Saturday, April 20, 2024

Empowering Your Business: The Power of Incentivized Compensation

 


Intricacies of purchasing a business and the strategic importance of hiring the right managers to steer its course. Building upon that foundation, let's delve deeper into the crucial aspect of incentivizing your workforce to ensure their interests are aligned with the company's objectives.


Imagine this scenario: Your business operates in a sales-centric environment where hourly wages have been the norm. While this model may have served its purpose in the past, dwindling margins necessitate a paradigm shift. Enter the era of commission-based structures.


Allow me to illustrate this with a real-world example of a business that underwent a transformative change by reevaluating its approach to hiring and compensating its workforce. Previously, they relied on a large team of hourly-wage employees to handle customer interactions, with the hope that sales would cover the costs. However, as margins tightened, profitability became increasingly elusive.


Recognizing the need for change, they transitioned to a commission-based sales force, granting employees greater autonomy and flexibility in their work arrangements. No longer confined to the traditional office setting, employees were empowered to work from home or wherever they pleased, driven by the promise of earning based on their performance.


The results were nothing short of extraordinary. By aligning compensation with performance, the company attracted a new breed of motivated, self-directed individuals who thrived on the opportunity to control their earning potential. Freed from the constraints of hourly wages, employees embraced their roles with renewed vigor, leveraging their networks and creativity to drive sales and revenue.


But the benefits of incentivized compensation extend beyond the realm of sales. Whether it's frontline customer service or backend operations, aligning employee interests with company goals fosters a culture of accountability and excellence. By rewarding initiative and results, businesses cultivate a workforce driven by ambition and passion, propelling them towards collective success.


However, it's crucial to tread carefully when implementing incentive structures. Lessons learned from past missteps, such as the Wells Fargo scandal, underscore the importance of maintaining integrity and ethical conduct at all times. Incentives should never incentivize unethical behavior, as this can erode trust and tarnish the reputation of the organization.


In closing, the journey to aligning operator interests with company goals is one paved with innovation, adaptability, and foresight. By embracing the power of incentivized compensation and fostering a culture of excellence, businesses can unlock the full potential of their workforce, driving sustained growth and prosperity.


I invite you to share your thoughts and experiences on this topic in the comments below. Let's continue the conversation and learn from each other's insights.


Download my incentive-compensation checklist here-> DOWNLOAD


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Cheers!


David Barnett


Wednesday, April 17, 2024

Sell a customer list

***New Video Alert!

What if you have a very small business?

Even just yourself.

How can you go about getting the best value for your biggest asset?

Your customer list.

I explore it in this week’s video here: https://youtu.be/0U9Rb-mNn90 


Cheers


See you over on YouTube

David C Barnett

 

Saturday, April 13, 2024

Delving into the Entrepreneurial Journey of Ryan Duffy's Franchise Venture

Today's story originates from a unique sale involving a Ryan Duffy’s franchise in Saint John, New Brunswick, intricately linked to the legendary creation of the Donair in Halifax, Nova Scotia.



This particular deal was structured through seller financing for $400,000, highlighting the often complex and underexplored aspects of buying businesses. Unfortunately, the new owner defaulted on payments, leading to legal actions and the establishment's eventual closure. This situation sheds light on the risks of seller financing and the importance of realistic, sustainable negotiation terms.

From this transaction, we can glean several critical lessons for prospective business buyers. First, the importance of due diligence cannot be overstated. Understanding the financial mechanisms and terms of a deal is crucial. Secondly, the art of negotiation is key—terms should be fair and manageable. Finally, the story underscores the unpredictable nature of business ownership and the need for careful financial planning.

Remember, knowledge is your best asset in navigating the business world. Stay informed, stay engaged, and never underestimate the value of a well-negotiated deal. Cheers to your business success, and feel free to share your experiences and questions. Let’s keep learning together.

Never miss any of my small business content by ensuring that you’re on my email list. Sign up at https://www.DavidCBarnettList.com 


Wednesday, April 10, 2024

Grow your SMB

 


***New Video Alert! What does it cost to grow a small business? Where do you start? More sales? Run some advertising? You start with a plan. Watch. Watch this week’s video here: https://youtu.be/UD06KAjDvuo v Cheers See you over on YouTube David C Barnett

Saturday, April 6, 2024

Unlocking Success: The Power of Business Systems

This week I've been asked a question by Anton a Few Years Ago, just give me more videos about business systems. So I'm gonna do just that.


Firstly, it's crucial to understand that every functioning business inherently operates on systems. Whether it's handling customer transactions, managing workflows, or delivering services, systems form the backbone of operational efficiency. But here's the kicker: it's not just about having systems in place; it's about documenting them comprehensively.


