• Start from scratch
• Buy an existing business
• Buy a franchise/license

Each has different levels of risk and associated costs, which makes for a discussion at another time. If you have decided that buying an existing business is the direction you want to choose, here are the steps to accomplish that objective.

Determine the right type of business

This initial step takes self analysis regarding your abilities and goals. What is your skill set – selling, operations, finance?  Of course, as a business owner you will be wearing many hats, but certain businesses will require specific skill sets of their owners. For example, if a particular business requires the owner to be heavily involved in sales and that’s not your forte, maybe it’s not a fit for you.

If your exist strategy is to work 8-10 years fully engaged in the business, but then be able to back away from the day to day operations, make sure that you focus on the type of  business that is conducive to that arrangement.

If your lifestyle is conducive to working M-F, focus on a b-to-b business rather than a b-to-c business which may give you more flexibility but will require your attention on evenings and weekends.

Determine your investment level

Businesses are typically priced for sale based on a multiple of the earnings they are generating. Thus, based on your income requirements, you should be able to roughly calculate the price range of a business you need to purchase. An accountant qualified in business valuations should be able to assist you with this calculation. Remember – the earnings the business produces not only provides your income, but also needs to provide for debt service if you are financing the purchase.

Focus your search

As you can guess, most business owners don’t publically announce that their business is for sale. They don’t want to deal with the fallout from nervous employees, concerned suppliers, anxious customers, or aggressive competitors. So without a “for sale” sign in the window, how do you know what’s available? Historically, the local newspapers contained classified ads of numerous businesses for sale with enough detail to arouse your curiosity but not enough info to disclose the exact business. However, these days the newspaper classifieds have been replaced by websites listing the businesses. www.bizbuysell.com is one such source which lists business for sale by owner and by business brokers.

Contacting business brokers directly is also an option – however, be aware that brokers typically only represent the sellers. Thus, they will show you only their own listings or their firm’s listings.

Networking with small business accountants, attorneys, and business coaches is an excellent way to connect with business owners who are planning their exit strategy. But be prepared to be patient for this will take time.

Investigate the business

Typically before a business’s identity is disclosed the prospective buyer will sign a confidentiality agreement. Again, this is to protect against those nervous employees, concerned suppliers, etc. finding out that the business may be changing hands. Usually a summary of the business is available for review along with financials. Three years of P&Ls and balance sheets are useful to see a breakdown of the financial health as well as the cash flow the business is generating. However, make sure that tax returns accompany these documents to insure that the numbers are valid. If the seller is not willing to share these, look for another business opportunity.

This is the time to ask the owner questions about their operation. Inquire about all facets of the business that he or she is willing to discuss. But realize that certain information will not be shared with you at this point in the process.  For example, it’s doubtful that a seller would share any type of specific customer information at this time. This is also the time to physically take a tour of the business. This will probably happen after hours so as not to disrupt operations or raise suspicion among employees.

Negotiate the LOI

Very much like a real estate transaction, the prospective buyer makes an offer on the purchase of the business detailing the price they are willing to pay, the terms, what’s included and what’s not included. And just as important, what contingencies will be incorporated. An example of an important contingency would be the ability of the buyer to obtain financing. Another would be the ability to obtain or extend an existing lease for the location. And of course, the opportunity to conduct due diligence on the business’s financials and operations. Be prepared to enlist the services of an attorney at this point.

Due diligence

After the LOI is acceptable to both parties, the buyer has the opportunity to conduct their due diligence which means they have access to the seller’s books and financial records. If you do not have an accounting background or are strong with financials, I would strongly suggest enlisting an accountant to verify the numbers. Other due diligence items may include verifying customer data, speaking with employees, and inspecting inventory – however, this needs to be spelled out in the LOI beforehand.

Financing

If the buyer will be utilizing a bank or third party for financing, now will be the time to apply for the funds. Be prepared to present a well thought out business plan, resume, and personal financial statements. The above mentioned financing contingency allows the buyer to kill the deal without penalty (losing a deposit) if financing cannot be obtained, but understand that typically the seller will require their own contingency stating that the buyer has a given period of time to secure the financing. So be prepared to approach the bank immediately after the LOI is agreed upon.

