MarkOstryn's Blog

Received my brand new 2012 Yellow Pages Sydney directory yesterday, and was unsurprised to see it had shrunk to one quarter the size of the 2011 directory.  If a case history written around the theme “Innovate or Die” was ever produced, Yellow Pages would be it.  Sensis have seen the writing on the wall for years, but arrogance and bloated management hierarchies ensured it was not in their interest to innovate.

The challenge is – while innovation may help create value,  a lack of it can destroy value a whole lot quicker.  Are you innovating or should you be planning an Exit?

Listened to a fascinating podcast today, downloadable at http://www.thersa.org/events/audio-and-past-events/2011/the-rise-of-collaborative-consumption

Idea is that  -in the 20th century humanity consumed products faster than ever, but this way of living is no longer sustainable.

But technological advances are driving forms of ‘collaborative consumption’ which will change forever the ways in which we interact both with businesses and with each other.

• The average lawn mower is used for four hours a year.
• The average power drill is used for only twenty minutes in its entire lifespan.
• The average car is unused for 22 hours a day, and even when it is being used there are normally three empty seats.

Surely there must be a way to get the benefit out of things like mowers, drills and even cars, without having to carry the huge up-front costs of ownership? There is indeed. Collaborative consumption is not just a buzzword, it is a new win-win way of life.

Rachel Botsman and Roo Rogers have written a book drawing together the many strands of Collaborative Consumption into an argument to show that the way we did business and consumerism in the 20th century is not the way we will do it in the 21st century.

I presented a three hour interactive workshop in Parramatta on the above.

Here’s the link to the presentation

http://www.slideshare.net/MarkOstryn/getting-great-returns-on-your-business-sale-online-version

and the blurb:

This presentation is for any business owner planning to build and sell their business, or simply wanting to increase its value. More than 40% of business owners will try to sell their businesses over the next five years as a result of the baby boomer generation going into retirement and it is absolutely imperative that if your business is to received its deserved “return on investment” that steps are taken now to make the buisness attractive and desirable for potential purchasers.

The presentation covers:

1. PLANNING AHEAD: How will key industries evolve over the next five years. Some tools to assist you with strategic foresight.

2. UNDERSTANDING THE MARKET: when is the best time to sell? Understanding how a business is valued, and the difference between a strategic investor and a owner / operator buyer.

3. PREPARING FOR SALE: what strategic and tactical actions can you take to improve the value of your business prior to sale.

4. FINDING BUYERS: A guide to making the most of the acquisition process, ranging from defining your target audience through to buyer due diligence.

As I prepare for my marathon, I’ve got a lot of spare time to train and listen to audio books (audible.com – a great source for people needing craving brainfood).

Although I’m not a big fan of American business thought leaders biographies, I really recommend Tony Hsieh’s new book, Delivering Happiness, A Path to Profits, Passion and Purpose.  For those of us on the right side of the Pacific Ocean & thus not as well informed about zappos.com, Tony was a 25 year old son of Taiwanese migrants who in 1999 turned a struggling online shoestore into a $1 billion plus sale to Amazon, ten years later.  From recall, most of his key messages were around how absolutely essential great customer service was – going so far as to say that CS IS the brand!

Other messages

- Divert your budget from marketing to customer service

- 75% of orders come from repeat customers

- Put your phone number on every page of your website, and relish every incoming call.

- Don’t give call centre people a script and don’t pressure (or even allow) them to upsell.  Don’t put time limits on their calls.

- Customers (and suppliers, and other stakeholders) will remember you if you deliver them some WOW.  WOW can be anything positive!

I was recently involved in evaluating a range of business plans from attendees at the NSW Enterprise Workshop (enterpriseworkshop.com.au) – a truly worthy non profit  institution if you want to develop a sound strategy for long term growth.  Here are some of my observations:

• Most important of all, expressing yourself clearly. Get your most critical friend to pretend they don’t know you and read the plan from scratch.  Do they understand what business you are in now and what your future is?  Above all can they maintain their interest while they are reading it?  If they switch off while reading a section – put a line through that section!
• TInvestors and boards will receive many business plans and will probably only have a limited time to read each one. Your content has to stand out. So you have to be exceptionally clear and concise. Whatever you have to say, give it to them right in the first sentence, in the simplest possible terms.
• However, with the presentation, assume that the evaluators HAVE read the plan.  The slides and talk should be around 3 minutes of regurgitation of the written document and the rest of the time making it interesting.  Ask the evaluators what their “pain points” are that would make them want to purchase your product.  Tell a little story about its development.  Get the whole team involved.  Show some flair and have a little fun!
• With almost every plan there is a failure to address a customer retention strategy.  There’s always a focus on how to get new customer, but rarely a description about how to maintain the existing ones.  The existing customers are the lifeblood of the companies existence, the easiest to up-sell future services, maintenance packages, upgrades to in the future.  They are the ones that will recommend you to their friends, rave in blogs about you.
• Get properly acquainted with the layout capabilities of MS Word that will make documents more attractive to read.  Have a look at some of the demos at http://office.microsoft.com/en-gb/word/CH100740901033.aspx particularly those about SmartArt, tables and diagrams, bullets. Can you say in a single chart everything that you would put in a long winded text description.
• Remember this is a strategic plan for your business, not an operations manual for how your business currently operates.  We don’t need to know what you do for every hour of the day, what insurance policies your company has, or even a list of every competitor.  On the subject of competitors, I’m more interested in what your strategy is for beating, merging or simply understanding your competitors, than I am about just knowing who they are.
• So with competitors, like so many other issues, the description must answer the “so what” question.  What will be their impact on the products you sell or the margins you obtain from them?  How will their growth strategy undermine your capacity to growth?  Does their direction create any synergies that you could mutually pursue through a future partnership or alliance?
• With the financial plan, the key information such as turnover, profit , cash position of company must not be buried in 6 point type at the bottom of a detailed model.  It needs to be made obvious through the narrative.  The profitability of the business and the probability that things are going to turn out that way are fundamental to the plan.  The alternative i.e. should I just close the doors and go and get a job now needs to be considered on the light of this?  If you want to further strengthen your plan describe some alternative scenarios e.g. failure to gain funding versus success gaining funding and talk about what your financial model will look like under each.
• If you have a technology that is patent protected you need to consider within the plan how it can go global in the shortest period of time.  While a direct sales route may be unaffordable, creative consideration can be given to licensing, distribution etc.  A more rapid expansion will usually also result in a per unit cost reduction through economies of scale in manufacture.
• Finally, my greatest concern is whether you have been able to visualize what your market will look like in five years time.  What overall macro and micro-economic trends will occur, how will consumer behavior change, how will your industry change as a result etc?  Here’s a great link for this http://www.nowandnext.com/?action=misc&subaction=2009_plus Speculate that the world will move even faster in the next five years and think about what you will have to do to reach your ideal position of a piece of Blue Ocean with some shark netting surrounding it!

The new owners of Cashflow Wizard have introduced a really interesting Excel based financial forecasting product.  The original model was targeted at larger corporates, but at first sight this would be good for SME’s needing to develop a financial plan as part of a business plan.  I’m thinking of supporting it in Australia.  But would people buy it? It’s pitched at around the $400 mark. Feedback appreciated.  There a good demo at http://www.decisioncurve.com/Products/CashflowWizard/VideoTour/tabid/149/Default.aspx