Imagine a scenario where anyone, from a new employee to a seasoned manager, can seamlessly step in and understand how things work. That's the power of documented systems. Whether it's a detailed manual, an instructional video, or a simple checklist, effective documentation ensures clarity and consistency in execution.


When clients reach out for assistance, I don’t leave anything to chance. From the initial inquiry to the final service delivery, each step is meticulously outlined and communicated. By documenting both internal processes and client expectations, I ensures a smooth and transparent experience for all parties involved.


But why stop there? Documenting processes isn't just about clarity; it's about accountability. By tracking every action and milestone, businesses can hold employees responsible for their tasks. Whether it's initialing completed assignments or signing off on deliverables, accountability loops ensure that standards are met and deviations are addressed promptly.


Moreover, documented systems pave the way for continuous improvement. By tracking performance and identifying bottlenecks, businesses can refine their processes to boost efficiency and productivity. It's a cycle of optimization that fuels growth and success.


My journey with business systems isn't just theoretical; it's grounded in real-world experience. From running a junk removal business to coaching aspiring entrepreneurs, I witnessed firsthand the transformative power of well-documented systems. And now, I’m sharing my insights and expertise through courses like "Build a Business that People Will Wanna Buy," empowering small business owners to implement effective systems and unlock their full potential.


With that, let's embrace the journey of business systemization and chart a course towards success. Until next time, stay inspired, stay informed, and keep thriving in your entrepreneurial endeavors.


Be sure to never miss any of my latest content by joining my email list at https://www.DavidCBarnettList.com 


Download our FREE business systems visioning tool. Click here.







Wednesday, April 3, 2024

IP and Brand value in small business

 


***New Video Alert!

So, is a 100-year-old company with a well-known brand worth more?

What about if there are over 1000 names on the past client list?

Does a special trade secret make a business worth more?

Today, we uncover value drivers that many sellers love to tell you about…

Watch this week’s video here: https://youtu.be/0CcQV2yiycI 


Cheers


See you over on YouTube

David C Barnett


Saturday, March 30, 2024

Unlocking Business Success: The Power of Staged Buyouts for Long-Term Seller Involvement

 Today, I'm diving into an intriguing question from a viewer years ago– what if you don't have enough capital to buy a business, and you want the seller to stay involved for the long haul? The solution lies in the art of staged buyouts. Check the YouTube video here:


Imagine a scenario where the business in question isn't a small entity but has a significant workforce, say around 10 to 12 employees – perhaps a small car dealership. In this staged buyout strategy, the buyer initiates the process by using the available funds to acquire a small percentage of the company, let's say a 5% stake. Over the years, as the business turns a profit, dividends are issued. However, rather than reaching the minority shareholder, these dividends are redirected to purchase additional shares from the seller.


This gradual approach offers several benefits. Firstly, it facilitates a mentor-mentee relationship between the buyer and the seller, allowing for a seamless transfer of knowledge about the business operations. Secondly, it ensures that the seller receives excellent value for their business. A pre-established buy-sell agreement outlines the valuation formula for shares, and as the company thrives, the value increases, resulting in a higher price for the seller.


More importantly, this staged buyout provides the seller with a secure exit strategy, mitigating the risks associated with unforeseen circumstances. Whether it's a personal crisis or a planned retirement, the exit plan is locked in, offering flexibility and control over the transition.


Traditionally, buyers would acquire up to 49% of the shares through this staged process, with the remaining shares purchased in one transaction. While this might involve securing a loan from a bank, the buyer's track record within the business, coupled with a profitable operation and issued dividends, makes securing financing much easier with most lenders.


For this strategy to succeed, a well-structured business with defined roles, responsibilities, and profitability is essential. This ensures a smooth collaboration between the buyer and seller without constant interference.


If you're looking to enhance your business setup and learn effective exit planning strategies, consider exploring my Small Business Systems Course and Exit Planning Program. 


As we delve into the exciting prospects of staged buyouts, keep in mind the importance of business discipline and profitability for a seamless transition. 


Cheers to your success, and see you next week!


David C. Barnett


Wednesday, March 27, 2024

Unseen Liabilities- SmallBiz worth less than $1!


***New Video Alert!

This business owner learned that his business was worth less than $1.

How?

Because of the unseen liabilities.

Let’s learn about how companies owe money that doesn’t get shown to you when you look at the financial statements.

Watch this week’s video here: https://youtu.be/a7RY-1LVTiM 


Cheers


See you over on YouTube

David C Barnett


Monday, March 25, 2024

LIVE Pat Ennis Exit Planner More to Exit Planning than just a Sale.

 


More to Exit Planning than just a Sale.