Closing the deal

So you have gotten this far – now it should be a piece of cake, right? Unfortunately, about 50% of the deals that are agreed to between buyer and seller never get to closing.  Other than issues that come up during due diligence, financing, etc., the biggest deal killer is the disagreement on the terms of the final purchase agreement. This agreement should follow the theme of the LOI, but realize that it will be much more detailed. This is when buyer’s remorse and seller’s second-thoughts get magnified. In other words, emotions run high! An experienced attorney in business transactions is critical at this stage to protect your interests, but also keep the deal together.

Seek professional advice

As I mentioned above, the small business accountant and attorney should have key a role in the purchase of a business. Since it’s typically the largest transaction a person will make in their lifetime, make sure you have a team working for you.

Doug Boehme is a Business Advisor for the Central Indiana Small Business Development Center, an organization with the mission of having a positive and measurable impact on the formation, growth, and sustainability of small businesses in Indiana, and to develop a strong entrepreneurial community. Doug can be reached at dboehme@isbdc.org.

An awards ceremony will be held at the Indiana Roof Ballroom in Indianapolis in late August 2012. Winners will be profiled in the awards ceremony program as well as in the September 2012 Companies to Watch edition of BizVoice, a magazine of the Indiana Chamber of Commerce. Also, throughout the year, Companies to Watch winners are invited to exclusive professional development and networking events.

Business Criteria Includes:

Complete eligibility requirements, the online nomination form, and additional information can be found here.

View the press release.

Follow Indiana Companies To Watch on Twitter: #inctw

Cindy Bertram

The Reality of Customer Loyalty Today

In today’s business world, marketing is not a “one size fits all” and  identifying who your target customers and clients are, as well as the age range they fall into spills over to using a generation marketing approach. Beyond that, business owners need to also understand how those potential clients liked to be reached and touched, and then use the appropriate methods.

Key Points to Building Loyalty – “Disney Keys To Excellence”

The Disney Corporation has led the way when it comes to building customer loyalty. Their ongoing workshops, including “Disney Keys to Excellence” provide some of their best practices. As Walt Disney himself often said, “You don’t build it for yourself. You know what people want and you build it for them.”  The Walt Disney Company is built around this premise as well as their philosophy that you need to connect emotionally with your guest/clients, and make sure that the experience delivers superior value. Your brand aligns with individual identity and contacts build relationships.

“Experience Mapping”

An area that Disney focuses on and excels at involves their training when it comes to “Experience Mapping.”   This is a method they use and train their staff members (also referred to as “Cast members”) when dealing and interacting with their guests.  “Experience Mapping” analyzes the effectiveness of the experience at each point of contact, which may or may not be with an actual person. Each of these “touch points” combined then creates an overall experience felt by Walt Disney guests.

Taking this Forward – Shep Hyken, well known expert, author

 Shep Hyken, well known speaker, author and consultant has written extensively on the subject of customer loyalty. His book, The Cult of the Customer, (Wall Street Journal Bestseller) focuses on this as well as steps needed to create and maintain customer loyalty.

5 Stages of Culture Before Clients Become Loyal

Hyken defines the word “cult” as “a group of people with common and shared interests. There are five levels or stages that people/customers go through before they become loyal. The first is the “Cult of Uncertainty,” which he mentions “at best, is where the experience is inconsistent.” To move forward, it’s critical to get out of this uncertainty.   From there, the second stage is “The Cult of Alignment” – everyone must be headed in the right direction.  The third is what Hyken refers to as the “Cult of the Experience.” He explains this as, “before it can be owned, it must be experienced.”  The “Cult of Ownership,” is the fourth stage of building customer loyalty, and Hyken defines this as “once an experience is predictable, it can be owned.” In other words, the experience must be positive.  And the fifth stage is “The Cult of Amazement,” which he says involves the “A+ Predictable above Average Experience.”  This is a way to provide above average experiences for the client.   Hyken’s most recent book, The Amazement Revolution, also a New York Times bestseller & WSJ bestseller, focuses more on this.

