I am often accused by family, friends and colleagues of applying business principles to any and every situation – it’s a blessing and a curse (especially when helping a teenager with homework). My friend Michelle Stella Riordan of Photography by Exposure fame has a great photography blog and I often joke with her about how nice and easy it would be to just post a picture and write something about it – much easier than coming up with exciting business topics. Soooo, in an attempt to either defend or prove myself, I asked Michelle to send me a picture every once in a while and challenge me to relate a valuable business principle. You can challenge me as well. Email your picture with a brief description about where it came from and any relevant links. Now to our first Picture v. Business Challenge!
You Have to Limit Your Hats!
In the course of a year I meet with many different types and ages of business. One big difference between a small, new business and a more mature business is the number and types of hats that the owner wears. Like the baby in the picture, young businesses don the hat of their technical profession, but very quickly find themselves wearing the marketing hat, accounting hat, facilities hat, computer hat and the sales hat, which not suprisingly resembles a court jester hat!
On the contrary, the owners of more mature businesses, even those with no employees, have limited their hats and their focus to the things they do best and like to do the most. They turn over their books to bookkeepers and accountants, hire administrative professionals, bring on sales people, and pay people to develop their web sites. Of course they have grown the business and have the revenue to support these resources now, but to at some point they had to make the decision to let something go. They could have done it themselves for cheaper, and it probably wasn’t done exactly like they would have done it, but by delegating and taking the risk they were able to leverage their value and grow the business.
Grow Business By Giving Away Your Hats
As you plan and strategize about your business, think about ways that you can turn things over. List the skills needed for that task and get pricing for contracting it out until you need to hire someone. Most importantly prepare yourself mentally and emotionally to let go of doing IT and stick to managing IT – it will make you a better business person!
If you need help getting rid of your hats, contact us at Sigma College of Small Business – we teach business, consult on management and even teach you while we consult, what we call “Consultative Learning”.
Do you have a picture for The Picture vs. Business Challenge? Email it to me along with a brief description of where it came from and any links you want me to include. Thanks Michelle for getting us started – let me know how I did!
Welcome to our class on “How to Start a Business”, our first topic is on “Exit Strategies”! This opening never fails to get a class full of raised eyebrows, but I’m convinced that considering your exit strategy is an exercise every small business should start with and periodically review.
Starting with your company name…
…most of your decisions will be affected by your exit strategy. Let’s say you want to build your plumbing business over a few years and then sell. Using your name as the brand will detract value for a new owner with a different name. The legal entity; C-corp, S-corp or LLC, that you choose is another big decision made early in the start-up process that can be dependent on your exit strategy. Hiring employees, the value model, buy or lease decisions – your exit strategy may effect all these decisions, which is why I encourage every small and medium business to have one.
In a controlled dissolution exit strategy the business stays in operation as long as the owner is working. When the owner decides to stop working the business is done. This exit strategy is typical of many professionals who are the primary revenue generator for the company – a consultant who bills all the hours or a plumber who does all the labor. There is no passive revenue and the value of the business is basically zero without the owner’s daily involvement.
There is nothing wrong with this exit strategy, as long as it is a conscious decision and the owner plans the rest of the business around it. For instance, the value model is that you pull out as much cash as possible and invest in outside resources, which means the marketing strategy should maximize profitability and cash flow.
An ownership transfer exit strategy is one in which the owner plans to sell his ownership to another party in whole or in part. The most common transaction for smaller businesses is a complete sale to another person or another company. For a few entrepreneurs with the right business concept, “going public” is a valid strategy where the “sale” of the company is to many outside investors on a public stock exchange.
In an ownership transfer exit strategy the value model is about building “transferrable” value. This is the kind of value that can be realized even in the absence of the owner. With this exit strategy the sky is the limit for your return on investment. The value of the company can be a passive revenue stream, typical of insurance agencies, or the potential for growth from a new technology, a high value customer mix or demand for a specific product or process that you own. In general owners with this exit strategy should always be looking for ways to make the business less dependent on them through solid processes and a strong work force. That will make the business much more valuable to any potential outside buyers.
