We often hear business owners say, “I don’t need to think about an exit strategy because I’m not going to sell my business anyway.” But they do! And here’s why: Your potential acquirer’s due diligence is the perfect way to organize your files. Period.

What kind of documents would you want to see if you were buying a business? Certainly, you’d want to make sure you didn’t get sued by any undisclosed or unsettled disputes. You’d want to know that you wouldn’t be closed down because you didn’t have the correct licenses and permits, or that they weren’t up to date. You’d want to protect your self from buyers who might claim better pricing and terms from the former owner.

What kind of records would you want to see? How about the monthly and annual sales history from the beginning? How about the chart of accounts? What about the individual sales history for every customer? How about any and all sales contracts and agreements, formal or in correspondence? And how about all of their personnel records and all their vendor and supplier contracts just to name a few? You must protect yourself!

For Your Legal Protection

As you can see, you need all this stuff to operate your own business anyway, but there’s more! When we sold our business, we were surprised by a few requests that caught us off guard. And, if we had thought about it, we really should have had those items at the ready.

Perhaps the biggest surprise was the acquirer’s request for legal sign-offs for any and all art work, like logos, labels, advertising materials, trade dress, and any other custom art to help sell our business or our products. We thought that the fact that we had hired the artists and paid them was enough. No. They wanted to protect themselves, and rightfully so, from any artist coming back and claiming ownership and exacting a big payment later. This was especially true of the label design.

Another big surprise was the disclosures. Ironically, these were to protect us from anything that could come up later that we hadn’t divulged. Well, in 20 years of business, lots of issues come up! But they are settled, solved, or satisfied, and you move on, right? No need to keep track, right? Wrong! If any of that stuff raises its ugly head later, your acquirer has grounds to come back on you. We should have been keeping some kind of a journal or file or at least tagged these kinds of correspondences and settlements, so they could be pulled out later. As it was, we had to spend 17 hrs-a-day for over a week to get them all written down.

To Help You Run Your Business

Preparing your filing system for an eventual acquisition is just good business because you need to have this stuff too. It will help you run your business, reflect on the past, and keep track of your mistakes, challenges, and solutions. It will remind you to ask for those signoffs when any art job is done. Preparing your files will remind you to keep your entitlements up to date.

Besides, you may just want to sell your business someday.

And when you do, you’ll be ready! The longer the deal takes, the less money you will make. Why? Because the word will leak out, your sales manager will quit (and may take your key buyers with them). Your staff will quit (and take their key vendors’ relationships with them), your customers will want to wait to see what the new owner will charge, and what the quality of goods and services will be. And your suppliers will reign in your credit because you are a “short timer”.

In other words, when it comes to a business sale, be prepared from day one. Make it quick and quiet! Time is Money!

Who We Are

Michael Houlihan and Bonnie Harvey co-authored the New York Times bestselling business book, The Barefoot Spirit: How Hardship, Hustle, and Heart Built America’s #1 Wine Brand. The book has been selected as recommended reading in the CEO Library for CEO Forum, the C-Suite Book Club, and numerous university classes on business and entrepreneurship. It chronicles their humble beginnings from the laundry room of a rented Sonoma County farmhouse to the board room of E&J Gallo, who ultimately acquired their brand and engaged them as brand consultants. Barefoot is now the world’s largest wine brand.

Beginning with virtually no money and no wine industry experience, they employed innovative ideas to overcome obstacles, create new markets and forge strategic alliances. They pioneered Worthy Cause Marketing and performance-based compensation. They built an internationally bestselling brand and received their industry’s “Hot Brand” award for several consecutive years.

They offer their Guiding Principles for Success (GPS) to help entrepreneurs become successful. Their book, The Entrepreneurial Culture: 23 Ways To Engage and Empower Your People, helps corporations maximize the value of their human resources.

Currently they travel the world leading workshops, trainings, & keynoting at business schools, corporations, conferences. They are regular media guests and contributors to international publications and professional journals. They are C-Suite Network Advisors & Contributing Editors. Visit their popular brand building site at www.consumerbrandbuilders.com.

