Berkonomics

Selling your business? Find the emotional buyer

Berkonomics

This is one of my favorite insights, since I lived this one in a positive exit from my computer business. Types of business buyers expanded. Most people will tell you that there are two kinds of eventual buyers for your business: financial and strategic.

Why not share your liquidity success with those who got you there?

Berkonomics

So, you are close to selling your company, and counting the profits a bit early. Well, that’s human nature. Here’s a thought for you to recall later when and if the event happens. Remember those who got you there.

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Your core competency and why not to stray

Berkonomics

Consider your core. It is the one skill, process or advantage you have over your competition. Then think of all the things you do to surround that core with people and assets that complete your company and allow you to release your product or perform your service.

Take advantage of the good times to build stakeholder loyalty.

Berkonomics

Loyalty is a hard-earned commodity. There are several times when stakeholder loyalty is tested to the limit. For employees, a late or missed payroll is the ultimate test of corporate loyalty, divorced even from an employee’s ability to make do without a paycheck.

How much of my business do I have to give to an investor?

Berkonomics

If you’re looking for growth capital, this one’s for you. We’ll cover what information you’ll expect to provide, your range of expected values and amounts of investment to expect. All to help you set your expectations. Financial History and Projections. Let’s start with the basics.

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Here’s how NOT to define your competition

Berkonomics

We investors see this all the time. An entrepreneur pitches using a deck with no slide for competition. When asked (as we always do,) the response is “This is new. We have no competition.”. Niet! Unh unh. Professional investors laugh when they hear an entrepreneur come out with that one.

What’s the minimum information to give your investors?

Berkonomics

Every investor wants regular information from companies taking their money. And most of us investors are frustrated by the lack of regular communication – unless of course – the company needs more money.

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Think ahead when raising your early investments

Berkonomics

Some businesses just can’t fit within the angel capital or friends and family model for raising funds. Sooner or later you may need to seek venture capital and accommodate the needs of the venture community in negotiating the terms of an investment. What VC’s can and cannot do.

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Insurance is always too expensive – until it’s needed.

Berkonomics

I expect that you have a story about how insurance saved you lots of money in your past. As usual, I have a story to make your hair stand on end. But first: here’s a fact.

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Can you defend your pricing niche against your competition?

Berkonomics

This week, we continue our series on marketing and positioning. There can be nothing more important in your business planning that selecting the proper pricing niche, making your story clear using that niche, and the defending your position against the competition.

Why buy IT? Why buy MINE? Why buy NOW?

Berkonomics

What a powerful set of three questions. These are so succinct, so well defined, so precise that everyone in sales and everyone involved in marketing must be able to answer these three questions without pause, and convincingly.

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Faster is sometimes more valuable than better.

Berkonomics

And d oing both well usually wins the day. This is one of those arguable insights, where both sides win. Dell is a great example of emphasis upon fast, creating a customized computer in 48 hours or less, bringing in assemblies and components just-in-time to make the assembly line.

Are you the bottleneck in your organization?

Berkonomics

Close. At many board meetings, I can be counted upon to ask, “Where’s the bottleneck this month?” Senior management is usually prepared with an answer, and a good discussion of resource availability and application follows. Sometimes, the bottleneck is not so visible to the CEO.

Are you thinking of the end game when managing your business?

Berkonomics

Ever think about growing your business with the plan to sell it someday, cashing in on your hard-earned work over the years? Or if you’re an employee with stock options, are you aware of the increases in value you can make with your efforts?

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Is your company or department as efficient as it should be?

Berkonomics

Close. There is more money lost in businesses today from inefficient processes than any other single area. Yet this is not a place where most managers feel comfortable deconstructing and rebuilding.

How do you pay an early stage board?

Berkonomics

Give one percent equity to each outside board member vesting over four years of service. Many early stage CEOs and board members have asked for some guidance regarding pay and time commitments for board members. Here is my best advice, based upon many boards and many years.

Equity 274

The four “P’s” to help you build a great business

Berkonomics

How do you manage a great business, as opposed to be a survivor? Well, here are the four areas you should focus upon every day. Now, some of us remember things better when given a catchy phrase or rhyme. So, here’s one to help you with squeezing the most out of your own available resources. In this new reality in our business world, there is certainly little room for mistakes and no room for bloat within our companies. Preventing them is our responsibility. The first “P” stands for people.

