Author: Megan Davies

4 ways to make your business easier to sell!

Perhaps you’d always planned to build a thriving business to eventually sell for a tidy sum – or maybe for unexpected personal reasons it’s best to let your company go sooner rather than later.

No matter what the reason for selling your business, experts agree: it’s best to be prepared well in advance as it can take years to complete a successful sale.

These four tips will help you get a head start on making your business attractive to buyers for the day you’re ready to sell.

Get a business valuation 

Even if a business sale isn’t imminent for the next five years, it isn’t too early to meet with an appraiser. A valuation will give you a realistic picture of what your business is worth right now, and invaluable information on what you can do to improve its value.

When you’re ready to sell, having already had an appraisal can be a real plus for potential buyers. Sharing the details of your valuation shows transparency, creating trust and building credibility—while saving a buyer the expense of getting one done themselves.

Remember that timing is often everything with a business sale. Once you know what your business is worth, you can decide whether it’s best to move forward—or wait for a growth phase or improved economic conditions.

Make a succession plan

Every business, large or small, needs a succession plan. And when you’re ready to sell, having an exit strategy in place will put a buyer’s mind at ease because you’ll have already ironed out a smooth transition for you and the new owner.

A succession plan should include both the human resources aspect (e.g. a training plan for the new owner and any employees that stay on when ownership is transferred), as well as the management of any financial, legal, or tax issues. 

Once you’ve made all the hard decisions about how the business will run without you, be sure to review it once a year to make sure it’s always up to date. 

Tidy up your financials

The biggest red flag for anyone considering a business deal has to be disorganized or incomplete financial records.

A potential buyer will want to see your yearly tax returns for the last three to five years, as well as balance sheets and your profit and loss statements. You may also be asked to share accurate sales and marketing data, the value of your assets and any outstanding liabilities – as well as your plans to resolve them.

Hire a business broker

Hiring a business broker with a proven track record can really simplify the sales process—especially if you’re too busy to look for an interested buyer or need professional expertise to get your business in order to sell on your preferred timeline.

You’ll want to meet with a few brokers to make sure you find the right fit. Look for someone with experience selling businesses in your industry, a large database of interested buyers, and an impressive closing ratio.

When you interview a broker ask for testimonials and info on the strategies they’ll use to market and sell your business. Reach out to your network for referrals—as with any professional service, when it comes to business brokers an honest recommendation can help you find a winner.

Final tips

Ask your broker about the best way to structure your business sale for the best return. If you’ve built up some solid equity it may be wise to offer a buyer a gradual sale or lease. In addition to a continued income stream for you, this type of arrangement can help make the deal attractive by reducing the new owner’s financial burden.

If you are looking for Fulham accountants or a tax advisor in London, get in touch!

e: office@londonaccountants.co   t: 0203 137 9791

Kind Regards,
The Team at London Accountants

Growth Hacks for Small Businesses:

Deciding on an online marketing plan can be overwhelming for small business owners looking for affordable ways to nurture steady, sustainable growth. With time in short supply, the key is to find one or two growth strategies that will get results at minimal cost.

These proven growth hacks offer business owners a few simple, cost-effective ideas for attracting new customers, increasing brand awareness, and ultimately, getting more sales.

Build your email list

Recent research shows that e-mail marketing works; in fact, it’s been shown to promote a 17% greater conversion rate than social media marketing. Permission-based marketing is based on a friendly exchange – your customer’s email address for a promise to provide value. As you nurture a positive relationship via your newsletter, with special offers, useful or inspiring content and discounts, over time your customers will be more inclined to buy from you. Incentivize new customers to sign up with contests, giveaways, referral bonuses and webinars. The bigger your list, the greater the return when you have a new product to promote – so if you decide to launch a company e-newsletter, be sure you make a consistent effort to attract new subscribers. This Forbes article offers 50 ideas on how to grow your list.

Offer social proof

One of the biggest challenges for small business owners is converting online leads into paying customers. It comes down to convincing people you’ve never met that you deserve their trust – which is why social proof is so important.

Adding testimonials to your website is a simple way to convince potential customers they won’t regret buying from you. In fact, it’s been shown that this simple form of social proof can increase conversions by 34%.