To make inquiries for keynote speaking, trainings or consulting, please contact sales@thebarefootspirit.com.

The post Why You Need to be Thinking About Exiting Your Business (Even If You’re Never Going to Sell) appeared first on The Barefoot Spirit.

When we ask, “Why,” we usually get answers like, “Well, to get rich, of course!” or “It’s always been my passion” or even, “I’ve always wanted to be my own boss”. Yet none of these popular answers really address the only three practical reasons why you can be in business: You can create a job for yourself; you can start a legacy; or you can build a brand and monetize its brand equity.

If you create a job for yourself, your “paycheck” is only as good as your time “on the clock.” If you don’t work, you don’t get paid. Sure, you can hire people to work for you to keep the business going in your absence, but this type of business is limited to trading time for dollars. You may build up some equity which someone may pay you for. But essentially, you have created a business that is operating on daily income and profits, with no long-term plan to monetize the brand equity through a sale or merger.

People who choose this kind of business usually tell us they are following their passion and well they should. But many also say they never want to sell and act like they can go on forever. If and when they do decide to sell, it’s usually because they have to due to age or health, or they finally tire of the work. Selling for them is an afterthought to achieving a business that expresses their passion.

The other group that “has no intention of ever selling” are the folks who think they are starting a legacy. Their plan involves their kids becoming vested in their business and wanting to continue their legacy.  This is a wonderful way to include your family’s future in your business. But only a small percentage of planned legacy businesses succeed beyond the first generation.

The last group, in which we count ourselves, is interested in monetizing their brand equity. They want to use their ideas, concepts, and products to build a viable business that attracts an acquirer. They take acquisition of their business very seriously.

These are the people we can help the most. These are the kinds of businesses that are designed from the get-go to have all the hallmarks of an acquisition target. They grow into something saleable. They can run without the owner. And they are set up from day one to satisfy their acquirer’s due diligence.

One of the guiding principles of the Barefoot Spirit approach to doing business is to ask yourself why you are in business in the first place. If your answer is to build and monetize your brand equity, then you must assemble a short list of who would want to buy your company, why and when. You must organize your books, records, and reports to reflect your acquirer’s due diligence. You must reinvest your “profits” into expansion. And you must determine how, when, and where you expand to get your peanut in front of the elephant. We share what we learned about this fine art in our Guiding Principles for Success.

We’ve been through it, from ideation to monetization. These are just some of the business decisions that become heavily influenced by your early decision to eventually sell. if monetizing your brand equity is why you are going into business, we can help!

Who We Are

Michael Houlihan and Bonnie Harvey co-authored the New York Times bestselling business book, The Barefoot Spirit: How Hardship, Hustle, and Heart Built America’s #1 Wine Brand. The book has been selected as recommended reading in the CEO Library for CEO Forum, the C-Suite Book Club, and numerous university classes on business and entrepreneurship. It chronicles their humble beginnings from the laundry room of a rented Sonoma County farmhouse to the board room of E&J Gallo, who ultimately acquired their brand and engaged them as brand consultants. Barefoot is now the world’s largest wine brand.

Beginning with virtually no money and no wine industry experience, they employed innovative ideas to overcome obstacles, create new markets and forge strategic alliances. They pioneered Worthy Cause Marketing and performance-based compensation. They built an internationally bestselling brand and received their industry’s “Hot Brand” award for several consecutive years.

They offer their Guiding Principles for Success (GPS) to help entrepreneurs become successful. Their book, The Entrepreneurial Culture: 23 Ways To Engage and Empower Your People, helps corporations maximize the value of their human resources.

Currently they travel the world leading workshops, trainings, & keynoting at business schools, corporations, conferences. They are regular media guests and contributors to international publications and professional journals. They are C-Suite Network Advisors & Contributing Editors. Visit their popular brand building site at www.consumerbrandbuilders.com.

