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Casual Articles - Strategic Acquisition Strategies for Small Businesses
Increasing sales can be very expensive or low cost depending on the selling strategy that is used. Having a selling strategy that can be implemented with little money and produce good returns is most desirable. Some of these techniques will now be considered.You may use magazine and trade articles to bring exposure to your business. The articles may be written by you or there is the option of paying a professional writer to write articles about a topic related to your products and s manner is highly services. Selling your products in this manner can be highly effective and can reach a large number of highly targeted prospects.If you are a more verbal person there is the option of public speaking and lectures. By being an outside speaker of business groups or adult education communities you will be able to network and build a solid sales reputation. Chances are you an even earn additional income through public speeches and even be considered an expert in the particular area addressed.Another selling strategy is to utilize business cards and brochures. This is a very common method of reaching prospects. The cost is minimal and yet it can produce very good results. Of note, is that you should do a little research before printing these cards so you can see what your competitors are doing and also make your cards more appealing. This is a form of advertising and represents who you are.There is also the option of creating a list or database of prospects. From this list you can send email letters to entice prospects to buy your products. Any list you use should be yours and not bought or rented from someone else. . The results of using your own list are far gre
Strategy #2 - Reduce expenses through economies of scale
The picture gets even better if eliminating duplications and other economies of scale will reduce company SMALLER's expenses. Every dollar reduction in expenses translates into $15 of value (P/E Ratio of 15 X $1). Increases in Value Calculation -- Company BIG is able to eliminate 1 milli
A great name is like extra octane in a brand. A bad, boring or sound-alike name won't necessarily kill a brands chances for success. In most cases however, it dramatically dilutes the brand equity and potency.Do You Have A Name That Basically Sucks?If so, shame on you. If you acquired it, I send my sympathy.Should you change it? Yes. It will cost some bucks, but it's also a great opportunity to get a lot of great attention and renewed momentum. Weigh it out, look at the cost versus the benefit and remember that change can be scary, but a lame brand can be scarier!Birthing A Brand NameThe task of developing that killer name has become quite complex. For years, business owners and management named their offspring, then creative service firms and ad agencies jumped in, often with a sprinkling of college talent, finally, the general public added their wisdom in naming contests. I'm sure all have produced their share of brilliant names as well as some very scary ones. Now this field of art, science, skill, and luck has gone professional. Naming brands is big business and can come with a big price tag. Hire a professional naming company and expect a bill of $10,000-$100,000 or more before the graphic execution or production.So What Is A Great Name Worth?The answer: a lot. If your brand is properly nourished, it grows and has a long shelf life or history-do the math.Not All Great Brand Names Cost A LotNike(tm) is one of the best examples. Nike is Greek for victory and is also the Greek goddess of victory. The name came in a dream to Jeff Johnson, Nike's first "real" employee, and replaced the original name of Blue Ribbon Spor
Timing is Right - Two elements have combined making growth through acquisition an attractive option for small and middle market companies.
Demographics - The maturing of the Baby Boom generation, many of whom own their own businesses, will increase the number of owners willing to consider selling to an historic high.
Financing - Money is available to finance small and middle market acquisitions. Banks and non-traditional lenders are aggressively pursuing acquisition lending at a level we have not seen in twenty years. Cash required to do a deal is at an all time low.
Profit Pays the Bills Profit and Value are two main financial components of every business. Profits are essential and therefore on every businessperson's front burner. Value, on the other hand, is an elusive and intangible issue. Unlike Public company presidents, whose effectiveness is measured daily in their firm's share price, private and family business presidents need not be concerned with their company's value as their shareholders, if any, typically focus upon profit only.
Value Measures the Size of Your Pile
Shareholders of Public Companies measure their wealth (or the size of their pile) using share value not earnings per share. Successful CEOs, therefore, develop strategic plans for growth and profit that maximize shareholder's value. Mergers and Acquisitions is a fundamental element of most strategic plans to grow profits and value simultaneously. What follows is an overview of Public Company strategies to grow profits and value through acquisitions and how to adapt these strategies to private and family businesses. Although the topic may seem technical and complex it is really quite basic and straightforward.
An Overview Adding earnings or profits is self-explanatory. We will, therefore, focus primarily on the value component of growth through acquisitions.
We know a Public Company's Price/Earnings Ratio measures the amount investors are willing to pay for $1 of company earnings and that a P/E ratio of 15 for a well-run company is not unusual. Consequently, company BIG with 100 million dollars of earnings and a P/E Ratio of 15 has a value of 1.5 billion dollars. We also know private company P/E Ratios are much lower than those of Public Companies.