Transition to Passive Investment
This exit strategy is used very often in family businesses. As the kids are able (and willing) to take over the business, ownership is sold or gifted to them over time. The owner either sells them the business and finances it over a number of years, or maintains a diminishing ownership stake as they buy ownership through the transition process. The passive income for the owner is in the form of principle and interest payments on a long term loan, additional sale of their ownership and distributions from the profit of the company over time.
This is a solid strategy when done correctly. First of all, it is imperative that the owner ensures the transition of operations is to someone competent, because if the business fails, the passive income source is done. Also, if you are dependent on distributions or dividends as an income source, make sure the new ownership is planning to make those. If they decide to put everything back in the company, your income source could dry up quickly.
Pick One and Decide Accordingly
Picking an exit strategy is not about predicting the future and yours will probably even change over time. The important thing is to have one in mind so that when you make daily decisions they are based on a long term vision, not just a gut feel for what’s easiest at the time.
Of course there are many variations and nuances to exit strategies and I’d love to hear about your experiences or struggles in deciding on and implementing an exit strategy. If you need help in this area give Sigma College of Small Business a call and we can help.
It’s early, you have your cup of coffee, a laptop and about 45 minutes that has been carefully set aside to devote to your Facebook business page….
WHAT THE HECK DO I WRITE?!?
If you don’t have a plan the result is either to think about something clever and creative for 40 minutes and then share it in the last 5, or unload two days of thoughts in 5 or 6 rapid sequence posts, completely filling the first page of all our loyal fans, annoying them to no end!
Here are Three Social Media Posting Strategies I’ve found to be effective at Sigma College of Small Business and with our clients.
#1 – Have One, a Social Media Marketing Strategy That Is!
It doesn’t have to be complicated, but you should take some time and write out a social media strategy. The plans we write for clients are three pages or less and include:
- Target audience – list of the top three audience categories we expect to reach
- Objective – what we expect from that audience as a result of social media marketing
- Message – the general message(s) we will convey through social media
- Media Plan – a list of each social media channel we will use, with the specific audience, post frequency, specific objective, primary topic categories and examples for each individual channel.
The Media Plan is the most important part of the plan, because you will use Facebook for a different purpose than your blog, and LinkedIn will get different results than Twitter. Taking some time to write out your strategy will give you a first reference for building a Social Media Calendar.
#2 – Use a Social Media Marketing Calendar
Every month I meet with clients and we list all the events, products, services and important messages that are “post worthy”, i.e. valuable to our audience, for the next month. Then we add in some campaign ideas, their Constant Contact email marketing schedule and some placeholders for sharing the content of others. Once we have the master list we expand it and develop specific posts for each item. A big event may warrant 4 or 5 posts in the weeks and days before the actual event and even 1 or 2 follow-up posts. Smaller events may be one “I’m here” post.
The result of the media calendar is that the time used for posting becomes very efficient. Many times I write the posts ahead of time so it’s just a matter of copying them over to the right media channel. There are also social media scheduling tools like Hootsuite that enable scheduling your posts days in advance if you won’t be available to make it real time.
A media calendar with a posting strategy also keeps your posts consistent and spread out so they are “above the fold” more frequently for your audience. Use the calendar to fill in the gaps on the days and weeks where there isn’t too much going on. A good way to fill those gaps is by sharing the content of others.
#3 – Make Sharing a Part of Your Strategy
A great thing about social media is that sharing great content is easy. (almost too easy for those who can’t recognize “great” content:-) Make sharing part of your strategy. Share content from blogs that are relevant to your audience, web sites of great new products or services you find (like business classes for small business owners), and most importantly the posts, tweets, blogs and emails of the people in your social media and personal networks.
Sharing great content does a lot for building your online reputation and relationship with the people who can help share your message! As part of the social media marketing plans that we develop for clients, there is a list of blogs, pages and people for them to follow; most importantly for their own information and development, but also to give them plenty of stuff to share on those rare mornings when they have some time but nothing to say.
What are Your Social Media Tips and Tricks?
Social Media can be a very effective tool for small business owners if they take the time to create and implement a simple strategy. One of the goals for Sigma College of Small Business is to keep things practical for our customers. We focus first on simple ideas and actions that are easy to implement but will have an impact. What are some tricks and techniques you use to be more effective with Social Media Marketing?