New Livestream guest- Pat Ennis, CExP, CAP®

I’m happy to have Pat join me on a live broadcast.

Pat has been in the wealth planning business since the 90’s and helping SMB owners plan their exit for over a decade.

Tune in and as we’ll be discussing getting a business ready for your exit and just what, exactly, that might mean.

This is a ‘must see event’ for anyone who owns a business or want to one day.

Be sure to join live so that you can ask questions, replay will be available.

Set yourself a reminder on YouTube here: https://youtube.com/live/ai-Hhe9PE98 

We’ll be going live March 25, 2024 at 1PM Atlantic Time and 12 Noon Eastern Time

See you there!

David C Barnett


Saturday, March 23, 2024

Navigating Due Diligence: How Long Should You Investigate Before Buying a Business

Today, let's tackle a crucial question from Bob, who experienced the challenges of insufficient due diligence time when buying a business. https://youtu.be/qJSlRfg62Ik


Bob rightly points out that during the initial stages of negotiations, everyone seems amicable and forthcoming with information. However, it's when you delve deeper into discussions with key staff and suppliers that the real insights emerge. So, the burning question is: How long should due diligence last when you're looking to acquire a business?


In a previous video, I shared the story of Jay, who found himself in a bind due to an impractical 10-day due diligence period. Buying a business involves numerous intricate components – employees, suppliers, receivables, vendors, customers, and more. Rushing through this process can lead to oversight and potential pitfalls. Watch the video here: https://youtu.be/-CF-b7QdctQ


During my time as a business broker, I adopted a unique approach to due diligence. Instead of limiting it to a set timeframe, I structured deals where due diligence began upon acceptance and continued until closing. 


This way, the buyer could scrutinize every aspect of the business without feeling rushed.


Now, from a seller's perspective, the idea of an extended due diligence period might seem daunting. To address this concern, we often implemented a milestone or benchmark within the process. 


For example, when the buyer wanted to engage with key employees or suppliers, breaking confidentiality, we made the deposit non-refundable.


This strategic move protected the seller's interests and ensured that buyers were committed before delving into sensitive discussions. By making the deposit non-refundable at a crucial stage, we encouraged serious offers and filtered out less committed buyers.


The key takeaway here is that due diligence should be thorough and comprehensive. Every business is unique, and setting arbitrary deadlines can jeopardize the quality of the investigation. Unlike real estate, businesses are complex entities with multifaceted operations that require time for a meticulous examination.


If you're buying a business, avoid getting locked into an unrealistically short due diligence period. From a seller's standpoint, it's essential to strike a balance between buyer confidence and protecting your business's confidentiality until the right stage in the process.


Remember, due diligence is your safeguard against a bad deal. If you're serious about buying a business, check out my comprehensive online program, "Business Buyer Advantage,". It's your roadmap to navigating the complexities of business acquisition and ensuring a successful deal.





Click here to download my Checklist to Unlock the Secrets How Long Should Due Diligence Last A Comprehensive.


Explore my blog in a nutshell with these awesome infographics! 



And make sure you’ve signed up for my email list while you’re here.


Cheers!


David C Barnett



Wednesday, March 20, 2024

Compete to buy the best business

 


***New Video Alert!

For every person who sells a business there are 10 buyers.

How does a buyer compete to get the best business?

Let’s discuss

Watch this week’s video here: https://youtu.be/5ip8bIUwU08 


Cheers


See you over on YouTube

David C Barnett


Monday, March 18, 2024

Live - Quickest way to find a business in the UK with Alfie Lambert- Bizcrunch.co


Quickest way to find a business in the UK.

New Livestream guest-> Alfie Lambert.

I’m happy to have Alfie join me on a live broadcast.

He’s the co-founder of BizCrunch.co, an online tool that makes it easy to find exactly the business you’re looking to buy in the UK.

Tune in and as we’ll be discussing the hows and whys of his new BizCrunch tool.

This is a ‘must see event’ for searchers in the UK.

Be sure to join live so that you can ask questions, replay will be available.

Also, Alfie has set up a special offer for any of you who want to try out the service.

Tune in and get the link/discount code.

Set yourself a reminder on YouTube here: https://youtube.com/live/b5VMMhT_Szo 

We’ll be going live Monday March 18, 2024 1PM Atlantic, 12 Noon Eastern Time

See you there!

David C Barnett


 

Saturday, March 16, 2024

The ABCs of Factoring in Business

Today, let's dive into the world of factoring – a financial tool that can be a game-changer for businesses dealing with accounts receivable. Watch the full video here:


So, what exactly is factoring? In simple terms, it's a financial process that allows companies to transform their accounts receivable into immediate cash. If you're in a business-to-business environment, offering trade credit is common – you provide goods or services, issue an invoice, and then patiently await payment, typically within 30 days.