Let your customers know you’d like their feedback, and ask for permission to include their positive comments on your company website.

Other kinds of social proof you can use to win over customers online include:

• Case studies
• Media mentions
• Customers logos
• Accreditations and certifications.

Create partnerships

This simple growth hack is effective both on and offline. Initiating a partnership with a company that provides complementary products or services can quickly increase each of your email lists – give your sales figures a big boost.

There are many ways a business partnership could work – you might negotiate a joint venture, host an event where you promote each other’s products, run a giveaway together or launch a combined product or service.

Final Tip

As you try out some new ways to market your business, be sure to set actionable and achievable goals. For instance, you might make 1,000 newsletter sign ups over the next quarter one of your priorities – or increasing your blog traffic by 50% by end of the year. Make it a habit to review your metrics on a regular basis to see how well your strategies are working. Then use that data to set new goals to keep winning over customers and expanding your business.

If you are looking for Fulham accountants or a tax advisor in London, get in touch!

e: office@londonaccountants.co   t: 0203 137 9791

Kind Regards,
The Team at London Accountants

Surprisingly Destructive Habits You Should Avoid as an Entrepreneur

Entrepreneurs want to have their hands on every aspect of their start-up. This is understandable, as many entrepreneurs come into their respective industries from a place of passion. Their passion will drive them to spend long nights at the office, working hard every hour of every day. Unknown to them, this kind of attitude can actually lead to some destructive outcomes.

You must avoid these habits, despite the allure of their short-term benefits.

1. All Work and No Play

You’re probably under a lot of pressure from your investors, your family, or even yourself. This pressure is doubled if your product is brand new and thus untested. It needs to work well or at least prove itself viable right out of the gate or it’s all going to go wrong. The pressure and need for success make your hobbies and relaxing seem like a waste of time. Moments spent on your hobbies could be moments seemingly better spent on your marketing campaign or your product.

The fact is that you still need to take time to relax, for two important reasons. The first is that the lack of relaxation will lead to burnout, which can lead to lost days from sickness and reduced output. The second is that creativity actually comes from a place of enjoyment. You may find your creative output limited if you spend all your time looking at documents and numbers.

Set aside time for more creative tasks. Play games, take in a movie or an art gallery, whatever you enjoy.

2. Spreading Yourself Too Thin by Multitasking

Entrepreneurs, naturally, want to make sure that every part of the business works out. Every little aspect is of interest to them. They juggle various duties at the same time, multitasking as best they can.

This seems like a good idea, until you realise that a lot of things require and deserve your undivided attention. It can start small – you may miss details during a small meeting, or a client may remark that you seem disinterested or distracted. These small things can easily snowball in reduced overall efficiency. Those small details might result in half your company not knowing what the other half is doing, or that client turning to another provider because you just don’t seem into it.

Focus on finishing one task at a time. If you find that you need multiple things done at the same time, delegate.

3. Micromanaging Your Staff

You’re not going to know everyone on your staff. The vast majority are going to be strangers. You might never see some of them in person if you use remote staff. You may find it difficult to trust them, no matter how strong their credentials look.

Resist the urge to micromanage every little task, especially for virtual workers. Just because you can’t see them working doesn’t mean they’re slacking off. If you don’t need to give input, don’t bother them after you give orders.

4. Being Present at Everything

Some entrepreneurs think that they’re the heart and soul of the company. It’s their idea, and they may believe that without their presence it will amount to nothing. At every meeting, whether it’s with a client or for a marketing campaign, they’ll be there, showing their dedication and making sure every goes exactly according to plan.

You might be thinking of doing the same. It seems simple when you think about it – you just have to be in a lot of places. It’s worth it, in your head. In practice, however, it turns out differently. Practically speaking, at some point you’re going to have to decide between two things and you may hold up the meeting as they wait for you. You may also end up driving yourself into the ground, burning yourself out for things that may not have even needed your presence or attention.

It might be hard to admit, but parts of your business can and will survive without you. You need to pay attention to the tasks that actually require your presence and attention while trusting your crew to handle the rest.

