WHY DON’T SCHOOLS TEACH BUSINESS HOPEFULS TO USE CASH FLOW TOOLS?

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Imagine a business, if you would, that shows decent margins, low debt, and slowly growing sales. Bankers examine the financial statements declare that the company is in good shape. “Carry on and keep up the good work,” they say. But … Continue reading

Results Based Pricing for Professionals

I have just read an article from November of 2013 (Managing Partner, published in New Zealand) about pricing for professionals. When surveyed about how they charge, most professionals shrug and admit that they charge what everyone else charges. It has reminded me to put value and choice at the very top of the list of how to devise winning pricing strategy that will increase profits.

shrugPricing professional services is a big problem for lawyers, accountants and anyone selling services. Professionals deal in results, but they charge for effort. The easy route is to charge by the hour but that makes it easy for a potential client to compare apples to apples. AB charges $125 per hour. BC charges $250 per hour. Therefore, AB is the best buy. But is that true?

So, would you buy a house based solely on price? House F is small, rundown, needs a roof and is in the middle of a rough neighborhood. It is listed for $229,000. House G is much larger and in a nice neighbourhood. It is occupancy ready and most importantly, your wife likes it. But its list price is $400,000. Which house has value?

In order to place value on a service for hire, the trick is to comprehend that the customer does not care about the amount of time, effort and sweat you expend. They want results. And what is the result they want? Do you ever ask? Where will the customer place the most value? Speed of service? Accuracy? No jail time? Or will  they respect the weekends you spent on their file, the late nights and the cost of years of schooling?

So we establish, state and then highlight the value on the table, first, right? But now what?

In order to get your price, though, you must offer choice. Like Goldilocks , the choices must be few- not too high, not too low and just right. Choice in pricing will allow you to take clients and customers with all kinds of budgets and thickness of wallet, without discounting. The platinum package will have the largest assortment of bells and whistles. The gold package has fewer bells and only one whistle but has a lower price tag. The workmanship is still present, but the results are fewer. The bronze package is the budget offering with the lowest price and the fewest bells and no whistles at all.

Want to be more profitable? Be brave and get a better pricing strategy.

IBM predicts the return of local brick-and-mortar retail to prominence over e-retailers

IBM’s “5 in 5″ series presents ideas about how life will be affected by technology over the next half decade. A video series provides the highlights, including this one that predicts the return of local brick-and-mortar retail to prominence over e-retailers that have been “spanking” them for years.

watch video at http://www.profitguide.com/industry-focus/retail/will-brick-and-mortar-retail-prevail-in-the-end-60600?

IBM’s release says:

“This year’s 5 in 5 explores the idea that smart machines will learn, reason and engage with us in more natural ways–helping to amplify human abilities, assist us in making good choices–big and small, and help us navigate through life.

Within five years, we predict buying local will beat online. Savvy retailers will use the immediacy of the physical store to create experiences that simply can’t be replicated by online-only retail. Watson-like technologies and augmented reality will allow physical stores to turn the tables and magnify the digital experience by bringing the web right to where the shopper can physically touch it.

Brick-and-mortar retailers may still drive a significant majority of retail sales, but online sales are growing faster. Physical stores, once seen as a negative, will become a big positive. Their proximity to the customer will give them the advantage of integrating the immediacy of physical shopping with a magnified digital experience inside the store.”

It’s true that Watson’s offspring could drastically change a physical store’s shopping experience, but presumably any digital tool that a sales associate could use in-store could also be used by the shoppers themselves while they’re sitting on their couch. IBM says augmented reality, for example, could enhance the retail experience. Why not put that tool online and make it accessible from home? Virtual tools aren’t tied to physical locations.

For every company like IBM that offers tools to draw you back to the store, there will be a dozen online startups using the same tools (plus a few innovations of their own) to drive their own business that isn’t hampered by overhead costs like staff, rent and building insurance.

