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9 Mistakes Plumbing Company Owners Make When Selling Their Businesses That Cost Them Time and Money

Introduction:

If you are the owner of a plumbing company, then you are probably like many other business owners.

You realize that you can’t work forever. In fact, it may be that you do not WANT to work forever despite enjoying what you do.

Even the most successful plumbers eventually get to the place where they are ready to hang up the wrench and do something different.

They may be burned out from the daily stresses of running a business, have physical or family issues that demand more of their time, or they simply want to move on to a new challenge.

However, for many owners, it’s difficult to find the time to sit down and map out a strategy for exiting the business. If you own a successful plumbing company, you probably don’t have a plan in place that will facilitate your goals of selling your business quickly, without a lot of hassles, while creating a lifetime stream of income from the proceeds.

A significant portion of your retirement planning is likely predicated on a successful sale of your business. Exiting a business is truly one of life’s most important transitions; a transition whose outcome can make or break your retirement future.

That’s why it is so important to create an action strategy that will help you avoid making mistakes that can result in you running out of money in retirement.

But, do you know exactly what it will take to create such a sale? When the time comes to leave will you become so frustrated, overwhelmed and desperate that you make poor decisions that will cost you lots of money?

Knowing the answers to these questions is important, especially if you are nearing retirement and more than ready to start the process of selling your business. You must seek solutions that promise a better, more financially lucrative and less stressful way of achieving your selling goals.

Plumbing company owners who want to sell in the 21st Century must seek alternative systems for selling a business that address some of the common mistakes owners make when they try to sell their companies.

I say “try” because more often than not, sellers wind up either not selling at all or having their businesses sit on the market for months, even years, before they find a qualified buyer. Even if they do manage to find a good buying prospect, there are currently so many businesses on the market that they may wind up getting a lot less money than anticipated.

9 of the most common business exit planning mistakes plumbers make and how to avoid them:

It is not uncommon for plumbing company owners to have no exit blueprint at all. They usually either haven’t given it much thought or they make assumptions about the future that may not be true.

1. Not planning at all

As the old saying goes, “it isn’t a plan until it’s written down.” For a succession plan to be effective and implementable, it MUST be written down and reviewed by all parties involved. A plan must be clear, concise, and free of ambiguities that could cause problems later.

A business exit plan, while being distinctly different than your estate plan, should nevertheless complement the estate plan and ensure that your overall retirement goals are being met.

That’s why it’s a good idea to have your CPA and/or estate planner review the blueprint and make suggestions that align with your goals and aspirations.

2. Making too many assumptions

In talking with business owners who are thinking about selling, it’s interesting to see how many of them are making assumptions about both the process of selling and the outcome of the sale. The skies in their world are a different color than reality when it comes to the futures of their businesses.

For example, some plumbing company owners take for granted that a son, daughter, granddaughter, grandson, or other relative will take over the business. They may have the idea that in the event their heirs don’t want it; a group of key employees will step in to buy out the company. Or, some savvy investment group will recognize how great the business really is and snap it up.

Another common assumption made by sellers is that the selling process is easy and quick -a handshake, a check and it’s done. They take it for granted that there will always be someone looking to buy at exactly the time they decide to sell, and that the price they are asking is correct and reasonable.

Unfortunately, none of these assumptions may wind up being true. Selling in the 21st century, with its economic flux and massively shifting demographics, is anything but simple. You can’t afford to predicate your plan on assumptions based in the past.

3.Not including your family in the planning process

“Stan” was the owner of an extremely successful commercial plumbing business.

His oldest son had worked alongside him for several years, proving himself especially adroit at bidding for large jobs, handling customer issues, and managing employees. Stan assumed, without ever really discussing it, that his son would take over from him when he decided to retire.

When he finally made that decision and approached his son, he was stunned to learn that Stan, Jr. had applied to a local business college and had no interest in taking over his dad’s company. Neither did the other kids, for that matter.

It’s easy to avoid this situation (and many others) by keeping your family apprised of your intentions from the very beginning in an honest, transparent manner.

You should work to achieve consensus on all important issues, including discovering whether or not a family member or spouse wants to take over, which family members will stay on as employees or move into management.

Business succession planning is definitely NOT something you want to keep secret from your loved ones.

Meet regularly with the family all during the planning process. Explain to them what your vision of the future looks like and what must occur in order for you to achieve this. By doing these things, you will go a long way toward avoiding the kinds of family feuds that can derail the sale of a business.

4. Poor organization and record keeping

The day before you decide to sell is not the time to discover that your records are a mess and that key documents are missing. If you intend to sell, or even if you want to keep the business in the family, organized records are essential.