5. Believing That Long Hours Immediately Means Big Returns

The traditional image of a hard worker is someone who spends their days and nights at work, devoting the entirety of their life to the job. You might be tempted to do the same in the hopes that your start-up will make profits sooner.

Before you do that, take a look at what you can actually get done by staying at work all the time. True, there are some instances wherein burning the midnight oil would actually produce better results, but that isn’t true for every situation. Make sure that if you do spend long nights at the office that they’re going to result in a tangibly improved outcome for that specific task.

An entrepreneur’s success revolves around efficient use of their time and effort. There’s only so much a person can do in one day without running themselves into the ground. Don’t just look at the short-term gains – look at what it can do to you and your start-up in the long run.

If you are looking for Fulham accountants or a tax advisor in London, get in touch!

e: office@londonaccountants.co   t: 0203 137 9791

Kind Regards,
The Team at London Accountants

Working out an effective marketing budget!

“How much should I spend on marketing?”

Most small business people this question at some stage. Many small business people find working out how much to spend on marketing a tricky exercise to calculate.

Generally there are five ways to work out a marketing budget for the year. Remember that these are marketing budgets, not advertising budgets.

Marketing covers everything you do in your business that creates awareness, including such activities as advertising, brochures, competitions, free tastings, demonstrations, trade shows, travel, personal selling, direct mail, sponsorships, etc.

1. No idea at all method

Some businesses don’t have any budgets, and just advertise either when they feel that sales have slipped and they need extra business, or when they get duped into advertising by some advertising salesperson (“Buy now and we will give you 50% extra free!”).

Ever wondered why they offer you the freebies? Usually because it’s such a silly time to advertise that all their regular clients are holding back and the sales rep is desperate!

Many businesses are just too busy during certain times of the year to think of advertising, and if they did, it would be a waste as they would not be able to handle the work anyway. Suddenly, however, sales fall (perhaps due to seasonality) and then the business starts advertising.

However, this could be a waste of money as often you’re advertising at the wrong time, or advertising to get instant sales, which is unlikely to happen. So the problem is that the advertising money is spent during slow times (this hurts), and that it is spent to fix a problem instead of to create new opportunities.

2. Whatever you can afford method

Here you just spend spare cash (yes, spare cash may exist!) on advertising. So the advertising is dependent on cash flow.

During the good times you advertise more, during the bad times you cut the advertising. The danger here is that if business falls, and you cut advertising, then the situation is likely to spiral out of control.

How can you climb out of the situation when there is no money for marketing?

3. The percentage of sales method

This is a popular method.

Typically, you work out at the start of the year what percentage of sales you want to spend on advertising.

For example, if sales last year were £200,000 and you decided to spend 5% of sales on advertising, then you’d have a budget of £10,000 (£200,000 x 5%).

The problem with this method is you may not actually need £10,000 worth of advertising to achieve your sales target. What if you can only do so much? If £4,000 spent on marketing creates enough work for you to be flat out, then the other £6,000 is just being wasted.

And what percentage should you use? 3 – 6% of sales is an average, but the figure obviously depends onwhat industry you are in.

For example, here are some advertising-to-sales percentages researched in the USA for marketing budgets:

• Couriers 2.1%
• Rental car companies 2.9%
• Computers 5.1%
• Games and toys 18.4%
• Cafes 5.6%
• Hotels/motels 3.8%
• Sporting goods 5.0%
  
  So what percentage you use all depends on your activity. If you are a retailer, then you will spend more on advertising than a manufacturer who concentrates on personal selling to suppliers.

4. The ‘whatever the competition are doing’ method

This is the cheat’s way.

Find out what the competition is doing and then spend a similar amount on similar promotions.

This approach has an obvious problem: what if the competition has been using method number one – the ‘no idea’ method?

For example, a well-known retailer went into receivership after spending large amounts of money on TV and radio advertising. Now if you had copied that business, you might have found yourself down the gurgler as well!

Never think that the competition or the larger businesses know what they are doing, as often they do not. Many large companies spend thousands of pounds on wasted promotions. Just watch TV adverts every night to spot the ads that really represent a waste of money.