Strategies and Additional Tips

 Hyken also provides ten different strategies to work through those different stages of building customer loyalty, and notes that at any given point, one person does represent the company. As a business owner, it’s important to look at the “touch points” as well as “impact points,” which are ones that occur behind the scenes.  Once again, The Cult of the Customer provides more on these areas, and steps to take.

Last Thoughts

One of the unique points that Hyken mentions is that “you’re only as good as the last time.”  When it comes to building customer loyalty, it’s critical to focus on this as an ongoing way of thinking about your current customers and clients, isn’t it?

Cindy Bertram is a Business Advisor for the Northwest Indiana Small Business Development Center, an organization with the mission of having a positive and measurable impact on the formation, growth, and sustainability of small businesses in Indiana, and to develop a strong entrepreneurial community. Cindy can be reached at cbertram@isbdc.org.

Bill Gregory

A recent blog on Huff Post was by Daniel Tenner.  He is clearly a successful entrepreneur, co-founder of two organizations. One of those, GrantTree, was started in 2010 with the explicit aim of helping innovative tech companies to access government funding, albeit in theUK. Daniel and co-founder, Paulina Sygulska, both worked in and cofounded other tech startups beforehand, and felt that although there are many ways for startups and more mature companies to raise government money, most of those ways are unknown or inaccessible to the average entrepreneur. Sygulska, herself, had co-founded a company of her own called DreamStake.net with the dream of creating a support network for creative entrepreneurs. (And yes, I could not resist taking an unanticipated detour into her fascinating site!)

Tenner’s Huff Post article was titled “The Startup Skill Set” and was the result of a workshop he participated in with Eric Ries, author of “The Lean Startup.” You can find Ries also on the HBR Blog Network, with an article titled “Is Entrepreneurship a Management Science?”

The author’s basic premise is that success in the startup world has more to do with skills than with ideas. They believe a skilled entrepreneur will achieve some measure of success even with a mediocre idea. An unskilled entrepreneur is likely to fail even with a brilliant idea whose time has come. There are exceptions, or course, they say, but you can’t rely on being the exception any more than you can rely on winning the lottery. So the best approach as a new entrepreneur, according to Tenner, is to try and fill the glaring gaps in your skill set (via learning, partnerships and mentorship) so that if your startup fails, at least it will be failing for an interesting reason. This last thought took me on another detour to learn about what Tenner would consider interesting reasons for failing. This detour was so engaging that I decided not to return to my main road. I’ll simply leave it to you to seek out his Huff Post on what he believes to be the core entrepreneurial skills, which you can find at http://www.huffingtonpost.com/daniel-tenner/the-startup-skill-set_b_1224293.html?ref=small-business. I’ll comment on them in a later blog here. I’d like to focus, instead, on his thoughts that failing in a unique and interesting way is hard!

Tenner says that startups are renowned for their unique difficulties, for the fact that each startup faces an extraordinary set of problems that has never been seen before in this particular conjunction. This is largely borne out, he says, by the many definitions of startup which are all about uncertainty, hard technical problems, scalability and so on.  He believes, however, that what usually kills startups is a set of much more mundane issues, like running out of cash (the ultimate killer), building the wrong product, building for the wrong market (both of these effectively equate to what he calls “building a crap product”), having a major fight between the founders, etc. The root reasons, which he says can be described in a thousand different ways, are all essentially the same and relate fairly closely to Paul Graham’s principles on how to start a startup:

• Start with good people
• Make something people want
• Spend as little money as possible.

Tenner says that most startups (particularly those started by new entrepreneurs) will fail because they screw up one of those three basics, not because they face a unique set of never-seen-before circumstances unique to their market, their product, and their specific set of circumstances. According to Graham, “Most startups that fail do it because they fail at one of these. A startup that does all three will probably succeed.”

Starting with good people

Tenner observes that if you started with people who were not committed, not a good match with you, didn’t have the skills, didn’t have the mad perseverance to see things through, were too many or too few, then chances are the team won’t survive the stress of a startup. Even a “regular” business is ultra-stressful, he notes, putting any relationship to the test.