Strategy #1 - Acquire companies with a smaller P/E ratio than yours
Example: The Transaction -- Company BIG with a P/E Ratio of 15 acquires company SMALLER and pays 10 times earnings (P/E ratio = 10). Company SMALLER's 10 million dollar of earnings are added to those of company BIG. Increases in Value Calculation -- SMALLER's earnings are now worth 15X instead of 10 times earnings resulting in an immediate increase in value of 5X earnings or $50,000,000 (5 times $10,000,000) over and above the value paid by company BIG.
Strategy #2 - Reduce expenses through economies of scale
The picture gets even better if eliminating duplications and other economies of scale will reduce company SMALLER's expenses. Every dollar reduction in expenses translates into $15 of value (P/E Ratio of 15 X $1). Increases in Value Calculation -- Company BIG is able to eliminate 1 millio
How many times have you heard that you gotta get past the gatekeeper and get to the decision-maker to make the sale? Countless books and sales trainers have talked about this for years. Much of this advice was written for a world without voicemail. Today's flatter organization has fewer administrative assistants for management, which means fewer live gatekeepers to screen our phone calls. The delegation of authority has also resulted in decision-makers being found at lower levels in the business than ever before. More and more decision- makers now use voicemail as their primary or even exclusive gatekeeping and screening tool. Today I am going to discuss a few sales tips for getting through to your target in the world of voicemail hell. The first rule as always in sales is to be prepared, so you should have ready two or three major pains and visions that your product solves or enables. Make sure you have prepared at least one strong pain that your prospect is likely to identify with (pain elimination is a stronger motivator for most people than vision creation). TIP#1 - Call At Weird Hours People who screen their calls normally during the 8am to 6pm business hours will often pickup the phone if a call comes in at 6am or 8:30pm and they are working at their desk. With some of the insane hours people work these days, this can be very effective. They will pickup the phone generally thinking that the only person who would call at 8:30pm at night is their spouse or a friend. Who could possibly know that they are at the office at that sick hour? Try calling anytime after 6pm, and up until 8pm or 9pm when you really need to reach this person. If they are
Profit Pays the Bills Profit and Value are two main financial components of every business. Profits are essential and therefore on every businessperson's front burner. Value, on the other hand, is an elusive and intangible issue. Unlike Public company presidents, whose effectiveness is measured daily in their firm's share price, private and family business presidents need not be concerned with their company's value as their shareholders, if any, typically focus upon profit only.
Value Measures the Size of Your Pile
Shareholders of Public Companies measure their wealth (or the size of their pile) using share value not earnings per share. Successful CEOs, therefore, develop strategic plans for growth and profit that maximize shareholder's value. Mergers and Acquisitions is a fundamental element of most strategic plans to grow profits and value simultaneously. What follows is an overview of Public Company strategies to grow profits and value through acquisitions and how to adapt these strategies to private and family businesses. Although the topic may seem technical and complex it is really quite basic and straightforward.
An Overview Adding earnings or profits is self-explanatory. We will, therefore, focus primarily on the value component of growth through acquisitions.
We know a Public Company's Price/Earnings Ratio measures the amount investors are willing to pay for $1 of company earnings and that a P/E ratio of 15 for a well-run company is not unusual. Consequently, company BIG with 100 million dollars of earnings and a P/E Ratio of 15 has a value of 1.5 billion dollars. We also know private company P/E Ratios are much lower than those of Public Companies.
Strategy #1 - Acquire companies with a smaller P/E ratio than yours
Example: The Transaction -- Company BIG with a P/E Ratio of 15 acquires company SMALLER and pays 10 times earnings (P/E ratio = 10). Company SMALLER's 10 million dollar of earnings are added to those of company BIG. Increases in Value Calculation -- SMALLER's earnings are now worth 15X instead of 10 times earnings resulting in an immediate increase in value of 5X earnings or $50,000,000 (5 times $10,000,000) over and above the value paid by company BIG.