Buyers will want to see your financial records for at least the past five years, perhaps even for the last ten years. They will want to know where to locate your marketing pieces, customer lists, employee records, leases, and everything else pertaining to the business that should be filed and easy to locate.

To ensure less stress when selling, start organizing your records right now.

Note: To get a free exit planning checklist detailing exactly what kinds of documents buyers will want to see when valuating your business visit the website listed at the end of this article.

5. Forgetting to give the business “curb appeal.”

A temptation for all business owners who realize they want to sell the business and retire is to stop putting any more money into the company that is necessary to keep the daily operations going.

They might stop repairing or replacing tools and machinery, not wash their fleet vehicles as much, or allow their building and landscaping to become shabby.

Owners might postpone doing things such as buying new uniforms and badges for employees or upgrading safety equipment and signage.

Just as a home that has had some basic TLC before going on the market usually sells for more money, it’s the same for a business that wants to attract more qualified buyers.

Buyers of businesses are in short supply and they know it. They can afford to be very picky when it comes to which businesses they decide to purchase.

A savvy plumbing company owner who wants to sell more quickly and for more money will invest a bit of time and money in ensuring that their company looks appealing and professional.

6. Not sustaining your succession planning focus

Many times plumbing company owners who, coming to terms with their need to plan their exits, throw themselves into succession planning with a vengeance.

They hold formal planning review meetings, talk to their families and seek out the counsel of their trusted advisors and mentors,

Then, for whatever reason, the succession planning process just dies on the vine. It goes nowhere, frustrating the owner as well as all his key employees and advisors.

Why does this happen? I believe it is because business owners tend to see succession planning as a “one of” event, rather than a vital part of the company’s business planning cycle.

Exit strategies risk gathering dust unless they are integrated into the overall plans of any business long before the time comes to leave

7. Failure to integrate your plan into your company culture

It’s absolutely true: Long-term business objectives can’t be reached without an effective succession plan. That plan has to be as integrated into your company culture as your mission statement or guarantees.

Having an exit plan in place will allow you to retain your best and brightest employees by allowing them to know that when ready to sell, they will still have a future with the company.

A company built around the idea that there will be an orderly succession that keeps the business intact and thriving is a company whose managers and key employees are not inclined to abandon.

8. Not understanding that selling takes time

In the same way you take time to plan before performing a complex plumbing project, you must allow an adequate amount of preparation when you get ready to sell your company. In fact, your success is directly related to how much quality time you put into the process.

You need to sit down and write down what your idea of a successful sale looks like. How do you want the sales process to play out? Walk through everything thing has to happen to make this a reality.

You need to be able to articulate what success in exiting your business looks like to you and share this vision with your key players, employees, and family members.

Yes, this will take a lot of time and thought. But it is definitely NOT something you want to rush through just to “get it over with.” After all, if you are like most people, you are only going to get one chance to sell your business and retire successfully. Take the time to do it the right way and avoid any mistakes that could wind up significantly impacting your lifestyle in retirement.

9. Not staying on top of the plan

Exiting your plumbing business, in many ways, is a lot more work than when you first started it. There are many moving parts and complex tasks that must be executed successfully in order to avoid failure.

You need to be sure that all of your employees and family members have bought into your vision and are performing their tasks as assigned.

You are going to need the support of all key players if you are going to break past the lousy 3% success rate for selling a business in the United States.

Check in often with those entrusted to help you exit, and hold each one accountable for completing their assigned tasks within a stated time frame.

Conclusion

Selling your successful plumbing business is a process that should be begun right now, even if you think you NEVER want to sell.

By having a plan firmly established before you need it, you will be able to make better overall business decisions and give your employees, family members, and yourself more peace of mind.

Small Business Owners: Low Cost Marketing Strategies to Increase Profits

Have you ever wondered if you could think of a marketing idea that can propel your business to sky. Like, Wendy’s commercial in the 1980′s ‘Where’s the beef’, Coke ad about it being the ‘The Real Thing’ and Nike selling tennis shoes by spreading the word of ‘Just Do It’. How ingenuous of those companies.

When people think of marketing they tend to think of advertising which can be expensive, ineffective image-based advertising. There are many ways to position yourself as an expert and build a personal connection to attract new clients, customers and patients.

Effective marketing is not cheap; however, there are strategies you can implement for little or no cost.

A basic low-cost way to do market research is to get a poster and put a picture of your ideal customer on, then list your prospective customer fears & frustrations, then list your customer’s wants and aspirations. Then focus on the emotional event that caused it and the irrational dream behind it, this is where the power and leverage is to resolve the customer problem with your product.