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Can you overcome five risks and create wealth?

Berkonomics

Of course, we are speaking of increased valuation of your company when we speak of “wealth.” Especially if you are in the early stage of growing a business, these five risks can and often do derail entrepreneurs before realizing the riches of a great exit. So, let’s examine them and mitigate them.

Business risk: Bet the farm only when the crops are on fire.

Berkonomics

Close. How much risk you and your company are willing and able to tolerate over time? Most people believe that early stage companies should take risks aggressively because there is less to lose and much more to gain with each risky bet or decision.

You are watched, mostly when decisions are tough.

Berkonomics

we_are_wat we_are_watching_you. Close. If you have been in management or an entrepreneur long enough, you will have experienced the gray area of decision-making where ethics, the law, your needs and expediency all collide.

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Learn to never handle a paper or email twice

Berkonomics

Close. We all do it… to our own detriment. So, let’s make a pact that we will try, if not succeed, to handle our incoming messages more efficiently. Personal time management helps immensely to make a better manager of you and me.

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Any advice can be worthless, or worse.

Berkonomics

Close. Ever get bad advice? We all have in our past. Ever take that advice without question because the person giving it was an investor, a superior in rank, the chairperson of your board? I’ll bet you have at least one story of bad advice taken and being bitten as a result.

How can you let a talented employee go to pursue a new career?

Berkonomics

It is tough to lose your best employees wanting to advance their careers. Sometimes you can be the coach, helping them even if it means losing them.

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You are your company’s moral compass.

Berkonomics

Here’s yet another story that you may identify with – or have yet to experience in your business life. It’s one of those that define your leadership for all to see, sometimes based upon decisions made in the moment – such as this one. A story of a CEO’s snap judgment call.

Are you wasting money filing patents?

Berkonomics

I’ve been working with early stage companies and their intellectual property protection plans for years. But only recently did I read a clear document on the risks and rewards of patent strategy.

I won’t serve on a board without D&O insurance!

Berkonomics

Close. I’ve been sued as a board member too many times over the past twenty-five years of board service. Five times. Does that shock you? It does me. Entrepreneurs blaming their board for failures of a fragile, early stage company.

How about your board members’ time commitments?

Berkonomics

Expect a board member to give a meeting a month, emails and phone calls between. Urgent issues require more of all. Board members are usually busy people, often running other companies or serving on multiple boards.

Email 263

Have you been celebrating each victory?

Berkonomics

Here comes another story. Of course. This one may be like one or more you have experienced in your company. It is a story about focus upon the customer, first.

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Here’s a rule for companies with outstanding loans

Berkonomics

Here is one that is so important to the continued health of a growing company that it cannot be overstated. It’s a bit complex for novices. But hang in there as I explain a bit about accounting classification of assets and liabilities. Differences between types of assets and liabilities.

Have you made the mistake of hiring too soon?

Berkonomics

Well, you may not be alone. Many executives and managers have made the mistake of using the financial and sales forecast to plan and execute hiring of new employees – so that they could be trained and up to speed when the demand arrives. The balance between preparedness and cost.

Hire a consultant; ignore the advice.

Berkonomics

At one time or another, most all businesses use consultants to fill the gaps in knowledge or to provide guidance for management. Consultants are good in that you can sample their work with short projects, change to other consultants quickly, and stop using them when a project is completed.

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Niche marketing works. Here’s how.

Berkonomics

Close. How many of us throw away marketing dollars because our paid efforts reach an audience that is much larger than the target or niche audience we need to reach?

So, what if you run out of money?

Berkonomics

Money in the bank is like oil in the car. Certainly, you have many ways you are pulled every day, both tactical and strategic. But when money is the issue, your time, energy and focus are drained from other important areas of your life or business.

Would you sign a personal guarantee if you have investors?

Berkonomics

It’s a fact of life that a banker, lender or lessor will ask for a personal guarantee from the founder or entrepreneur most every time. But what if you’ve diluted your interest from 100% to something less than 50%? Should your investors expect you to carry 100% of the risk? The short answer is “yes.”

Bankers: love ’em or hate ’em. They may affect your future.

Berkonomics

Let’s get right down to it. Your banking relationship can be like a great marriage or a bad trip to the DMV. In most cases it is strictly your choice. But the results of that choice will reverberate for what could be years. For a start…. How did you open your first bank account?