To make inquiries for keynote speaking, trainings or consulting, please contact sales@thebarefootspirit.com.

The post Why Are You Going into Business? appeared first on The Barefoot Spirit.

Start Up. This is the exciting phase when your business concepts are launched. First you must get through the pre-launch by raising enough capital to prove your concept. Then you must design, build, test and hone your product and marketing plan.  Then you enter the real market. Here you discover the misconceptions you had regarding what your customer really wants, and what that means to your product, package and pitch. The speed of this early course correction is critical.  You must make many expensive changes at a time when you are racing the clock to achieve a positive cash flow. Most studies put the start-up success rate at less than 1 in 7.  The goal of the start up phase is to prove your concept and achieve positive cash flow before running out of funds – or losing control of the company through subsequent rounds of financing.

Build Up. Now that you have beaten the odds and achieved a positive cash flow, you must identify and sell a few large customers. This will keep you going long enough to overcome the challenges of personnel management, cash flow management and distribution management. This is a dangerous time for most businesses because you may have all your eggs in a few baskets. Sure, you have secured a big buyer enabling you to pay your bills, but now you must service that buyer or get discontinued. This increases the cost of sales and now you are trapped. With volume purchases over time, you become dependent and then the big buyer can coerce you to lower your prices – or worse, temp you to give up on your brand equity by becoming a mere supplier of the big buyer’s house brand.  If this big boy discontinues you, you are out of business. The goal of the Build Ups is to increase cash flow, maintain profitability, build brand equity and prevent discontinuance by your biggest buyer.

Build Out. Here is where you expand your branded product into other markets. This will help you diversify, thereby reducing your dependency on any single buyer. And it will give your brand the geographical recognition it needs to command the respect of future buyers. It also provides you with the commercial proof that your brand is in demand in other markets. However, now you must support those sales with local representatives, resulting in a dramatic increase in the cost of sales – which threatens your profitability. The goal of Build Outs is to expand slowly enough to afford the increased cost of sales while properly servicing multi-state buyers.

Enterprise. At last you have achieved a national brand. Now you can reduce your cost of goods by getting discounts for larger bulk purchases.  Now you have brand recognition and can become an acquisition target. But now you can also suffer from the loss of the entrepreneurial spirit. Your non-sales divisions start to act like the sales division is somehow below them. Employee engagement and innovation can take a hit. Turnover can increase as “professionals” begin to use your business as a stepping stone in their careers. The thrill of those start-up days in the garage is gone. The goal of the Enterprise stage of business is to capitalize on efficiencies without losing entrepreneurial spirit.

If you make it this far, you have gained great insights into business, as well as our heart-felt respect!

Who We Are

Michael Houlihan and Bonnie Harvey co-authored the New York Times bestselling business book, The Barefoot Spirit: How Hardship, Hustle, and Heart Built America’s #1 Wine Brand. The book has been selected as recommended reading in the CEO Library for CEO Forum, the C-Suite Book Club, and numerous university classes on business and entrepreneurship. It chronicles their humble beginnings from the laundry room of a rented Sonoma County farmhouse to the board room of E&J Gallo, who ultimately acquired their brand and engaged them as brand consultants. Barefoot is now the world’s largest wine brand.

Beginning with virtually no money and no wine industry experience, they employed innovative ideas to overcome obstacles, create new markets and forge strategic alliances. They pioneered Worthy Cause Marketing and performance-based compensation. They built an internationally bestselling brand and received their industry’s “Hot Brand” award for several consecutive years.

They offer their Guiding Principles for Success (GPS) to help entrepreneurs become successful. Their book, The Entrepreneurial Culture: 23 Ways To Engage and Empower Your People, helps corporations maximize the value of their human resources.

Currently they travel the world leading workshops, trainings, & keynoting at business schools, corporations, conferences. They are regular media guests and contributors to international publications and professional journals. They are C-Suite Network Advisors & Contributing Editors. Visit their popular brand building site at www.consumerbrandbuilders.com.