Develop a customer persona profile identifying where the customer get there information like magazines, websites and key people they follow blogging. Find out what ‘watering holes/bars’ they frequent, neighborhood live in, university attended, hobbies, favorite tv shows watched, associations, and church they attend. Use websites and question your target audience to gather this information.

Ideally, a small business owner should spend around 35 – 50% of their time marketing their product. If you have a marketing department to support your business make sure it looks like the customers you are serving. The power of hiring people from many different cultures, products and industries to come together and create products for your consumers is powerful. The depth of ideas, understandings, insights, creativity and the blending of cultures can bring out the best solutions for your business to make more money is awesome.

Below is a list of 10 low cost strategies that can help you improve your profits.

1- Join your areas Chamber of Commerce and participate in community service events. Get involved in your community by volunteering, donating to and/or sponsor local events. It gives you the opportunity to network with other business owners and maybe cross promote with other local. These monthly meetings let you know what going on economically in your area.

2- Social Media: the ability to provide information about your products all over the web.

  • Share what you do and what merchants you love. Completed a new project, offering a new product, and have a customer testimonial.
  • Write about it on Twitter, website, Facebook, LinkedIn or on a industry blog. Photos and videos helps others to understand who you are, what you do and how it can help them solve a problem.

3- Tell your story in 90 seconds.

  • a. Develop an elevator pitch story to inform others about your business. Your story should contain the following elements.

  1. Who you are
  2. What you do
  3. Why your different from your competitors
  4. Why should they care about your products or service (what’s in it for them)

  • Does your message create an emotional response from your target audience demographics. Hint, use plain English in creating your message

Example: We help to make your life easier by (explain your product or service).

  • Use customer testimonials to persuade your customers to purchase from you. Ask for them from satisfied customers and use them, make sure they are genuine and go into a little detail with real names.

4- Develop a simple marketing plan for your business

There are (4) secrets to marketing commitment, investment, communicate, consistency. It’s difficult to maintain all (4) four without some basic plan.

  • Make sure your plan describes how well the product or service meet the customers need or problem?
  • Make sure your logo and marketing message use words that paint a picture of an experience using your product that creates an imagination in the customer that generate a profit (that makes them want to buy your product or service).
  • It could consist of ordering business cards, attending networking opportunities, book speaking engagements and submit press releases about your product offerings.
  • Create an email signature, with web links to your business website and Twitter link. Also, include your company name, most current achievement, telephone number and email address and tag line if your company has one.

5- Put together a list of previous customers and send them new information and promotional offers to reactivate some of them.

  • Reward loyal customers with discounts. It will keep them coming back and help generate referrals. Good referrals from satisfied customers is often more effective than expensive advertising.
  • Use social media, to offer SMS marketing (texting) to provide existing customers with new information about ‘must have’ discounted or liquidating items.

Improve Customer Service

Customer Service is a form of advertising. You’re advertising that you care, that gets noticed

Use your vehicle

Vehicle Graphics are seen by thousands of people each day. Turn your vehicle into a mobile billboard.

6- Offer free public seminars or workshops to general public to come and find out how you can solve a problem for them and show them how approachable and helpful you are.

Rule of Thumb:

Your target customers need to hear your marketing messages at least 7 times to influence buying decisions. Example, you can craft your message a public service radio announcement to get it played for free on the radio stations and small internet radio stations

Get a Piggy Back

Hitching a ride on the marketing of another company can save your small business time and money.

Example: Locating near a Wal-Mart to be near price conscious consumers on a low budget.

7- Stimulate Customer Senses

  • Talk to your customers about how they feel about your product and store experience, why they buy from you versus other stores, they will be honest with you.
  • Continually educate your customers about the benefits of buying your products from you.
  • The more comfortable we keep our customers, the longer they’ll stay, the more memorable experience they’ll have and the more they’ll spend or pass on positive word-of-mouth.

Example:

Do you think the smell of fresh baking bread flowing throughout the grocery store or music is playing by choice? (duh)

Retail businesses have been going out of their way for years to stimulate shoppers and keep them browsing scented bathroom spray works better than disinfectant.

8- Make Yourself Newsworthy

Get a mention of your company in the right media

  1. For doing a good deed in the community or a humorous tie-in with a sports event
  2. Develop a relationship with your industry trade publications (magazines) they are always looking for ‘free relevant content’, write and article for them. It can help you to appear as an ‘expert’ to others in your industry.

9- Form a joint venture

  • Forging an alliance with a group of small companies or big company, give you ‘biggest bang for the buck’. Lowering your costs to enter new markets and create new distribution opportunities.
  • Make offers to other businesses that serve people in your target markets to pay them for referrals or sharing their list with you
  • Support Fundraisers

  1. Donating your products or services to select charitable events is a great way to get your name out into the community. Be sure your target market will be attending and that your brand will be well represented.

