BreakOUT Business Owner's Blog

These short topical articles target specific areas of knowledge where a business owner's thinking and actions can make all the difference.  Knowledge, coupled with the right actions, can and should increase your wealth through the power of your business!

You Have to Know What to Do ... Then Do It!

Business owners who want to systematically increase the value of their businesses for themselves and their family, have learned that it takes knowledge, effectively planning, focused decision-making, and a consistent bias toward ... actions!

There is no substitute for gaining the required valuation knowledge and learning how to approach each day with the right mind-set.  Once you can step back, reassess how you are managing your largest investment, and begin to "work on" your business...with a "proven value creation" process you will be way ahead of most business owners.  

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Future Financial Performance

What Impacts a Business's Future Financial Performance?

It is management's job to be able to assess the operating environment for today and tomorrow and to adjust to the changes as they occur. Ideally, managers will pickup early on the trends and re-position the company before there are any lasting detrimental impacts from these "outside" forces.

All of the FACTORS in the Following Areas of the Business have a Notable Effect on Financial Results:

Macro-Economic Factors

  • General business cycle
  • International economic factors
  • Government policies
  • Long-term trends 

Industry Factors

  • Structure of the market place
  • Level of competition
  • Capital intensiveness
  • Long-term trends 

Business Operating Factors

  • Sales & marketing process
  • Production operations
  • Human resources management
  • Long-term trends

Accounting and Financial Factors

  • Interpretation of accounting statement data
  • Financial condition and outlook
  • Long-term trends 

Business Law & Tax Factors

  • ...
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How to Share Financial Information

Learning How to Carefully Share Financial Information is more than Just a Good Idea...It is Essential to Long-Term Success!

One of the hardest things to do for many business owners is to share financial information about the company with the management team.  There is alway concern about confidentiality that relates to competition and personal issues. Such concerns are real and deserve consideration, but the benefits of providing the team with the "true" report card for the business are significant enough to argue for every owner to find the right way to include the management team in this way.

Timely distribution of monthly statements or portions of same that related to each manager's responsibility will put the managers in a better position to act to improve the results.  There is also a hidden benefit.  Once the managers feel that they are more "inside" the company they may react differently to various situations.

Think about the financial reporting...

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Prepare for a Sale

Get Visible: It Could Make the Difference!

It pays to be prepared for the sale of your business at any time!

You never know when a highly qualified, unique buyer will appear.  The thrust of value engineering and strategic planning is to move your business into a position to engage with a buyer who appears unexpectedly without regret.  Good preparation will permit you to know what to do and have the confidence that your business is ready to be marketed...even if it is in advance of your prior plan.  If you apply the strategies and principles in the value engineering section of MergerMentor.com you will be well on your way to effectively handle and optimize any unique offer that develops.

You should alway be seeking visibility and market position as "that really good business over there" in the publics and competitors' minds.  You can go beyond focusing on operating excellence by recognizing that the market place will develop a characterization of your...

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Market Knowledge

What are the Key Parts of Developing Market Knowledge

"Business Intelligence" success comes form effective assessment of business lines and market segments to assure a positive match.

Market research is a critical function within any organization.  Today the terms have broadened to "business intelligence".  To succeed, every business should endeavor to learn "What it needs to know" and figure out how to acquire that information in a timely manner.

Information on markets or market segments should initially answer the following questions:

1.  How big is the pie?  (What is the estimate of the market size in $ and key potential customers?)

2.  How big is the current slice of the pie held by your company?  ($ or # of key customers)

3.  Who has the biggest slice of the pie?  (Who is the market segment leader in $ terms?)

4.  What is the current market leader doing right?

5.  What might this market leader be doing...

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Strategic Thinking

Sound STRATEGIC THINKING is critical to business success.

The strategies chosen will have the controlling influence on the successful accomplishment of any business plan.  Consequently, it is essential to understand what strategy is and does...and what it is not. 

STRATEGY focuses on EFFECTIVENESS...which is doing the

RIGHT THINGS.

TACTICS by contrast emphasis EFFICIENCY...which is doing

THINGS RIGHT.

Both are important, but becoming more efficient in doing the wrong things will only waste time and resources, so identifying the right strategies and constantly testing them is critical.  There are huge costs to choosing the wrong strategies.  Consequently, management must be open to changes or adjustments in corporate strategies when indicated. That is what it takes to continuously maximize the "return on effort" as well as the "return on investment" inside any organization.

Sound strategy development always demands

more THINKING...and better...

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The Power of One

Use the Hidden VALUE from the POWER of ONE! 

The late Senator Couzens was at one time the richest member of the United States Senate while Senator William Borah was reputedly the poorest. As Senator Couzens was leaving the Senate one day, he put his hand in his pocket to take out some money, and discovered that he had not a cent with him. He turned to Senator Borah, who was standing near him, and said: "Bill, can you lend me a dollar?" There are times when ONE counts.

The margin of one vote cast by Senator Edward A. Hannegan of Indiana made Texas a part of the United States in 1845. As a matter of fact, California, Oregon, and Washington were also admitted to statehood by margins of one vote. And the Draft Act of World War II passed the House of Representatives in Washington by one vote.

Thomas Jefferson and John Quincy Adams were each elected President by one vote in the Electoral College. Rutherford B. Hayes' election as President was contested and referred to an electoral...

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The Case for Planning

Don't Under Estimate the "Value" in Planning. 

If a change has occurred since the often-referenced Business Horizon study in the 1980s, it is not the fundamental finding. If anything, the faster pace of change and the ready availability of information could increase the variances shown in the study.

          The study reviewed six industries over a period of approximately ten years. The study left no doubt about the benefits of planning… planning of all types. The study results of planning vs. not planning are shown below:

                                                    Benefit of                       Benefit of

                   ...

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WHAT IS THE MIDDLE MARKET?

That Private, Quiet Middle Market…

WHAT IS THE MIDDLE MARKET? It's not the Fortune 500 companies, nor is it a two-or three-man job shop.  In the world of mergers and acquisitions, the middle market is sometimes defined as those companies that fall into a size range, by value, from $5 million to $50 million.

What is the private market? 

Unlike those attention grabbing mega-dollar deals involving large publicly owned companies, acquisitions and mergers taking place in the middle market are usually unnoticed by all except those directly involved.  These transactions are normally quiet and private by nature.  This quiet and private middle market world is quite distinct from that of small, main street type businesses you would find advertised in the classified section of any local newspaper.  And yet it does not presume the mega status of deals in the Chrysler-Daimler class.  The middle market tends to be a world unto...

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How to Go Where the Money Is!

How to Put Your Company in the path of the Buyers with the Greatest Purchasing Power

There are more Private Equity Groups (PEGS) active in the market for closely-held businesses than days of the year.  Depending on how you define and count these investors, there are now over 1,500 active professional participants in the US private middle market. 

Most Private Equity Groups has preferences for investments in specific industries.  This is their first screen. The target industries for the more active PEGs is well know within the merger and acquisition community.  Part of the service provides by top middle market acquisition advisors is effective representation of client divestures to multiple groups who they know will have a high level of interest.  In addition to access through advisors, there are websites such as www.PEHub.com that provides a searchable fee-for-information data base. 

These...

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