Category: Visitors
Exit Strategies for Businesses
Many investors are only interested in investing money into an enterprise for a limited amount of time. They want to know when they will get their money back and what sort of return they will be receiving at that time. Both issues are closely linked. Therefore, when preparing your business plan, to pitch to potential investors, you will need to make sure that you have outlined your long term plans and a sound <b>exit strategy</b>.
In order to do this properly you will have to ask yourself a few questions about your own personal plans regarding the business. Do you wish to stay involved in this business in the long run, or are you more interested in getting it off the ground and letting someone else take over then? These are the kinds of questions you should deal with in your exit strategy.
You will also want to know a little about the <b>investors</b> you are pitching to and what their expectations are regarding the future of the investment:
<ul><li>If you are dealing with <b>venture capitalists</b> you have to be aware that they are looking for a <b>high return</b>. They will generally be expecting the business to go public at the end of the period or make some other high profit move. The period they are willing to invest is about three to seven years so you will need some sort of high return exit strategy at the end of that period. However, you should not opt for going public unless you are confident that it is a realistic goal for your company. Public offerings are very rare for small businesses and the investors you are speaking to will be all too aware of that fact.</li><li>If you are considering an <b>angel investor</b> then again they will be looking for a high return but will not be overly concerned with the type of exit strategy under consideration, as long as it seems sound. They will be less sophisticated than the venture capitalists or institutional investors you may deal with and are more likely to be involved because of a <b>personal relationship</b> to you or the business.</li></ul>
There are a number of exit strategies you can consider:
<ul><li>The most basic exit strategy would be to simply <b>bleed the business dry</b>. This can be done by giving yourself a huge salary or other remuneration, regardless of the performance of the business. While it is not appropriate in most cases, there is no doubt that it can get a lot of your investment back out of the company in a short time.</li><li>Another simple option is <b>liquidation</b>. Simply close the doors and wait for the company to be wound up. All debts will be paid off, and then whatever is left over will be clear to the shareholders.</li></ul>
While these two options above are quite practical and effective, they are professionally frowned upon and you may wish to propose a more sophisticated exit strategy if you wish to impress potential investors.
<ul><li>Another option could be <b>selling to a friendly buyer</b>. While you may have come to the end of your relationship with the business, there may be many people who would be saddened to see it end and may well be willing to step in to take over. This might include passing it on to another member of the family, or selling it to employees or customers. There are many businesses where this will be a realistic option, however it is difficult to predict it at the beginning of the venture.</li><li>Another option is <b>acquisition</b>. This is when a rival firm, usually one wishing to expand, agrees to buy you out. You can negotiate the price and terms with the buyer and there is a good chance that both of you can come up with a very <b>attractive price</b>. You will get a good price because together with your assets, the buyer will be willing to pay for good will, market share, client contacts etc. This means you can get a very good price for the business.</li><li>The <b>IPOs</b> that we previously talked about are the final option. These are potentially the most lucrative of all, but when reality kicks in, they might not seem like the dream you thought they were. In reality, a minuscule percent of companies manage to make it through an IPO. The process costs millions, includes lawyers, analysts, publicity agents and a lot of other costly professionals. The odds are against you ever making it. And if you do, you will probably be left with only a fraction share of the company you used to own.</li></ul>
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Advertise to millions -#1- Write articles
Introduction:
This is a series of articles about marketing and advertising. There are different ways you can reach an audience of millions of individuals all around the world. I show you on this series how to implement profitable strategies in your marketing career.
It has been said that “what matters is not what you sell but how you promote it.” So, the secret to success lays within your marketing techniques. That’s why it is very important for business owners to develop skills which allow them to increase the sales of their products.
One of the most important skills you must have is the ability to reach a lot of people quickly. To do this you need to realize how powerful media is an how it can drastically increase your revenues.
” Write Articles;
Writing articles is one of the easiest and most effective methods used to advertise on the Internet today. This technique works as follows… You need to write a short one page or one and a half page article and submit it to article banks. Then web masters and online publishers will copy it and paste it on their web sites, newsletters, e-zines, etc.
At the bottom of each article you will attach a small biography about yourself which is called the author’s resource box. That will be your ad containing your contact info, which could be your name, phone number, e-mail address or web site URL.