Then again, copying the competition is basically a poor strategy anyway. You should always strive to be one jump ahead of the opposition.

5. The objective and task method

At the start of the year, select the targets you’ll be aiming at over the next 12 months. Work out what you want from each of these targets (such as 100 new customers, or each existing customer to spend another £100, or an increase in the average sale, or whatever).

Then specifically state what you want to do to achieve this, estimating how much it will cost (common sense will give you guidelines, for example, a small business will not be spending £100,000 on TV advertising).

Complete this exercise for each of your targets, then add up all the costs, and this will be your marketing budget for the year. Points to note include:

Always have a cash reserve for marketing, so you can take advantage of any opportunities that may arise during the year. Remember, not only can you not predict what may happen (for example, some action by your competitors), but the whole point of being in a small business is having the flexibility to adapt to market forces.

Your objectives must be specific, so that when you’ve reached them, you can choose to stop any further marketing expenditure if you wish to remove any wastage. Of course, you could continue and look for more growth. The point is, you—not someone else—make that conscious decision to spend your whole budget.

Conduct a break-even analysis. For example, if you’re spending £1,000 to get 50 new customers to spend on average £50, then sales will be £2,500. Will £2,500 in sales generate enough profit to cover the £1,000 spent on marketing?

You may have a number of methods that you have used in the past, which you know work. Fine, just include them in your plan.

You may have to spend a certain amount of money just to keep your existing customers and maintain market share. Fine, but again make sure this is in your plan, and you review the effectiveness of what you’ve always done.

Remember to monitor results!

Finally, always have a method of monitoring if your marketing is working or not, otherwise you’ll fall into the ‘no idea’ category that far too many small business owners belong to. You can’t refine and improve your marketing spend unless you measure the results.

If you are looking for Fulham accountants or a tax advisor in London, get in touch!

e: office@londonaccountants.co   t: 0203 137 9791

Kind Regards,
The Team at London Accountants

How to create good habits in business!

If you’re like most small business owners, there are never enough hours in the day to complete every task on your list.

Often you’re faced with prioritizing what you need to do right now – deal with a customer, meet a deadline, attend an event – and the things you know you should do for the ongoing growth of your business.

Scheduling time to attend to these business activities on a regular basis is a great way to get on track for greater success.

Know your numbers:

It’s not uncommon for business owners to lose touch with how well their business is performing on a day-to-day basis. But an awareness of your real time income and expenses is the key to making better decisions that will nurture growth.

• Implement these changes and see the difference they make in your business:
• Switch to an online accounting solution that offers access to real time data anywhere, anytime
• Monitor your finances on a daily, weekly, monthly, and quarterly basis; review the data with your accountant often
• Check in on your other numbers, too – your website metrics and software analytics – so you know whether your marketing, lead generation, and sales tactics are working.

Update your business plan:

Companies should update their business plan at least once a year. Or sooner if there’s an upcoming change that requires planning, financing, or re-assigning resources (for instance, a product launch, an opportunity to start importing/exporting, or a new side business).

Many business owners neglect to revise their plans on a regular basis. They end up operating on autopilot, losing sight of their bigger goals and the steps they planned to take their business to the next level.

The start of a new year is an excellent time to set goals, mark milestones, and start implementing your plans. The timing also lines up nicely with closing out the previous year’s books, so you can plan with your latest annual figures in mind.

Hire help:

It sounds simple, but the self-sufficient, independent nature of many entrepreneurs can make it difficult to get comfortable delegating responsibility. Finding the right people to relieve the burden of doing everything, all the time, is the only way a business can scale and reach its potential.

Think carefully about how you spend your days. Are you still at the point where you want to – or need to – do it all? The ultimate success of any company is to reach the point where it can run without you, so you can enjoy a holiday, pass the business on to a family member, or sell it.

It can take time to find the right people that you can trust to perform their jobs well and continue to grow your business. A recruitment agency can help you craft an attractive job description and recruit so you can focus on strategies that can bring you greater enjoyment and success.

Developing new business habits takes time and commitment – but the pay off is well worth it!

Which of these business habits is most important for you to commit to this year?