A startup, with its pressure to grow fast, is ten times as stressful and he offers two ways to avoid this, proactively and protectively. Proactively, he says, make sure you only start companies with determined, motivated, obsessive “nutters” who have the same priorities in life as you do. No “Oh heck, I’m about to start a start up, I want my friend John to be my cofounder, I’ve known him since we were kids.” When starting something new & scary, your impulse might be to gather friends around. That’s the wrong impulse he says. You need to be extremely selective, and only start business with someone who is going to be as crazy about it as you will be. Then, protectively, he says once you’ve picked the right person, make sure your arrangement is sustainable, and make sure the company can survive one of you changing their life priorities.

Making something people want

The key mistake to avoid, according to Tenner, and which many promising startups make, is building something in isolation, without any customers, with only theoretical ideas about what will drive sales of the product or use adoption.

Tenner says , “Building what customers want means getting something out and quickly iterating it based on customer feedback. “He quotes Graham, “In a startup, your initial plans are almost certain to be wrong in some way, and your first priority should be to figure out where. The only way to do that is to try implementing them.”

Spending as little as possible

Another way to phrase this, Tenner observes, would be “be on top of your finances”. If you’re bootstrapping, he says that’ll probably come naturally, because it’s your pennies going down the drain. But if you have managed to raise funding, he says this can be harder than it seems. Being on top of your accounting means this can’t be delegated to someone else until you personally understand it. Even if you’ve raised funding, you can’t spend irresponsibly. He says it’s better to be a zero-cost entrepreneur than to be an uncontrolled spender. In short, he notes, it is about being aware of and on top of the basic life pulse of your business, its cash flow. A lot of startups stumble and fall because they’ve taken on way more expenses than they could afford given the stage and success of their project.

According to the author, failing in an interesting and unique way is hard. The average new entrepreneur’s first startup will not face fantastic and exceptional problems – it’ll die because of a combination of starting with the wrong people, building something nobody wants to pay for, and failing to be on top of finances. The good news, he says, if you can prepare yourself in those three areas, and avoid the most likely mistakes there, you’ll greatly reduce the chances of a first-time flop.

Bill Gregory is currently serving as the interim director of the Northwest Indiana Small Business Development Center. Gregory has more than 30 years of business experience in a variety of management development and training roles. He most recently was executive director of the Center for Management Development at Indiana University Northwest. Bill can be reached at bgregory@isbdc.org.

I realize this next topic is less than festive, however considering the attention this topic has commanded over the past few years and its importance for exporting firms to grasp, I think it’s time for discussion. I’m talking about the Foreign Corrupt Practices Act of 1977 (FCPA), 15 U.S.C., §§ 78dd-1, et seq., which prohibits US nationals and firms from engaging in payments to foreign officials for purposes of securing or retaining business in foreign markets. It is one of few if any US laws that govern how US citizens interact with companies and officials outside our borders.

Business Expo starts the day by getting down to business. From 11am-3pm every business in Bloomington and the surrounding area are invited to attend. Exhibitors will have only business-to-business traffic so your message can be targeted to a business audience.

From 3pm-7pm the event will be open to the public. Starting at 5pm, we bring back the “Taste of Expo”, with local BIRA restaurants providing free food. Great prizes are also available to be won. We’re expecting heavy attendance during this portion of the event, which means your products and services will be seen by a huge number of people.

If you’ve been an Expo exhibitor in the past, now’s the time to come back. If you’ve never exhibited, what are you waiting for? To reserve your booth for the 28^th annual Business Expo on Thursday, April 19th at the Bloomington/Monroe County Convention Center visit our website, www.bloomingtonbusinessexpo.com or call 812.334.4070 today!

*Image courtesy of http://www.bloomingtonbusinessexpo.com/

We have all invested time in learning about and experimenting with social media, but much of that attention has gone to learning the ins and outs of platforms like Facebook and LinkedIn and tools like Tweet Deck and Hoot Suite.  Perhaps it is time to think beyond the tools and to devote more time to the message and, in particular, to stories.

 Throughout history man has used stories as a fundamental means of communication.  Today we live in a culture of sound bites and 140 character messages.  Our hyper-connected world has provided tools that enable us to build and maintain vast numbers of connections.  We have gained quantity, but are we sacrificing quality?  We have breadth, but do we have depth?  Are we finding meaningful engagement or simply shouting for attention?  Stories give us an opportunity to connect on a deeper and more meaningful level.