Strategy #2 - Reduce expenses through economies of scale
The picture gets even better if eliminating duplications and other economies of scale will reduce company SMALLER's expenses. Every dollar reduction in expenses translates into $15 of value (P/E Ratio of 15 X $1). Increases in Value Calculation -- Company BIG is able to eliminate 1 milli
With balloons and party accessories a festive atmosphere quickly develops in to an amazing party. We have given some good balloons decorating ideas below and with this you can use more of your imagination to add more flair to the party room by using the unique design and architectural features of your home.First and foremost hang balloons to your mailbox to spot the party place; place them as a decoration at the door; or you may even tie them to the birthday child's chair to mark the seat of honor. For an additional unique touch, make a balloon arch by filling balloons with helium, attach them (several inches apart) to a long piece of curling ribbon and fix the ends to the floor next to the doorway.Hanging balloons in bunches is one of the best idea to create best effect. If you have a plan to fill balloons with helium, wait until the party day so that it floats well. Attaching balloons to light fixtures and hanging them in doorways or anywhere that impress the crowd is a brilliant idea. Use colorful curling ribbon to tie balloons together, and curl the ends by pulling the ribbon among your thumb and blade of scissors.Helium-filled balloons decorationsA simple table decoration is quite simple to make with helium balloons, moreover all latex or a combination of Mylar and latex. Anchor the group to the table with a safety pin in the cloth or with a small wooden block enclosed in decorative paper. Do not forget that latex helium balloons stay floating for just about eight hours. So do this on the day of the party.For all these decorations it is most excellent if all the balloons are of the same size. To attain this cut out a cardboard pattern and che
Shareholders of Public Companies measure their wealth (or the size of their pile) using share value not earnings per share. Successful CEOs, therefore, develop strategic plans for growth and profit that maximize shareholder's value. Mergers and Acquisitions is a fundamental element of most strategic plans to grow profits and value simultaneously. What follows is an overview of Public Company strategies to grow profits and value through acquisitions and how to adapt these strategies to private and family businesses. Although the topic may seem technical and complex it is really quite basic and straightforward.
An Overview Adding earnings or profits is self-explanatory. We will, therefore, focus primarily on the value component of growth through acquisitions.
We know a Public Company's Price/Earnings Ratio measures the amount investors are willing to pay for $1 of company earnings and that a P/E ratio of 15 for a well-run company is not unusual. Consequently, company BIG with 100 million dollars of earnings and a P/E Ratio of 15 has a value of 1.5 billion dollars. We also know private company P/E Ratios are much lower than those of Public Companies.
Strategy #1 - Acquire companies with a smaller P/E ratio than yours
Example: The Transaction -- Company BIG with a P/E Ratio of 15 acquires company SMALLER and pays 10 times earnings (P/E ratio = 10). Company SMALLER's 10 million dollar of earnings are added to those of company BIG. Increases in Value Calculation -- SMALLER's earnings are now worth 15X instead of 10 times earnings resulting in an immediate increase in value of 5X earnings or $50,000,000 (5 times $10,000,000) over and above the value paid by company BIG.
Strategy #2 - Reduce expenses through economies of scale
The picture gets even better if eliminating duplications and other economies of scale will reduce company SMALLER's expenses. Every dollar reduction in expenses translates into $15 of value (P/E Ratio of 15 X $1). Increases in Value Calculation -- Company BIG is able to eliminate 1 milli
If you don't have good fresh content to use for new products, your momentum comes to a crashing halt and so does your business. So the question begs itself, how do you consistently create new content? Here are your four basic options:1) You can continually write your own materials...and you should.2) You can record your thoughts and get them transcribed... and you should.3) You can hire a ghostwriter to write materials for you... and you should.or4) You can purchase the rights to content that you can resell... and you should do this as well.Each option has its own positives and negatives but in my opinion you should be doing a little bit of each.Let me explain...4) You can purchase the rights to content that you can resell Purchasing the rights to content that has already been created can be a double edged sword, but, if you do it right, it can be VERY profitable for a number of reasons.First and foremost you want to review the “legal mumble jumble” to the materials that you have purchased. There are different “rights” and you need to be aware of the differences. I’ll give you a quick break down of the basic ones that I commonly come across for these types of products.A. Recording Rights: These usually grant you the rights to record the written material in your voice and sell the audio for whatever price you want. They do not give you the right to reprint the materials or transcribe your audio (yes that is the same thing!!) and resell that.B. Reprint Rights: Reprint rights give you permission to resell the written content. You can’t modify the content at all but you can resell it. Sometimes t
We know a Public Company's Price/Earnings Ratio measures the amount investors are willing to pay for $1 of company earnings and that a P/E ratio of 15 for a well-run company is not unusual. Consequently, company BIG with 100 million dollars of earnings and a P/E Ratio of 15 has a value of 1.5 billion dollars. We also know private company P/E Ratios are much lower than those of Public Companies.
