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Business Growth Strategies: Double Your Customer Base Overnight by Peter Ireland

Entrepreneurs and Small Business Owners Can Use Acquisitions to Double or Triple Their Customer Base Overnight

 

Oftentimes it’s easier to significantly increase your customer base through the acquisition of competitors than it is with the more commonly used marketing route.  Anyone with at least a modicum of business experience appreciates just how challenging it is for an established business to grow its customer base by 10% per annum if it relies solely on marketing efforts.  On the other hand, the acquisition of a competitor can double, triple, or quadruple your customer base at deal closing.

business growth strategies

 Business Growth Strategies

 

 

What many business owners don’t realize is that it can be cheaper as well faster to go with the acquisitions growth strategy. To illustrate this, let’s take a look at cases where this was capitalized on from the recent past.  Specifically, let’s look at businesses which utilized subscriber revenue models such as cable-TV and Internet service providers.  If you owned a small system in either industry, you were faced with a choice of growth through marketing or acquisitions. Now suppose that you had set as your goal a doubling of your subscriber base in five year’s time. We will assume that this target is extrapolated from your growth rates over the last three years. An analysis of your customer acquisition costs needed to double your sales over three years may show that a marketing based strategy’s costs will exceed those of an acquisition strategy.  Morever, the acquisitions route will achieve your goal by doubling the subscriber base as soon as the deal is finalized.

 

Are you still not convinced that an acquisitions-base growth strategy is the way to go? Okay, let me throw in another reason to seriously consider this option: lower risk. Yes, if you know your business and industry and decide to buy-out a competitor your risk can be reduced because you are taking control of an asset that you understand and that has passed your due diligence. Imagine for a moment that you own and operate a pizza parlor and are looking for ways to expand. One day a marketing consultant calls on you to pitch a new marketing strategy which he promises will double your sales over three years–but at a substantial cost. The week after you are notified by a friend that your competitor down the street is for sale. Acquisition of this pizza joint would instantly double your revenue. You compare the prices of the two options and discover that they are only about 15% apart.

 

Which is the lower risk option? In most cases, the acquisition of an add-on profit center for your business. After all, you already know to successfully operate such a business and the lenders will trust you more than someone needing a loan to attempt some unproven growth strategy.

 

Business Growth via Acquisitions

 

Back in the 1990s, there was a great deal of M&A activity in the printing industry.  One large printer embarked on an acquisitions strategy to expand the market for its three core services: document scanning, fast high-volume printing, and distribution of legal documents, such as proxy statements and collections letters.  As a result, the company focused on acquiring small printers which offered only one of these three services. After the acquisition, the absorbed company would be able to offer its customers the expanded range of services made possible by the acquirer.  This, in turn, enabled them to win over larger local accounts that they could not have otherwise serviced before.

 

This is a typical example of what drives a company to employ an acquisitions strategy.

 

The Tycoon Playbook covers the details of designing a successful M&A strategy for small businesses and entrepreneurial companies.

My Top 10 Tips to Shorten the Life of Your Family Business by Tom Deans, Ph.D.

My Top 10 Tips to Shorten the Life of Your Family Business by Tom Deans, Ph.D.

 

Photo-colour-Tom-Deans

I’ve certainly enjoyed more than my fair share of quality time on airplanes to contemplate some of the fascinating family business stories I’ve collected on the speaking circuit.

 

It’s pretty common for professional speakers to spend a little time with audience members who confess their stories and share details about their family firm fiascos after an event – typically during the book signing.

 

Sadly, most of these stories are stranger than fiction. Some people who share their tales are looking for a kind of absolution for their family business sins. But dispensing penitence is a task I’ve never done particularly well; it’s always my cue to send someone in the direction of the advisor who hired me so that they can receive the proper professional care they deserve and require.

 

Underlying these tales of family business woe is always personal tragedy on a scale that for me is unfathomable: estrangement between children and parents and between siblings, and physical violence that’s been known to include murder – and I’m not kidding.

 

On a lighter note, as I vacation in Spain recharging my battery before another busy fall speaking season, I’ve prepared a lighthearted list of the Top 10 Tips to Shorten the Life of Your Family Business. Read ’em and weep.

Top 10 Tips to Shorten the Life of a Family Business

 

Tip #1

Invite all your children into your business as soon as they’re able to walk so that you can enjoy as much of their free labor as possible. Remember to promise them that “one day all this will be yours” and look closely for the excitement in their eyes. Those are tears of joy.