So, what exactly is a story?  The famed screen writer Robert McKee says that a story is “a fundamental conflict between subjective expectation and cruel reality, about an imbalance and opposing forces.  A good storyteller describes what it’s like to deal with those opposing forces, calling on the protagonist to dig deeper, work with scarce resources, make difficult decisions and ultimately discover the truth.”  Doesn’t the last part of the quote sound a bit like starting and running a small business?  Digging deeper?  Working with scarce resources?  Making difficult decisions?  Ultimately discovering the truth, i.e. what works and what doesn’t?  Every small business has a story waiting to be told.

One of the great privileges in working with entrepreneurs and small businesses is having the opportunity to hear their stories.  Guy Kawasaki, in his book “The Art of the Start”, argues that making meaning is as important a reason to start a business as making money.  I find that many entrepreneurs have a passion and a purpose beyond financial gain, and that passion is the force that motivates them to embrace the challenges and risks inherent in starting a business.  That passion is also the root of a great story.  Like the cancer survivor starting a company to educate cancer patients so they have a better understanding of their options and someone to help them navigate the treatment process.  Like the single mom bravely balancing entrepreneurship and the needs of an eight year old child.  And like the woman establishing a business to help children and caregivers work through transitions with aging parents, improving the quality of life for all involved.  Those are great stories.  You have a story too, and it needs to be heard.

Stories all have plots, of course, and small business stories can be built upon several common plot lines:

Who I Am…Stories that enable the customer to connect with who you are or who the company is.

What I Do…Explaining what you do in a way that gets at why you do it.  Share your passion for the business.

Vision…What do you plan for the future?  People like to hear about aspirations and beliefs.

Values in Action…How you live out the principles upon which you built the business.

David and Goliath…People like to root for underdogs.  It’s exciting to hear the entrepreneur talk about taking on big challenges and changing the world.

When you have identified your plot line, and begun to craft your story, remember to think about inciting incidents.  Most stories are sparked by a particular event or circumstance.  What is the key moment in the establishment or evolution of your business?  Think also about conflict and about overcoming adversity.  Conflict drives stories because it drives transformation.  People and companies grow as a result of overcoming challenges.  Remember also that companies have internal stories.  Those stories help form the company culture, a culture that is experienced by your customers in every interaction they have with your organization.  Don’t forget to nurture the internal stories that give your customers a deeper look into, and greater emotional connection with, your company.

Finally, a few guidelines to keep in mind.  Here are five important attributes that are important to a good STORY:

S = Succinct.  Get to the point and be easily and quickly understood.  Clear and concise stories are easily shared, and that is one of your goals.  Make it easy for customers to share your story.

T = True.  Consumers are savvy and will sense any lack of authenticity.  Unless you are creating an obviously fictional story to educate or entertain, it is vital that you are credible.

O = Objective.  What is your objective in telling the story?  Are you teaching? Motivating action?  Clearly understand your goal.

R = Relevant.  Why does the story matter?  Understand your audience and tell a story they can connect to on an emotional level.

Y = Yearning for more.  A great story makes the audience want to engage.  Give them an opportunity to join in the story.

While stories have endings, remember that storytelling is more about the process and the journey.  Regardless of success or failure, there are more stories to create and tell.  Take time to nurture your stories and connect with your customers on a deeper level.  In the words of one of the great thinkers of the 20^th Century, Mr. Rogers, “It’s hard not to like someone once you know their story.”  Do your customers know yours?

Alan Steele is a Business Advisor with the North Central Indiana Small Business Development Center.  Prior to joining the ISBDC in 2008 he held a variety of senior level marketing and business development positions, working with both products and services in B2B settings.

Plan A is typically when someone graduates from college, he or she then tries and gets the very best day job s/he can. Unfortunately in this economy, many have been laid off from that very best day job. Plan B is chucking the idea of the day job and going to full-time entrepreneurship only if someone carried along that dream of someday owning a business. Unfortunately, that in many cases leads to working three times as hard for a third of the money that the day job supplied. This could lead (and often does lead in many cases as the statistics bear) to being broke and going out of business, exhausted.