Now, trade credit is industry-dependent. While fast-food businesses may receive instant payments at the counter, others, like those selling hard goods to retailers, might extend credit to clients. This credit allows retailers to sell goods, generate revenue, and pay the supplier within an agreed timeframe.


However, this seemingly normal practice can lead to a cash flow crunch for growing businesses. Imagine having to wait for 30 days or more to receive payment for each sale while still covering operational costs. This scenario can be detrimental, especially for businesses experiencing rapid growth.


This is where factoring companies step in. They address the liquidity crisis by purchasing accounts receivable. Let's break it down:

  1. The Asset: When you make a sale and issue an invoice, the resulting accounts receivable is essentially your asset. It represents the money your customer owes you.

  2. Factoring Agreement: A factoring company enters into an agreement with you to purchase these receivables. In exchange, they provide you with an advance amount – let's say $80 for a $100 debt.

  3. Payment Shift: Once the agreement is in place, your customer now owes the money to the factoring company, not you. You instruct your customer to pay the factoring company directly.

  4. Final Settlement: When the customer pays the factoring company, they deduct their fee (let's say 3%) and remit the remaining amount to you. In our example, you'd receive the remaining $17.


On the surface, it might seem like a fee, but the benefits are substantial. Factoring accelerates your cash flow, providing immediate working capital to cover costs and fuel growth. The fee incurred is comparable to credit card processing charges but can offer a significantly higher return on investment.


If you haven’t already, be sure to sign up for my email list at www.DavidCBarnettList.com 


Cheers



David C Barnett


Wednesday, March 13, 2024

The changing Value of your time

 


***New Video Alert!

What’s more important to you?

Money or time for personal pursuits and relationships?

This week, I take a stab at how to value your time and some very important considerations you need to make before you get into business.

Watch this week’s video here: https://youtu.be/KwNwBaZA1WA 


Cheers


See you over on YouTube

David C Barnett



Monday, March 11, 2024

Great Interview with the host of Vital Strategies Podcast Patrick Lonergan

How to Maximize Value When You Sell Your Businesses with David Barnett


Join host Patrick Lonergan in a dynamic episode featuring business exit plan expert David Barnett. With over 25 years of experience, David shares unique insights on selling and buying businesses, free from the conflicts of traditional approaches.


A seasoned expert in business exit planning, David brings unparalleled expertise to help entrepreneurs navigate the complexities of selling their businesses.


Explore the details of typical exit strategies with real-world examples and practical tips. Discover the art of structuring a deal that benefits both sellers and buyers, along with insights on post-closing payments for a seamless transition.

Saturday, March 9, 2024

Unveiling the Franchise Reality: A Freshii Perspective on Business Ownership

Today, I've got an eye-opening video to share about franchises, sparked by a recent news article.


Now, let's shift our focus to the pressing issue of franchises. As you may know, back in 2015, I penned a book called Franchise Warnings, shedding light on the pitfalls and risks associated with the franchise business model. Fast forward to today, and we're confronted with a recent news article about a Canadian franchise giant, Freshii, whose ambitious growth plans took a hit, leading to a 50% drop in stock value.

Freshii's CEO, Matthew Corrin, aimed to almost double their store count in 2019, but the reality was a far cry from expectations. The blame game began, with Corrin pointing fingers at underperforming franchisees and slower-than-anticipated growth in the UK and US markets. This situation raised eyebrows, prompting me to explore the deeper issues within the franchise model.

The franchise business model often relies on rapid expansion to attract investors and drive stock prices up. However, the consequences can be dire for individual franchisees who find themselves caught in the crossfire. Corrin's insistence on closing the bottom 10% of stores demonstrates a stark truth: franchisees don't truly own their businesses; they are merely extensions of the franchisor's larger enterprise.

This brings me to a cautionary tale from the past. The Great Canadian Bagel, once hailed as a success story with over 200 stores globally, now stands with only 20 locations, highlighting the transient nature of franchise success.

When considering a franchise, it's crucial to align your goals with the franchisor's and understand the potential risks. Franchise ownership may not grant you the autonomy and control you envision, as the franchisor's priorities may clash with your individual business aspirations.

In conclusion, as you navigate the world of business ownership, stay informed and consider all aspects before jumping into a franchise opportunity. And if you're hungry for more insights, head to davidcbarnett.com and sign up for my email list to gain access to exclusive content, including my holiday chat videos.

Thanks for tuning in, and remember, true success comes from informed decisions and strategic planning.

Until next time.

Dave Barnett.