TIPS FOR BUYING OUT A COMPETITOR.
As the economy begins to recover, many businesses are finding themselves in a rather enviable position: large cash reserves in the bank and weaker competitors just waiting to be snapped up (for a bargain price!). So you know you want to expand by acquiring another firm, but where to start?
Analyse Your Business
Start with a good old-fashioned SWOT analysis. Get a flip chart and a marker and, with your management team, write up the Strengths, Weaknesses, Opportunities and Threats of your business. Now identify the gaps; if for example, a weakness is that you have only 3 large clients, you could fill that gap by buying a competitor who has a further 4 large clients, thereby giving you 7 large clients. Repeat this process for the other areas.
Search for a Business
Now that you have your criteria from SWOT analysis, make sure you know how to look for a business. Don’t just go to one source; really check multiple (and reliable) sources to find the business that is right for you. Talk to your team and establish a list of competitors who are considered to have a good client base, good products or services, a good reputation etc. Get the right team of advisors in place (accountants, lawyers, etc.) and draw up a plan.
Value the Business Properly
Your accountant can help you with this, but you should read up and understand the basic financial techniques to value a business; it’s cash flow and other assets. Know how to prepare a basic business plan in order to make projections into the future. You should conduct research in order to understand how the business is getting its customers. Know how it delivers goods and services. You should try to gain an understanding of the cash flow and think about how you can maintain this flow before thinking about increased profitability.
Structure and Finance
Your advisors should be able to give you a basic understanding of how the business valuation and related cash flow tie together. Make sure you examine a number of possible ways to put a transaction together in order to overcome different risks. Your legal team and accountant should provide guidance on the best way to structure the deal and finance it in order to complete the acquisition.
PR PROGRAMMES MUST HAVE OBJECTIVES
In order to maximise return on investment, PR programmes should serve an actual purpose. PR for the sake of PR will most likely fail to produce a tangible result. Instead, each PR programme your business undertakes should tie in with at least one strategic objective of your enterprise. For example, your strategic objective could be to target more customers in a certain socio-economic group, or to encourage a repeat purchase.
As an industry, PR is packed full of creative people who can generate unique ideas to help you. However, all of this creativity means very little unless it is working towards a specific purpose. The starting point for any campaign, therefore, must be to identify what the commercial objectives of the business are. Business owners should consider “what success looks like” if everything goes to plan; the business should then be able to measure or quantify that success. Only at this point should you get creative and come up with the ideas to create the standout PR campaign that the business needs.
An effective PR campaign will capture the attention of the media, as well as the interest of your clients and prospects. Such a programme should aim to engage with the target audience and communicate a “call to action” in order to help the business achieve its objectives.
Remember that the profile of your brand is critical to your success. Increasingly, consumers buy products and services from companies because they value or respect the brand. Customers tend to look at the detailed features and benefits of a product or service second. The key, therefore, is to make your brand your target customer’s first choice.
Your business must live up to its brand promise and deliver what clients expect it to deliver. Your PR programme should reinforce this.
KNOW YOUR COMPETITORS.
Businesses need to know their competition, especially in today’s hyper-competitive business environment. Knowing what the competition is up to allows you to develop unique selling points (USPs) which will encourage buyers to purchase from you.
In order to understand the customer experience offered by your competitors, try “mystery shopping” your nearest direct competitors. Things to note include: the customer experience, staff-customer interaction, how staff dress and present themselves, the business environment and little touches such as complementary tea or coffee. Most important of all is to take note of the sales process – how do your competitors go about selling products or services to the customer? Do they suggest how their product or service can add value? Do they offer a demonstration? How do they close the sale?
Products and Services
Keep an eye out for any new services or products your competitors offer. Pay close attention to the quality of their brochures, the appearance of their products and any new or interesting ways in which they add value for their customers. You should create reports which compare your business to the leading competitors in your particular sector of the market. You should circulate these reports to your management and sales teams with a view to encouraging them to implement new ideas and approaches which will improve your business against your competitors.
Once you know the specific details about your competitor’s people and their products or services, your sales team will be more informed and can develop the USPs that they can use when challenged by customers as to “why should I buy from you and not from your competitor?”. Your sales team can then focus on the strengths of your products or services and encourage your customers to do the same.
If you are at a disadvantage to your competitors in terms of your pricing, work with your sales team to prepare a checklist of the specific features and benefits unique to your product or service. Have each sales person practice presenting this checklist, as this particular part of the sales process will usually be enough for the prospect to decide to purchase from you.
SETTING EFFECTIVE KPIs.
Setting goals and a strategy for your business is important. However you then need to measure how the business is performing in order to understand if the firm is moving forward and is on track to achieve its goals. As such it is necessary to set Key Performance Indicators (KPIs). However many business owners and managers find this difficult to do and see the establishment of KPIs as a pen-pushing exercise and don’t dedicate time to do this.
KPIs however, form a vital element of the business’s sales strategy, both for individuals and for the team itself. In order to create a shared vision, commitment and firm-wide motivation, it is vital that the KPIs are discussed with and agreed by each member of the team from the outset. KPIs should cover:
- Team targets (i.e. convert 75% of all leads during the first quarter of 2015)
- Individual targets (i.e. 80% of chargeable time billed each month in 2015)
- Key tasks
The nature and specific tasks of your KPIs will depend very much on variations including the market sector and geographical area in which you operate. However, managers must ensure that they follow the SMART principal – that is, ensuring that objectives are Specific, Measurable, Attainable, Realistic and Timely.
Depending on your business, it can be useful to adopt a traffic light approach for each client account, so areas of strength and weakness can be easily and quickly identified. This data can be fed into charts which can also be very useful when preparing KPIs, giving specific objectives and demonstrating how the results have a direct impact on the overall sales and business objectives.
Once set, KPIs should then be reviewed on a regular basis, both with the team as a whole and with individual team members. Any variance in performance can then be identified and flagged appropriately, with remedial actions put in place before any aspect of the traffic light chart turns to amber. Bear in mind that KPIs should always be dynamic. For example, even if a KPI target hasn’t been met, the individual or team performance may still be on course to achieve the overall sales objective, and the KPI target may need to be lowered. Similarly, if a target has been met, then it may need to be increased at intervals, to maintain drive and motivation.
Failing to plan, plan to fail. We all know this. However, many businesses who create a strategy or business plan fail to execute it to any significant degree. This is because it requires change, commitment, innovation, leadership and numerous other things to align your business in a way that facilitates the execution of your plan.
These 5 steps will help you to successfully execute your business strategy:
Clarify your vision
Define what the business will look like if your strategy is executed successfully. Develop a summary of that vision and communicate it to all stakeholders. Communication must also be consistent – keep the vision in front of your team and make it a part of their daily lives. People cannot follow you successfully if they don’t know where you want to go.
As part of your planning process, you should develop 4 or 5 critical goal categories. Each of these categories should be broken down and given specific goals with due dates, metrics to show progress and the names of the people that are accountable for their completion.
Align systems and people
This is the step where most businesses encounter trouble with strategy execution, as they do not take the critical step of aligning people and processes to attain their vision. They just assume that the firm will “figure it out”. All systems, people, incentives and business processes must be aligned with the new strategy. People must understand what they need to do and how their role affects successful execution of the strategy. They must get help in establishing priorities on what to do, as well as what not to do, to ensure that the overall strategy doesn’t get lost in the day-to-day.
The business should hold annual reviews of their current strategy and how outside forces have impacted on it. The aim of the review should be to determine whether the strategy is still valid, whether the firm is making adequate progress and what customers think. Strategy execution doesn’t just happen; it must be driven with the same commitment that built the business in the first place.