Why and how does it work? It works because web masters, affiliates, online marketers and publishers need valuable content to attract visitors to their web sites. Then they go to article banks and borrow free content (the articles) from people like you who provide said content for free.
That way they profit from your efforts and you profit from theirs because when their visitors go to their web sites and read your article many of them will contact you when they read your ad at the bottom. So publishers get free content while you get free publicity. The middle guys are the article banks which also benefit from this activity. It is a win-win situation for everyone.
Now, I will explain how this technique can increase your exposure exponentially. Some of the web sites bellow have as many as 15,000 publishers per site. So let’s say that you submit to 10 sites and on average 500 publishers per site are interested in your article within approximately one month.
If that’s the case (which is probable), then your article will be published on about 5,000 different web sites (500 publishers ◊ 10 article banks = 5,000 web pages). Do you understand what it means to have thousands of pages linking to you?
Let’s say that those 5,000 web sites receive on average 1000 visitors per month each. That would be 5,000,000 potential prospects that can now come across your products or services each and every month. To be realistic though, not all of the visitors will find your articles. Not all of the publishers will publish what you write. And this process doesn’t happen overnight. It takes some time.
On the other hand, this is one of the best methods if not the best one you can use to increase your exposure on the Internet. It is free, easy and doesn’t consume too much time. Ask any Online Marketing Guru and you will find out that they will have a similar opinion.
If you write a few articles and submit them to 10 of the best e-zines, you could be receiving thousands of new visitors per month within a few months. Keep in mind that the more you write and submit the more visitors you will receive. If you write just one article and submit it to one web site only, it won’t bring you many clients.
This is a numbers game. It is a Mathematical thing. I really like this technique because it makes my publicity grow exponentially. You make an effort once and it multiplies for many years into the future. You place your articles on a few web sites and they stay there forever.
New publishers find them every month. So it grows exponentially. It reproduces itself like a virus. This is what it is called viral marketing and it really works. You might need to have some patience because it may take some time before you start reaping the rewards from this activity, but it is really worth it! If you do this your articles will work for you as your sale agents announcing your products and services to the world.
For example, I wrote once three articles and submitted them to www.goarticles.com. Three days later I checked them out on that web site to see how they were doing. I was amazed to discover that one of the articles had been downloaded by 100 people already. How come? I had submitted it there only three days before.
That’s for you to have an idea how many people out there are desperately seeking fresh new content for their web sites. The other two had been downloaded about 40 to 50 times. Two weeks later my best performing article had been downloaded 197 times. Could you believe it? Try it an see the results for yourself.
This will definitely increase your exposure because you don’t only receive new visitors from the publishers’ web sites but also your search engine rankings increase, which makes you receive more potential clients from search engines too.
If you don’t like to write then you can hire a ghost writer and have him/her write the articles for you. Go to www.getafreelancer.com and post a project on that web site. Freelancers will bid on your project and you will be able to choose the one that will work for you. One page articles may cost you from $10 to $20 each and can bring you many benefits as stated above.
You can submit your articles to thousands of free article banks, but submitting them to about 15 or 20 will be OK. I think you should not skip the most popular ones, those with several thousands publishers like www.articlecity.com, www.goarticles.com, www.ezinearticles.com. Just make sure you read the authors’ bylines first.
If you don’t want to do this manually you can join www.thephantomwriters.com. They claim to have a list of more than 12,000 publishers to which they submit your articles to periodically. The drawback of this technique is that they charge a fee, while the web sites mentioned above are free to join.
As you can see, this technique can increase your exposure and help you get more clients. You can read about other effective marketing techniques from my other articles on this series.
Entrepreneurial Myths: The Truth Behind Them
If you are about to start off in business you will have no doubt heard these comments:
ìSo many businesses fail. Why are you doing this?î
ìI hear that you need a large amount of money to get a business off the ground these days.î
ìWhy are you throwing away the security of your job?î
These, and more of the same, are typical of the barriers that so called friends and advisors, put in your way if you are thinking of starting a business. These barriers are built on the back of myths about the pitfalls and challenges which surround running your own business.
In this article, we’ll take a look at some of these myths and reveal them to be exactly that just myths! Don’t get me wrong, being an entrepreneur can be tough and there are hurdles to cross, but let’s bring some common sense into the debate!