 

Tip #2
Always give the most important jobs to your eldest child (but only a male) and pay him (if you must) vastly more than your other children – this is how great family dynasties are built. It may seem unfair, but it’ll toughen some of them up and really set the stage for great Thanksgiving dinners for years to come.

 

Tip #3
Talk about your family business history often with your children and remind them that “we have always been (fill in the blank – shoemakers, dry cleaners, widget makers…)” and that this is all they will ever be. This will instill great pride and confidence that life is about tradition and not about pursuing their own dreams and definitely not about reaching their full potential. Talk about how Henry Ford should have followed in his father’s footsteps as a farmer and Steve Jobs in his father’s footsteps as a restaurateur.

 

Tip #4
Tell your children that the only reason you work so hard is so they will have a guaranteed job waiting for them when they graduate from school. Definitely do not let them work outside the family firm, for that will only build their self-confidence and fill their heads with crazy ideas about how other firms succeed in a changing world.

 

Tip #5
Some children who have watched their parents struggle and work hard at their business express a desire to pursue a different path. Mothers can play an important role in dissuading them from doing this by encouraging their husbands to hire the children (especially sons) and over-pay them for jobs they do poorly. This way, you can keep your children close and your grandchildren even closer. When this plan is in place, sit back and watch that special bond between a mother and daughter-in-law blossom – it’s really indescribable, especially when a son and his wife have no options because they could never replace their current salary elsewhere, especially when their only work experience is in the family business.

 

Tip #6
Always tell your non-family employees that there are two sets of policies and procedures – one for family and one for everyone else. This way, when your children show up for work at 11:00 a.m. (when they show up at all) and leave at 2:00 p.m., everyone will know they are following the rules and earning their bonuses. This is a fantastic technique for attracting talented non-family employees and retaining them for up to six months. The idea that experienced, long-serving employees are valuable to a business is highly overrated.

 

Tip #7
If you happen to be lucky enough to have one of those children who actually works harder than you – I mean really works long and hard – make sure you never discuss selling the business to him (and definitely never sell to a daughter, especially if she has an MBA). It’s always much better to leave your son – and your entire family – assuming that he will inherit the business. Hint at this plan but never really commit. Think of the excitement when your other children learn only when you and your spouse have died (likely when you’re both in your nineties) that in the spirit of fairness, you have left an equal number of shares to all the children. There is nothing like brothers and sisters becoming business partners late in life and working shoulder-to-shoulder, especially when one is married to a lawyer. Remember to keep your real business succession plan a secret – surprises are what make families strong.

 

Tip #8
Instill in your children the idea that a business is not about making money but rather about staying in business at any cost – the older the business, the better. Old is good! You can make this point by talking about how bankers will always lend money to an old family business to support its growth. But steer clear of examples involving buggy whips, slide rules and BlackBerries – they are just anomalies.

 

Tip #9
It is important to concentrate all your wealth in your business, especially as you near retirement. When you make money, reinvest it in your business year after year and tell your children that this is the full extent of your retirement plan. Tell them that when you die their mother will inherit the business and that she will need all of their help running it. If all goes well, the business will fail and everyone will gather round and reminisce about what a magnificent businessman you were – after all, clearly only you could run it profitably. This is okay because remember: you are dead and no longer require money.

 

Tip #10
Definitely do not write a will. Some of the best family moments come when everyone testifies in court and offers his or her own version of what you really wanted. Why deny your children an authentic Darwinian moment? Why deny them the sheer joy of learning who you really were as they riffle through your personal papers and slug it out mano-a-mano in open court? This makes for great front-page reading in your local paper. If you insist on a will, definitely do not get professional help writing it – those $9 do-it-yourself will kits are awesome and take only 10 minutes to complete. But remember, that’s 10 minutes of your life you’ll never get back.

 

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The 3rd Element of Planning by Rod Zeeb

rod zeeb

 

For centuries, “comprehensive planning” for most families has consisted of two elements: financial and estate planning. And for centuries, 90% of that planning has failed when measured by the objective of helping the family to retain both their family unity and their assets for more than two or three generations.