Many entrepreneurs have chosen Plan C. Plan C is having the full-time professional day job AND a part-time business or entrepreneurial endeavor on the side. There is a batch of professionals out there, Plan Cers I call them, who are doing both. This, I argue is a safer way to start a business, because it allows for the financial support of a stable day job, but also allows for entrepreneurs at heart to truly create multiple streams of income and financial independence, ultimately.

About twenty professionals in the book agree with me, who are actually living the Plan C life currently, or lived it and then moved on to full-time entrepreneurship. Through this book, I explore how people are doing both. In addition to those doing both, I unearthed a few trends as well:

1.  People who are trying part-time entrepreneurship are professionals first.  They realize that day jobs are important, and many actually went to professional schools and continued the professional day job before starting their own businesses. For example, there are pharmacists, attorneys, engineers, and others in the book who have successfully managed to balance the day job with the part-time business on the side.

2.  The Plan Cers have one of two ultimate goals.   Plan Cers, or those who are working full time at a day job and opened a part-time business want to go one of two ultimate paths—they either ultimately want to arrive at full-time entrepreneurship, OR they want to keep the professional day job long-term AND the business(es) on the side. There are different philosophical camps on this, but most whom I interviewed had one of the two clear paths delineated.

3.  There are also important support systems available for the Plan Cer.  In the book, on top of the interviews with the Plan Cers, I also interviewed three different coach/support professionals for the person who is either contemplating the Plan C lifestyle or living it—an attorney (Indiana native, Kenan Farrell, Esq. of KLF Legal), a life/business coach, and a money coach (Pete The Planner). It is really important to get all three lines (legal, life, and money) in proper alignment before managing both the day job and the entrepreneurial endeavor. Each gives important and sage advice to contemplate regarding the Plan C lifestyle, and what pitfalls to avoid.

4.  Plan C is a great retention strategy for big businesses with the best day job employees.  Big businesses need strategies for retaining top talent. One way to retain the best and brightest and have them bring more value back to the day job is by allowing them to start a part-time business on the side. While there are some issues to work around (as I mentioned in the previous bullet), employers who employ Plan Cers get more benefits from having intrapreneurial and entrepreneurial thinkers on their payroll. The big business day jobs get access to the Plan Cers’ networks, social capital, and connections in the community. The Plan Cers bring their creative, innovative minds to the day job, and the Plan Cer benefits from seeing the bigger picture of big business by being an entrepreneur him or herself. There are a lot of other benefits enumerated in this book for the employers of part-time entrepreneurs.

Lastly, there are many who can benefit from reading this book.  College students fresh out of commencement who cannot find their “dream” job should read this book in order to start an entrepreneurial dream, along with mid-level career professionals who are either bored or unfulfilled with their day jobs, or want a change, but perhaps have bills to pay and need to keep the stable day job. Lastly, the book is ideal for professionals who are near the end of their careers and preparing for retirement, who can plan ahead, start a business before they leave the workforce, and prepare for full-time entrepreneurship after their day job retirement.

The way that we work now is project-based. We can no longer rely on merely one stream of income in a global economy—as the old adage becomes true, never put your (career) eggs in one basket. Although there are professionals who truly think the ONLY way to successfully start and grow a business is by managing it 100% of the time, 24/7/365, I argue that there’s a smarter way to grow a business in an unsteady economy. It’s called Plan C, and this book shows how other people have learned to live the Plan C dream, despite a bad economy. This new year, consider this growing trend to re-create how we work in Indiana and America, and redefine the new American Dream.

Dr. Erin Albert recently released her seventh book, Plan C: The Full-Time Employee and Part-Time Entrepreneur, which challenges intrapreneurs in the work force to consider entrepreneurship in a different way.  For more on the author, logon to her writing website at: www.erinalbert.com, or her company’s website, www.yuspie.com. She provides today’s guest blog post, discussing the trends she found while writing this latest book. The book is available in e-format at Amazon.com, Barnes & Noble, iTunes, and at the publisher’s website in several different electronic formats.

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