Originally appeared at marketingmag.ca

Exiting your Business with a Barrelful of Money

 

How to Super-Size the Cheque the Buyer will give you.

With the baby boomers reaching retirement age, a large number of companies will likely change hands in the coming years. Right now, 20% of small businesses are for sale. Within 10 years that percentage will double to 40% and within 15 years that number will rise again to 70%. Kelowna and the Okanagan, being an older demographic are at least 5 years ahead of that supply curve.

soldWhat will be the fate of small businesses when the owners retire?

According to TD Waterhouse’s early October Business Succession Poll of 609 small business owners, only 24 per cent of small business owners surveyed said they had a succession plan worked out for retirement.

Of those polled, whether they had a formal plan or not, 23 per cent said they would simply close their business when it came time to retire; 20 per cent planned to sell their business to a third party; 18 per cent expected to transfer it to a family member; 12 per cent said they’d sell to a partner or employee; and 27 per cent said they were not yet sure what they’d do with their business.

td waterhouse survey

 

 

 

 

And what will be the likely impact on personal wealth?

When you sell to a family member or employee, there are typically fewer dollars on the table, because the company will be heavily discounted.

Closing the doors means zero return for years of business building.

The people answering “not sure” are likely faced with a Freedom 85 Plan, wherein the owner works until he/she can no longer work- and not by choice.

Of course, if the owners salted money away and used the cash flow diligently to build personal assets, then the owners may have enough for a comfortable retirement, allowing them simply to close the doors.

This article, however, is about those who are relying on the sale of their business to fund their retirement and how to find the retirement money they need.

Simple economics dictate that in forthcoming years, supply will exceed demand and many companies will just be left on the shelf as buyers cherry pick the best. But since the beginning of the recession in 2008 many businesses have faced falling sales and increasing debt. This situation has eroded value in many businesses.

So how can an owner stand out from the rest in a crowded bidding war for a buyer? What will buyers pay top dollar for? Investors look for a return on their investment and will not buy indebted companies with falling market share and paper thin margins. Most of all, they will not buy a business that depends entirely upon the owner to make it work.

  1. Is there good return on equity – today, not some hypothetical future?
  2. Does the company have high profit margins?
  3. What fixable factors mean that the business will be purchased at a significant discount to its value?
  4. Are there systems in place for the owner not to have to work 12 hours per day?
  5. What factors will help a buyer get financing from his financial Institution?

If an owner answers NO to any of these questions, then something needs to be done, starting today.

What to do?

  1. Pay for a third party valuation and ask what factors are holding back the value.
  2. Pay down debt, starting with the most dangerous debts
  3. Build tangible assets that hold their value and are essential to the business
  4. Increase profits and cash flow with a better pricing strategy
  5. Increase sales with a modern marketing plan
  6. Create a credible exit plan that identifies to whom you will sell the company and at what price and when.
  7. Talk to a good accountant about the tax implications of your plan
  8. Build a solid 3 year plan to make this happen
  9. Work the plan
  10. Do something, do anything. Remember that even a dead fish can float downstream.

By Andrew Gregson, Senior Partner at Floodlight Business Solutions LLP, a consultancy focusing on rebuilding sales, rebuilding finances and creating value. call today if you need a guest speaker on this topic www.floodlight.ca.

Email: agregson@floodlight.ca                        Ph: 888-959-0752

Free Event October 25th 2012 – You are Richer than you think!! Maybe!!

October 25th 2012

RSVP – by October 17th 2012

Seating is very limited.

Please book at 250-859-0752

Free Event – Donations Accepted for the Food Bank

 

This event will discuss practical advice on:

  • Living Well with the Money You Have
  • Managing your Income
  • Investing Well for Retirement.

 

This event is designed to give help …..

to those who are challenged by today’s

economics of life. Aren’t we all…!!!

When:  October 25th 2012

Where: Rotary Centre for the ARTS – 421 Cawston Ave Kelowna BC (across from Prospera Place)

Time: 7:00 pm to 9:00 pm

There are no GET-RICH-QUICK schemes that are not brimming with the danger of losing cash invested.

