COVER CONTINUED ... If you started to read this question and thought it didn’t apply to you because you’re not selling, you are dead wrong. Every single entrepreneur needs to focus on this question as part of their overall plan. When you build a business worth selling, you build a business worth owning — one that can run without you there every day, one that grows in value while you sleep. Since this question is broad and deep, let’s break it down. A. How stable is your business plan? Here’s what I mean by this: Are you jumping from shiny new object to shiny new object? Are you simply guessing at what works in your business? This can’t be the plan. I know business gets boring, but find areas that you enjoy and dig in. Do you think newsletters are the most exciting business I could be running right now? Of course not. But there are many areas I do enjoy in my niche, and I had to seek them out and focus on them. B. Investors also look at consistency. How long do your team members stay? Has someone been there too long? Side note: This is a huge problem. You’re loyal to Bertha because she has been there for 12 years, but Bertha is screwing you with her inability to perform her job at a high level. I see it literally every day. Is your business basically a different business each year because you see the next new internet hype and start selling it? Do you jump on the marketing bandwagon for the next way to magically get new customers? How consistent are your core customer bases? Do you even have a core base of customers? C. Investors surely want to know what systems you have in place to run the business. Does everything go by you before it can get done? Do you have a process for ordering or for working with vendors? Do you have marketing systems? What about a sales system — do sales happen due to luck? What about customer complaints? Do you have a system for those? Every business needs systems, and so few have any, except for the systems employees make up on their own. Those systems don’t count unless they were created on purpose and are documented somewhere.
D. What does growth in your company look like? Are your numbers solid? Do you cheat on your taxes and have two sets of books? What is the growth plan for 12–24 months? How’d it go in the previous 12 months? Is a large majority of your marketing plan from the previous year still being used for the next 12 months, or do you have shiny-object syndrome, or are you simply guessing at sales and marketing? E. Investors will make sure they know your real numbers. If they think there’s any chance you’re guessing, they’ll want to dig even deeper to see if you know your numbers. By the time they are done checking up on you, they will know the truth. For example, do you have any idea what the sales numbers were last month? No, the real ones, not the guesstimate. How many leads did you get last month? How many times did you follow up with them? What was your closing percentage? “At any point, we can — and have — CHANGED THE PLAN when it was in the best interest of the employees, customers, or the company.”
F. Finally, they want to know what your churn is (lost customer rate per month and per year) and what you are doing to decrease that number. The more customers churn, the more revenue you have to put back into the company just to stay flat. For every customer that leaves you, you have to replace them or start dying. High churn will have one of the largest negative effects on overall valuation than any other single item we’ve talked about, because most investors aren’t looking to buy a sinking ship. So now, what I want to ask you is this: What are you doing to fix these areas we just talked about? Fixing the items above is very important to your long-term future and profits, which leads me to my second question. 2. Do you have the right goals for the year? If your plan for next year is to grow and that’s the only plan, you have the wrong plan. I see “business plans” that only talk about new marketing tactics, but marketing is only one component of a business. If you’re just starting out (a couple hundred- thousand or less), having 85 percent of the plan devoted to marketing is fine. At a million-plus, though, there better be a section on systems and processes. There better be a plan for churn.
Continued on page 3 ...
2
www.thenewsletterpro.com
CHANGING THE WAY SMALL BUSINESSES GROW.
208.297.5700
Made with FlippingBook Online newsletter