformed into an opportunity to better understand the market and my clients.

This feedback loop has proved crucial, and allowed us to become what we are.

As an entrepreneur, the pressure never ends and you’ll never ‘arrive’. At Popimedia, we’ve come to embrace every opportunity that takes us out of our comfort zone. Working through failure is the foundation on which the entrepreneurial spirit is forged. It is the willingness to try again following a rejection, or to keep grafting knowing that there’s no guarantee of a pay cheque at the end of the month.

And doing so with the ‘chutzpah’ – the sheer audacity – to endure the hardship through mental toughness and a passion for what you do, becomes your greatest asset, because when you get comfortable, you become complacent… and complacency will work you into irrelevance.

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