So why take chances?

  • It is possible to find a way to live in dignity with the money you have. ????
  • You can manage your income instead of letting your income manage you!!!
  • More bills than pay cheque? There are solutions.

Our Presentations

3 x 20  minute overviews …and…plenty of time for questions.

What gets measured gets managed –   Speaker – Bill GuestDebt Counselor – can help with his insight into managing your income in his talk:

  • How successful people manage their income, practical tips for success
  • Shaking the money tree – how to get more from what you spend.
  • Measure your money and measure success

The Politics of Debt – Speaker – Andrew Gregson – Business Coach – Canada’s Pricing Strategist –   lender and former debt counsellor will talk about good debt and bad debt – which debt you should have and which debt is dangerous in his presentation:

  • Got a few nagging debt issues, just like everyone else?
  • Why do some people glide through their debt problems and build a solid life?
  • Why do some people just crash and burn?

 Invest Wisely and Reap the Benefits – Mike Hassard – Financial Representative Primerica – will highlight some necessary guidelines for making wise investments of your cash in his talk  

  • Need to make your cash work for you, so you don’t have to?
  • Have you attended some of those widely attended but bogus schemes to invest in revenue producing properties in Costa Rica?
  • Perhaps you should stay closer to home and work with a trusted professional with your best interests at heart?

Sponsored by

 

What is The Big Decision for your Business?

CBC has recently launched a brand new show The Big Decision which is a spinoff of  The Dragon’s Den.

What we like about the show is the substantive business acumen that can be derived from the show.

Canadian business owner’s can actually learn something about the running of a business and get a handle on how business investors think without the theatrics of The Dragons Den. (I am sure some businesses are chosen on the Dragons Den because it makes good television and not necessarily a good business idea)

The candidate’s on CBC’s The Big Decision program have to date; been well vetted and weekly they bring the different struggles of running a business in Canada to the forefront.

The present format has Arlene Dickerson and Jim Treliving alternate weekly, with both having the opportunity to invest in the companies that they are examining. All companies are given specific direction and have approximately 2 to 3 weeks to accomplish the tasks.

The format of the show is as follows:

Each 1-hour episode of The Big Decision documents two Canadian businesses desperately in need of expert advice and a cash injection. With the banks calling in their loans and financiers tightening their wallets, Jim and Arlene are their last hope.

If the companies can rise to the challenge of changing their ways, they could be given a life-changing investment from two of the most revered business leaders in the country. At the conclusion of each episode, Jim and Arlene have to decide whether they’ll invest in one, neither or both of the companies vying for their cash. 

So let’s examine week 3 episode:

Jim Treliving has very considerable business skills,   and an ability to get to the heart of business problem in very short order. On CBC’s Big Decision, Treliving met with a brewery in Aldergrove BC., and a manufacturer of screws and bolts in Winnipeg, Manitoba.

Overview: Dead Frog Brewery – Independent Brewery

Jim chose to invest in the brewery because he could roll in some financial controls very easily and the owners still had a passion for the business.

They needed sales help – the NEW campaign they designed was innovative but amateurish. They responded well to Jim asking for reduction in the number of labels they manufactured from 10 to 6 (Like a sample 6 pack …no charge for the marketing idea!!!).

Their 10 lines of beer surely contributed to the quality control problems that bedeviled the small brewery and quickly they made an effort to make their production line more efficient by eliminating unnecessary product movement and by making the line flow naturally and smoothly from vat to door.

The absence of good financial information and a business plan were exactly the things that Treliving could bring to the table and make the company perform well so he decided to invest.

Overview: Westland Steel – manufactures screws and bolts

The fastener company on the other hand could have been salvaged but only by an injection of very hard work. After Treliving asked his questions and poked around the plant, the plant managers tinkered with the sales incentives. But the sales people had just gone on record as saying they had nothing to sell. They didn’t have the cash or credit to buy the raw materials for their orders.