 

This is not a recent phenomena. Since ancient times, the majority of inheritance plans have failed. Two thousand years ago a Chinese scholar penned the adage: ”fu bu guo san dai,” or “Wealth never survives three generations.” In thirteenth century England they said “Clogs to clogs in three generations,” and in nineteenth century America the expressions became ”From shirtsleeves to shirtsleeves in three generations.” And, over 200 years ago, Adam Smith – of “specialization and division of labor” fame – summed it up in “The Wealth of Nations” when he said: “Riches, in spite of the most violent regulations of law to prevent their dissipation, very seldom remain long in the same family.”

 

henry viii photos

The basic principles of most of the Inheritance Planning today were put in place by King Henry VIII nearly five hundred years ago

 

This three generation cycle is not news to financial and legal professionals.  Ask a room filled with advisors how many have seen families torn apart by issues surrounding money and inheritance, and you will see every hand shoot up. And yet, traditional, two-element planning continues to be the dominant framework within which most people prepare for their futures. (By the way, when we say ‘traditional,’ we mean it: the basic system of inheritance planning used in the Western world today is not much different than it was in 1540, when England’s King Henry VIII pushed his Statute of Wills through Parliament and set in motion many of the processes and procedures we use to this day!)

 

Change comes slowly in the world of planning. The most significant changes since the 16th century have come about in just the past quarter century. In the mid-1980’s, Bob Esperti and Renno Peterson formed the National Network of Estate Planning Attorneys with a goal to “Change how America Plans” to use Living Trusts and avoid probates in even modest estates.  Within 10 years, the Network had grown to over 1,500 members, and Living Trusts were becoming the norm in all estate plans. The National Network of Estate Planning Attorneys helped change the way America did its estate planning; which was a wonderful accomplishment.

 

But, they still did not transform how America plans.  That is the goal of heritage planning, and the increasing number of advisors, non-profit officers and educators around the world who are introducing the 3rd Element of Planning to their constituents.

 

Register Today for our Upcoming Counselling the Affluent Program!

Do you have a Chief Legacy Officer? by Family Wealth Coach

Do you have a Chief Legacy Officer? by Family Wealth Coach

 

TomSorgeandAllisonMaherOct2011

No, that’s not a mistake in the title. But we wouldn’t blame you for thinking that, because Chief Legacy Officers are a relatively new idea.

 

We get lots of feedback about how much the “values and vision” concepts in our blogs resonate with readers. We can imagine though, that with everything else that’s going on in your life, it can be difficult to implement some of those ideas as effectively, efficiently and directly as you’d like. That’s where the Chief Legacy Officer comes in.

 

The idea behind the “Chief Legacy Officer” originated from the Family Office Exchange. It’s an idea that we’re enthusiastic about because a Chief Legacy Officer is to values and vision, what a CEO is to executive decisions, and a CFO is to financial decisions. We firmly believe that decisions about values, vision and mission play as crucial of a role in your business and family office as the executive and financial decision-making aspects. After all, there needs to be a driving reason behind making those executive and financial decisions.

 

A Chief Legacy Officer can help to define governance structures, and can be designated to implement some of the important concepts that we’ve discussed in past blogs such as engaging and educating the next generation.

 

This isn’t a fluffy role; it should be taken just as seriously as the selection of a CEO and CFO. However, one difference to consider between those roles and a Chief Legacy Officer is that experience isn’t always an asset. Leaving this role to the first generation can have risks. Incorporate the second and third generation’s views. The first generation’s take on all of this is great, but it will fade with them if the younger generation’s views are not also considered.

 

Incorporating a Chief Legacy Officer gives you the opportunity to focus attention and energy on all angles of your family business and estate—not just the obvious ones.

Epigenetic Transformation: You Are What Your Grandparents Ate: Pamela Peeke

Epigenetic Transformation: You Are What Your Grandparents Ate: Pamela Peeke

 

Dr. Peeke is an internationally renowned physician, scientist, expert and speaker in integrative medicine. Acclaimed as one of America’s top physicians, Dr. Peeke is a Pew Foundation Scholar in Nutrition and Metabolism, Assistant Professor of Medicine at the University of Maryland and Fellow of the American College of Physicians. She was the first senior research fellow at the National Institutes of Health Office of Alternative Medicine, studying the effects of chronic stress on the human body. She is WebMD’s lifestyle expert, co-host of RadioMD’s HER radio show, and a popular in-studio medical commentator for the national networks and media. 

A New York Times bestselling author, Dr. Peeke’s latest release, The Hunger Fix, is the first consumer book describing the newly emerging science of food, addiction and epigenetics. Dr. Peeke is founder of the Peeke Performance Center for Healthy Living, guiding people through the mental and physical transformations of their life journeys. 