Strategy #1 - Acquire companies with a smaller P/E ratio than yours
Example: The Transaction -- Company BIG with a P/E Ratio of 15 acquires company SMALLER and pays 10 times earnings (P/E ratio = 10). Company SMALLER's 10 million dollar of earnings are added to those of company BIG. Increases in Value Calculation -- SMALLER's earnings are now worth 15X instead of 10 times earnings resulting in an immediate increase in value of 5X earnings or $50,000,000 (5 times $10,000,000) over and above the value paid by company BIG.
Strategy #2 - Reduce expenses through economies of scale
The picture gets even better if eliminating duplications and other economies of scale will reduce company SMALLER's expenses. Every dollar reduction in expenses translates into $15 of value (P/E Ratio of 15 X $1). Increases in Value Calculation -- Company BIG is able to eliminate 1 milli
Ah, email. Since its invention, communication has greatly changed. We email our employers. We email our employees. We email our friends. We email our family. Perhaps we even email, after a few bottles of wine, our pets. Email has changed our lives and the future of email will likely even change it more. Soon, there may be no need to ever even speak.While email is a great way to stay in touch with everyone, and a great way to assure those we love wellness, enormous fortune, and luck if they forward a chain letter within two hours, it is also the cornerstone of business. Businessmen and Businesswomen, especially when they are away from their office, may rely on email as their number one mode of communication.Emailing for business comes with a certain etiquette that emailing on a personal level does not. When emailing friends and family, using terms such as “LOL,” sending forwards, and sending mass emails to everyone from your dentist to your third grade soccer coach are all okay. But, in business, these things aren’t very appropriate. Sending something unprofessional in a business email won’t leave your boss with the desire to write LOL when he replies.Luckily, keeping emails professional is relatively easy. By just remembering a few tips, you will be able to hit “send” without worrying about an unwelcome end.Be Careful of Sarcasm The bad thing about email, other than the SPAM, is that it takes away nonverbal communication. The recipient isn’t able to hear the tone of your voice or see the smile on your face as you send them an email. For this reason, jokes and sarcasm may come across not as intended. You may send an email that is meant to ligh
Strategy #2 - Reduce expenses through economies of scale
The picture gets even better if eliminating duplications and other economies of scale will reduce company SMALLER's expenses. Every dollar reduction in expenses translates into $15 of value (P/E Ratio of 15 X $1). Increases in Value Calculation -- Company BIG is able to eliminate 1 million dollars of redundant expense - $1,000,000 X 15 = $15 million dollar increase in value.
Strategy #3 - Acquire according to a strategic plan
BIGs acquisition of a company in order to gain specific benefits such as: proprietary products, technology, channels of distribution or talent base for example, can result in an improved outlook for company BIG. Whereas the P/E ratio usually reflects expectations of future profits, a strategic acquisition often produces a P/E ratio increase. In this example company BIG's P/E ratio increases by a dollar from 15X to 16 times earnings after the acquisition was announced.
Increases in Value Calculation -- Every point increase in company BIG's P/E ratio equates to 111 million dollars of added value (original $100 million in earnings plus addition of SMALLER's $10 million plus $1 million in reduced expenses times 1).
Calculation of Increased Value to Shareholders: In the above example, company BIG's acquisition of company SMALLER not only has increased earnings by $10 million but has increase company BIG's value as follows.
Increased value of $10 million in earnings $ 50,000,000
Reduced SMALLER's expenses by $1 million 15,000,000
Increase of BIG's P/E Ratio from 15 to 16 111,000,000
Total Increase in SIZE of PILE (VALUE) $176,000,000 This CEO has made the kind of a deal that makes shareholders happy. No wonder there is so much M&A activity in the marketplace. A well conceived acquisition should produce wondrous results. These dynamics are not reserved exclusively for Public Companies. Private and family businesses can and should take advantage of the opportunities presented by growth through acquisitions. We will now apply these principles to smaller businesses and analyze the results. Value Building Strategies for Small and Middle Market Businesses Private companies can employ the same three strategies used in the above Public Company example given an understanding of a few basic principles. General Principles: Financial Small companies generally have small P/E ratios. P/E ratios increase as companies grow and develop structure. P/E ratios increase as dependency upon owner decrease. Valuation Principles Two major value determiners are:
Perception of risk and
Expectation of future profit Businesses with essentially identical earnings, therefore, can have widely diverse values "Round Ball" Principle - Non Financial None of us are equally talented in all directions. We are not round balls, footballs or Frisbees perhaps, but no one can "do it all" well. Company strengths and weaknesses will therefore generally mirror those of its owner. Armed with a basic understanding of the ground rules we can begin to formulate a strategic plan to
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