To make inquiries for keynote speaking, trainings or consulting, please contact sales@thebarefootspirit.com.

The post The 4 Stages of Business Growth Face Their Own Challenges appeared first on The Barefoot Spirit.

There are many books written on the subject of sales, sale techniques, and best closing strategies. We’ve often said the best sales person is the “Assistant Buyer”. The key to sales success is simply to sincerely have the buyer’s best interest at heart.

When you produce a product that goes through distribution channels, or when you offer a service business to business, the funds your buyer has to buy from you came from the sale of their product or service. If you are selling direct to the consumer, you still have to recognize that they have to work for the income, one way or another, that enables them to buy your product.

Everybody who sells products or services wants to sell more. The ultimate question from your prospect is: “How does your product or service help me sell my product or service?” or “How can you help me make more money?” That’s why positioning your sales pitch as enhancing theirs is so effective.

Here are some ways your product or service can help your customer’s bottom line:

1. Reduce his overhead cost per unit sold. He has to pay rent, lights, power, insurance, staff, cleaning, etc., whether he sells your product quickly or slowly. If it’s a fast seller, his cost per sale is reduced. He improves his ROI on his capital investment, maintenance, advertising, and staffing.

2. Increase his profits with lower acquisition costs and, consequently, higher profit margins on your product. Give him a volume purchase program that enables a lower retail price and increased volume resulting in higher profits per month.

3. Make his retail environment more attractive with seasonal point of sale materials and promotional programs geared to the theme of the given holiday. Make your displays festive decorations to his retail space.

4. Increase his business with local promotions and support for neighborhood causes. Use Worthy Cause Marketing to bring in customers who have a social reason to buy your product. Let the membership of the non-profit you support know where your product is for sale in his neighborhood.

5. Sell him a product or service that makes him more attractive and more competitive to his clients or retail customers. Give him the best price in your category, or an area-wide exclusive for an introductory period.

6. Add value to his total sales package. Is there something you can sell him that makes what he’s selling more valuable, adds an extra feature or delivers another benefit – like a guarantee, excellent customer service or loyalty program? Does your product give him “green” bragging rights?

7. Improve his personnel’s efficiency by providing training, benefits or tools his staff can use to increase his sales. Help him find and keep good people.

These are just a few examples of how you can help your buyer increase profits and do his job more efficiently. When you focus on what your buyer is trying to do, you can quickly get a clue as to what you can do to help him increase his sales. Adding value to his sales efforts with your product allows him to say to his customers, “But wait, there’s more!”

Who We Are

Michael Houlihan and Bonnie Harvey co-authored the New York Times bestselling business book, The Barefoot Spirit: How Hardship, Hustle, and Heart Built America’s #1 Wine Brand. The book has been selected as recommended reading in the CEO Library for CEO Forum, the C-Suite Book Club, and numerous university classes on business and entrepreneurship. It chronicles their humble beginnings from the laundry room of a rented Sonoma County farmhouse to the board room of E&J Gallo, who ultimately acquired their brand and engaged them as brand consultants. Barefoot is now the world’s largest wine brand.

Beginning with virtually no money and no wine industry experience, they employed innovative ideas to overcome obstacles, create new markets and forge strategic alliances. They pioneered Worthy Cause Marketing and performance-based compensation. They built an internationally bestselling brand and received their industry’s “Hot Brand” award for several consecutive years.

They offer their Guiding Principles for Success (GPS) to help entrepreneurs become successful. Their book, The Entrepreneurial Culture: 23 Ways To Engage and Empower Your People, helps corporations maximize the value of their human resources.

Currently they travel the world leading workshops, trainings, & keynoting at business schools, corporations, conferences. They are regular media guests and contributors to international publications and professional journals. They are C-Suite Network Advisors & Contributing Editors. Visit their popular brand building site at www.consumerbrandbuilders.com.

To make inquiries for keynote speaking, trainings or consulting, please contact sales@thebarefootspirit.com.