<b>You Don’t Have a Personal Life</b>
Yes you will! It can be hard juggling the responsibilities of running your own business and spending time with the family, but at the end of the day, you are going to have far more flexibility with your personal life, than any employee will ever have. The real issue is, do you have the time management and planning skills to get things done, thereby allowing you time to spend with your family.
<b>You Have To Be Cunning and Ruthless To Be a Successful Entrepreneur</b>
Ok, it may help you in the short term but this is not a sound, long term strategy. To be a successful entrepreneur you need to build relationships with both customers and suppliers who will stick by you during the rough times. Being ruthless over pricing may get you one or two good deals but you are unlikely to build a lasting and profitable relationship. Your aim should be to strike a balance between what you want and what your customer or supplier wants.
<b>You Won’t Have To Work As Hard</b>
Your current job may be stressful and subject you to long hours. The idea of running your own business is appealing because you can slow down and take life at your own pace. To a degree this is true but there’s no getting away from the fact that it will be hard work. Most small businesses don’t achieve profitability until year 3 and so it’s a long slog. Remember, if was easy, everyone would be doing it!
What does make the difference though, is that you are finally doing something you love and so the hours and the struggles don’t seem like hard work at all. So perhaps this myth may be true after all!
<b>You Have To Have an Original Idea</b>
No you don’t. Most businesses are built around a central idea. The difference is usually how it’s delivered. The core products of all fast food places are the same, as are clothes shops, newsagents etc. You can make a decent living effectively copying someone else’s idea but done in a slightly different way. Don’t be put off by the doomsayers who will gleefully point out that ìit’s been done beforeî. Your response should be, ëGreat! That shows the idea works!î
<b>You Will Be Your Own Boss</b>
No way! There’s only one boss in your new business the customer. They are essential to your success. When you were working for that large, faceless Corporation, the loss of the odd client wasn’t that big a deal – plenty more where they came from.
In your new world you have to do whatever it takes to keep your customers and keep them happy. The customer is the one who calls the tunes. You have to listen and take note, before someone else does. However, at the end of the day, when all their demands are met, then perhaps you can have some time to yourself and enjoy the pleasures of being your own boss after all!
<b>You Need A lot Of Money To Get a Business Off The Ground</b>
Some businesses do need a fair bit of cash to get moving but there are many areas you can go into without the need to invest in a large amount of stock, machinery or equipment. The low-capital businesses involve the use of three very cheap commodities – your brain power, your knowledge and your time.
A business where you sell your expertise, not actual goods, to other people can be cheaply set up and carry high profit margins. All you may need is a PC, a desk and a telephone line. What’s stopping you?
<b>You Only Have To Do What You Want To Do</b>
Unfortunately this myth is wrong. We all have areas or skills in which we excel and it’s this expertise which usually forms the basis of your business. Your dedication to paperwork, bank statements and the VAT man may not be that high, but branching out on your own doesn’t mean you have the choice to avoid these terrible tasks.
Whilst you were able to do this when you were sitting in the big corporate office, you can no longer hide. These tasks have to be done otherwise the deck of cards can start to collapse.
If you do have serious misgivings on certain areas, marketing for example, then consider taking a course to improve your skills. If it’s something you seriously can’t do, then go and find someone to do it for you – don’t hope it will go away because it won’t.
You will have seen that some of the myths not being true is good news and others not so good news! Be sensible in considering the myths which are thrown at you. See it for what they are – comments from people who don’t know what they are talking about! In the next issue I’ll have some more myth-busting ideas for you.
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Entrepreneurs Don’t Have Average Credit Scores
Fair Isaac, the company that develops the formula to determine credit scores looks at the average statistics of consumers and factors that into your score, called a (FICO). According to Fair Isaac the average consumer will have:
– One inquiry on their personal credit report in a given year
– 54% of credit holders carry a balance of less then $5,000 on all debts other then a mortgage
– Have access to $12,190 on all credit cards combined
”’ìNow are entrepreneurs, like you, the typical consumer?’ I asked one of my clients (J.G.). ìNo.î, said J.G.. ìYou will see that as an entrepreneur, we have several more credit needs then the average consumer. So when the personal credit bureaus compare us to the average consumer, our credit consumption is not normal. Which is why your credit score lowered since starting your business.î ìThat’s not fairî said J.G. My reply, ìIf you don’t understand how the system works, you’re right.î’
Let’s look at J.G.’s situation. He has applied several times with suppliers for various credit lines over the last year. Each inquiry will likely drop his credit score approximately 5-10 points. The credit bureaus as suppose to lump three together and only drop 5-10 for the three, we’ll see if it happens. He also has a $60,000 line of credit available and carries a balance of $42,000. Both the amount of credit and balance are more then the consumer average which can hurt his score as well. This is without looking at anything else in the business or his personal life.