Frederic Kaplan: How I built an information time machine

Frederic Kaplan: How I built an information time machine

 

time machine

 

Imagine if you could surf Facebook … from the Middle Ages. Well, it may not be as far off as it sounds. In a fun and interesting talk, researcher and engineer Frederic Kaplan shows off the Venice Time Machine, a project to digitize 80 kilometers of books to create a historical and geographical simulation of Venice across 1000 years.

Frederic Kaplan seeks to digitize vast archives of historical information to make maps that move — through time.

WHY YOU SHOULD LISTEN TO HIM?

 

Frederic Kaplan is the Digital Humanities Chair at Ecole Polytechnique Federale de Lausanne (EPFL) and the EPFL’s Digital Humanities Lab Director. Kaplan leads the lab in applying computation to humanities research. His latest project is the Venice Time Machine, a collaborative work archiving 80 kilometers of books from throughout 1000 years of Venetician history. The goal of the time machine is to create an information system which can be searched and mapped. Think of it as a Google Maps for time.

 

Kaplan holds a PhD in artificial intelligence from the University Paris VI. He lives in Switzerland.

 

 

Needs: What’s Real & What’s Aspirational by Dr. Bill DeMarco

Dr. Bill DeMarco

Values, History and Folklore, are the core elements of culture at a point in time.  They are our link to our personal past…handed down to us by all those who came before us. This is true of our ethnic culture, our tribal culture, our national culture, our religious culture, and our personal culture, to name just a few.   Since we are the link to our past, we are caretakers of something precious as we hand it down to future generations.  Since culture is a living thing, it does change over time, but ever so slowly.  Just think about it; there is some behavioral mannerism, belief, perception that you got from an ancestor who lived a hundred or many hundreds of years ago.  To use a modern expression, “You are Connected”.  There really is nothing new under the sun, other than our choice of what we will do with our cultural inheritance.  Since culture is a living phenomenon, we will make our choices and then pass the culture on to future generations, along with our contributions.  That is the way it is and that is the way it will continue to be.

Image 1: DeMarco Culture Model

© 2003 Dr. Bill DeMarco

All of this gets us back to our discussion of Values.   I described Values as “the unique blend of perceived NeedsBeliefs, and Attitudes that live in the behaviour of most members of a society”.   Needs are one of three segments of the Values element of my Culture Model (Image 1).  Needs, along with Beliefs and Attitudes, taken separately and in their interaction, make up our unique Values proposition.

Within a cultural context, Needs are similar to what Abraham Maslow (Image 2) describes as the fundamental requirements for survival, safety and belonging. They have everything to do with the necessities of the human condition, and nothing to do with a luxury car in the garage, a kitchen with granite counter tops, and two weeks in Saint Kitts! The latter, at the extreme end, has more to do with our image of “Esteem”.

 

 

Image 2: Maslow’s Hierarchy of Needs

 

 

Maslow’s work linked Needs to motivation.  While his groundbreaking work is still challenged by some, I find his conclusions compelling.  Satisfying individual and group needs at the three basic levels in the above image greatly facilitates our ability to incorporate our Beliefs into our Values system. Remember I wrote earlier that if we want to know what our real values are, look at our behaviour and not our words.  There is a strong link between our ability to survive and our ability to put our Beliefs into action.

 

Here is a simple exercise that can help identify our real personal needs. It involves reading and reflecting on the bottom three categories of Maslow’s Hierarchy of Needs (Image 2).  Then make a list of what those Needs look like in your life.  Put that under a category labeled “Needs”.  Everything else that comes to mind, put under a category labeled “Wants”.  There is nothing wrong with “Wants”…Just don’t confuse the two!

 

Meaningful reflections!

 

Dr. Bill DeMarco

 

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A Time Traveller’s Primer: Ryan North

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Ryan North is the author of the long-running Dinosaur Comics (qwantz.com), the acclaimed Adventure Time comic series (kaboom-studios.com), and the recordbreaking To Be Or Not To Be: That Is The Adventure (hamletbook.com) a choose-your-own-path re-imagining of Hamlet. He also coedited the bestselling Machine of Death anthology (machineofdeath.net).

He studied Computational Linguistics at U of T (utoronto.ca). He is 32 years old and lives in Toronto with his wife and dog, Noam Chompsky (chompsky.tumblr.com).