The post World’s Best Sale Pitch: “My Product will help you Increase Sales” appeared first on The Barefoot Spirit.

Sometimes it’s easy to lose sight of the advantages you have as a small, undercapitalized start-up. We hope these articles provide encouragement and inspiration for the real saviors and backbone of the economy, the little guys!

Here are a few more advantages that can make the difference and give you a powerful competitive edge:

14. Establishing a Positive Culture. Probably the most important aspect of enduring success in any business is Company Culture. The big company has already established its culture and it may have existed for generations. Unfortunately, most big company culture just evolves over time till its set in stone.  When you first pour cement, you can move it with a trowel, but when it hardens, you need a jackhammer. Your small start-up has the advantage of deliberately creating a positive company culture from the outset. You are free to design the DNA and bake it in from the start. To make a sea change the big company has to undo decades of entrenched protocol and unwritten laws that determine the behavior, outlook and personality of its staff. You have the freedom to start out on the right foot on day one and you can easily correct your missteps before you get too big.

15. Company preservation is Job One. Your small start-up has hired a dedicated team that knows what they are up against and has a great deal of respect for the odds stacked against them. As they begin to succeed, they make incredible sacrifices because they see the direct effect they are having personally on the start-up success. There is an air of “we can do this thing if we stick together and all pull our weight”. “Lurking” is not an option.  The big company has stratified its work force so much that personal job security often becomes job number one. Decisions can be made that are good for the employee’s protection, advancement or budget, but are actually detrimental in the long run to the company itself. What’s more, this behavior can go unnoticed by top management. You are painfully aware of this short-sighted approach to job security because it’s readily visible in your small start-up and you can’t afford to tolerate it.

16. Be an Acquisition Target.  In these days of reduced IPOs and dried up venture capital, there is yet a way for your small start-up to monetize its value.  It can get acquired. In fact, it may get acquired by the very big company who may have resisted your advance. You can benefit by the growing trend toward acquiring new ideas. Today, in the big company, a truly new idea can get easily smothered by short-sighted views of job preservation, turf wars or stifled communication. They tend to look outside their organization for truly new ideas that have traction in even a small portion of the market. They tend to look at small start-ups like yours.

In this series we have tried to identify some of the more subtle benefits your small start-up can enjoy over the big well-capitalized, but sometimes sluggish corporations. When it comes to originality, positive culture, or ingenuity, size matters. When it comes to resourcefulness, customer service or maneuverability, size matters. The little guy can still have the winning hand!

Who We Are

Michael Houlihan and Bonnie Harvey co-authored the New York Times bestselling business book, The Barefoot Spirit: How Hardship, Hustle, and Heart Built America’s #1 Wine Brand. The book has been selected as recommended reading in the CEO Library for CEO Forum, the C-Suite Book Club, and numerous university classes on business and entrepreneurship. It chronicles their humble beginnings from the laundry room of a rented Sonoma County farmhouse to the board room of E&J Gallo, who ultimately acquired their brand and engaged them as brand consultants. Barefoot is now the world’s largest wine brand.

Beginning with virtually no money and no wine industry experience, they employed innovative ideas to overcome obstacles, create new markets and forge strategic alliances. They pioneered Worthy Cause Marketing and performance-based compensation. They built an internationally bestselling brand and received their industry’s “Hot Brand” award for several consecutive years.

They offer their Guiding Principles for Success (GPS) to help entrepreneurs become successful. Their book, The Entrepreneurial Culture: 23 Ways To Engage and Empower Your People, helps corporations maximize the value of their human resources.

Currently they travel the world leading workshops, trainings, & keynoting at business schools, corporations, conferences. They are regular media guests and contributors to international publications and professional journals. They are C-Suite Network Advisors & Contributing Editors. Visit their popular brand building site at www.consumerbrandbuilders.com.

To make inquiries for keynote speaking, trainings or consulting, please contact sales@thebarefootspirit.com.

The post The Advantages of Being a Small Start-Up – Part 4 appeared first on The Barefoot Spirit.