10- Under Your Nose

  • Are your vendors doing business with you? No, call them and everyone you do business with. If your product is not a current match to there needs, he or she probably knows someone who should be doing business with you. At minimum, ask to display your business cards and flyers at their office. Oops, I forgot, take a moment and make sure people in your immediate personal circle understand what you are selling.

Get out and walk

1. Look for underutilized store front windows in high foot traffic areas. Approach the owner and offer to pay a small fee to advertise your business in their window or reverse it, and do the some for a fellow business owner.

2. Scan your friends social media sites Facebook, Pinterest, etc. Ask them to send out a advertisement on the friends page about your business. Ask a friend if you can place an ad on his business website.

It can take a lifetime to build a business reputation, but 20 seconds to tear it down with the wrong message in your marketing campaign or an employee doing that reflects badly on your business. You, small business owner are the ‘gatekeeper’ of the image of the company you are trying to build. Monitor all communications that is released to the press about your business, you and someone else review all media coverage and commercials about your business image, to make sure it is consistent with what your business is all about. Most importantly, be honest in all communications, dishonesty can boomerang on you in a nightmarish way.

Finally, marketing is about making the customer aware of your product and building a trusting relationship with the customer, and hopefully grow with the customer needs, as they expand.

Easy profits in your pocket!

10 Survival Tips for Small Business Owners

The reality for many small business owners is that they were forced into starting something of their own. Perhaps they were retrenched, fired or unable to find a job.

What this means is that often small business owners really haven’t even had time to obtain some training in basic small business practices such as finance, human resources management and marketing.

The other real danger is that the small business owner works so hard in the business, trying to push for more sales, handling negotiations with suppliers, making month-end payroll and trying to get big customers to pay on time that they don’t catch major problems in their business before they become a threat to their businesses survival.

Newspaper reports recently indicated that about 4,000 businesses went insolvent in 2013. The causes for these business failures were not reported on but it doesn’t take a rocket scientist to figure the usual fatal mistakes: bad business decisions, running out of cash, a market that has dried up or even an employee when employees who have embezzled the company.

Here are 10 practical survival tips for small business owners:

1. Stay inside your “circle of competence”: the investor Warren Buffett avoids making investments outside his “circle of competence”. Starting something new, venturing into a new market requires competence that the existing small business owner may not have. Stick to the knitting in bad times.

2. Keep focused on cash flow: When the cash dries up, the game is over. In hard economic times its important to monitor cash flow more frequently, if not daily. Set up a simple system and watch your cash like a hawk. Big customers want to take ever forever to pay and suppliers want their money now. This makes it vital to manage cash carefully.

3. Don’t sign sureties: when cash runs out, the temptation is to go to the bank to increase your overdraft. Don’t sign sureties that for a small loan require confiscation of all your business and personal assets. Enough said.

4. Temptation: Act ethically at all times: even what may seem harmless will become a major issue if it involves and an unethical business practice. Ensure you have a clear red line where you will not cross over. In this economy with people desperate, unethical, explotative small business are on the rise. Detect them early and avoid them at all costs. Some are not paying their taxes, operating illegally and not complying with health regulations and should be shut down by the relevant authorities.

5. Take time to work on your business: Working in your business gives you very little time to work on your business. Make time each week to review where your business is going and how you can improve your operations and increase your market.

6. Insurance cover: Have insurance cover in place for fire, theft and personal liability: It sounds like a no-brainer but how many small business owners have adequate insurance? Don’t be wiped out because of this.

7. Business advice: The biggest risk that a business often faces is poor business advice. Airlines and utilities are virtually bankrupt because of bad business decisions and have to be bailed out. Double check business advice and rely on your own common sense and savvy.

8. Avoid the dangerous number 1: there is a danger in having one big customer or one key supplier. Check your business for this kind of risk and make backup plans.

9. Keep a watchful eye out for unusual employee behaviour: One of your employees could be handling too many critical tasks, employees could be taking out stock without you knowing it and finance or bookkeeping employees could be involved in an invoicing scam. Watch out for suspicious behaviour.

10. Be frugal: keep costs down and avoid unnecessary purchase of new assets. Set your small business a cost reduction percentage target and stick to it.

These 10 tips for small business survival are just a few that any small business owner should keep in mind during these economic times.

If you are in any way concerned that there could be un-seen or hidden risks in your business, get in the right professionals or a business adviser before it’s too late.

You may be grudge them a professional fee but when you consider it is really a pittance compared to the cost of closing your doors.