If J.G. had just taken the time to develop a business credit profile and start establishing basic lines of credit in the business name and then slowly build the businesses credit over time, he may never have ended up without the ability to buy the home he and his family wanted.
This is why I have written books and developed products and services with our company, Business Credit Services, to provide an education to the entrepreneur on how to ìbecome the typical consumer again’ and ìseparate your personal and business life.
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Advertisers Embrace ‘Rich Media’ Format
From ads that dance or sing to MTV-like commercials, online advertisers are now using a new type of technology called “rich media” to attract consumers.
U.S. Internet advertising revenue will have reached about $12 billion last year, up $3 billion from 2004. Of this, advertisers spent about $1 billion on rich media, up from $800 million in 2003, according to the Interactive Advertising Bureau.
So what exactly is rich media? By definition, it is an online advertising technique that combines graphics with audio technologies, giving Internet users an interactive experience.
And with more than half of American households connected online and using high-speed connections like broadband and DSL, it means a potentially lucrative way for online advertisers to get consumers’ attention.
One company taking online advertising to a different level is Centale Inc. (OTCBB: CNTL), based in Fort Lauderdale, Fla. The online marketing and technology firm offers cutting-edge technology solutions to its clients.
Centale’s premier application, the Catalyst EV, is a software platform that allows companies to communicate directly to the desktop of their audience in rich media format.
The software also functions independent of e-mail. To date, studies have shown that e-mail campaigns may be decreasing in effectiveness because as the amount of e-mail increases, the likelihood of success of the solicitation or advertisement tends to decrease.
One reason that advertisers are embracing rich media is that it typically entertains and is compelling enough to capture the interest of consumers. It also allows a user a modicum of control by either stopping the ad entirely, or participating in it and clicking through to an advertiser’s Web site to get more information.
While rich media may not endear advertising to online consumers, most users are finding it less intrusive than traditional pop-up, banner and text-based ads. Centale says there is a favorable market for its product, as the industry shifts away from traditional advertising such as print and radio in favor of online advertising.
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Advertising: Relationships vs Business Decisions
Successful businesses know the importance of building and maintaining good working relationships, whether it is with partners, employees, business or trade organizations, the government, media representatives, vendors, consumers, or the community at large. A business must carefully balance the benefits of these interpersonal relationships and should never allow these relationships to blind their judgment especially when it relates to what is in the best interest of the business’s continued success and growth
Buying advertising media based on interpersonal relationships is a common mistake made by many small businesses. This strategy throws the business’s strategic marketing plan into the winds of chance in exchange for the warm and fuzzy feelings that come with doing business among friends. However, when the smoke clears the business has made costly advertising expenditures with little or no results and the long term negative effects may not readily be seen. Simply, the marketing / advertising expenditures have been made, the budget may or may not be busted, and the results may be none to little measurable penetration into the business’s target demographic market segment.
Is buying media from a friend in the business always bad? No, however in order to choose the most effective media channels a business must first consider the audience or customer it is trying to reach. Developing a strong sense of the target demographics’ buying and shopping patterns, interests and hobbies, entertainment and media choices for example will lend itself a tremendous benefit to making informed media buying choices. Once the advertising business has developed a strong sense of what media channels may prove to be the most effective it should try each a little at a time carefully tracking the results of each. Once this is complete the business will be able to make an educated decision on where to invest its marketing dollars, prioritizing expenditures into the mediums that have proven results for the business.
It is true that strong interpersonal relationships skills and the ability to develop and maintain good working relationships with a variety of people, businesses, and other organizations are imperative in today’s business environments. However, the importance of a well designed and implemented strategic marketing plan can not be understated and is paramount to the business’s development and longevity never taking second seat to friendship.
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