Jim sensed the company’s lack of direction. The complete absence of leadership from anyone in the plant, the deadness behind the eyes of management and the energy to find to find a solution was missing. Jim knew that. To save the company he would have to drop in tons of cash and parachute a new General Manager into the building with a remit to overhaul the company from top to bottom. That would have taken months and perhaps years.

Further, the state of the company’s finances would have meant a partial receivership (a Chapter 11 in US speak) in order to buy time to re-arrange the finances and seek accommodation with suppliers and landlords. . At the very least Jim’s money would have had to finance the purchase of raw material.

What intrigued me about the fastener company is that in spite of the huge slowdown, nothing for the salespeople to sell, and no plan, they still had revenues of $200,000 per month. With that kind of revenue most companies are salvageable. With that kind of revenue, jobs could have been saved. It would have been a long turnaround project with some pain all around but do-able.

Conclusion:

At the fastener plant, there could have been the satisfaction of seeing the back end of delivery truck shipping to a customer. At the brewery, you could always crack open a beer on a bad day!!!

What is evident so far in the first three episodes this season of The Big Decision is the lack of direction by management for any business plan, sales plan, marketing plan and company direction.

It is very interesting to watch the reaction of business owners when they are asked to do specific tasks by Arlene and Jim.  Some of them cannot take direction and due to their inflated view of themselves lose the opportunity to get investment money and put their whole livelihood at risk.

Jim and Arlene are very successful business people who know how to run successful businesses and they are not willing to put up with people who are not keen to change and grow. A solid business turnaround begins with asking for help.

I highly recommend this show for any business that is looking to expand their knowledge and get great incite to what will help you Build Your Business.

All episodes can be viewed on line – Click here

Article written by Andrew Gregson and Donald Robichaud

Price, choice and buyer psychology: how understanding these factors can increase your sales.

Price, choice and buyer psychology: how understanding these factors can increase your sales.

In a Ted talk (http://www.ted.com/) a few years ago (http://www.ted.com/talks/lang/eng/malcolm_gladwell_on_spaghetti_sauce.html), Tipping Point author Malcolm Gladwell spoke about the role of choice in buying decisions. When discussing pasta sauce, the manufacturer wanted originally to know what the customer wanted. From that information they would craft a product to fit customer taste. Was the customer demanding chunky, spicy or smooth pasta sauce? Market research came back with a carefully crafted statistical analysis showing that most people wanted smooth. Gladwell disagreed with the conclusion.

By offering only smooth pasta sauce, they would have missed market niches looking for chunky and spicy with a consequent loss of market share in pasta sauces. So the statistical answer was correct but insufficient for a business decision.

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Build your Business with Public Speaking

Potential clients and customers like to see a sample of your work. If you are a contractor you  can show them the wall you built.

If you have any business that relies upon intellectual property, then you need to be seen and heard.

And what better way to be seen?

On the basis of an article I wrote on Dynamic Pricing and posted on my website,CBC National Radio program SPARK picked it up and interviewed me.

It helped my credibility a lot to have written a book on Pricing Strategies for Small Business but it was the public interview that got me noticed.

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Pricing Strategist Andrew Gregson Speaking at Cape Breton University

Pricing Strategist Andrew Gregson will be speaking in Halifax at the Cape Breton at Cape Breton University.

Located on Canada’s stunning east coast, CBU makes its home on Cape Breton Island. Population of 110,000 residents, the municipality boasts the amenities of a city, with a welcoming atmosphere of a small town.

At Cape Breton University Professors get to know their students and will refer to their students by name. Cape Breton University is a community in itself. Being a small campus helps create a relaxing environment, a sense of belonging and a diverse population from over 50 countries.

Andrew Gregson will be presenting a public lecture on Thursday October 27th 2011 and also a Public workshop on the morning of Friday October 28th 2011.

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