"So I go to a directory of industry associations. The American Society of Association Executives has one at www.asaenet.org. I get the association's phone number and call up the executive director. Executive directors love to talk. I explain what I'm looking for and ask for help. Has the industry newsletter run any articles about valuing a business? Does one of the association's board members know about valuations? Is there a banker or investment banker who's familiar with valuation practices in the industry? You can usually get what you need without too much difficulty."
Backlash
Two and a half years ago my friend and I left the company where we worked and started our own business. I'd been in our former employer's customer-service department, and I'd heard constant complaints about the company's poor service and failure to support its customers. My friend and I were determined to do better. As soon as we sent out our marketing material, the business took off. Our sales doubled from year one to year two. But recently our growth has slowed, partly because of the economy but also because our former employer has stepped up its marketing and undercut our prices. How should we respond? --Christopher
We turn again to our marketing maven, Inc 500 CEO Max Carey of Atlanta-based Corporate Resource Development Inc. "Christopher and his friend should respond by doing now what they should have done two and a half years ago," he says. "They should have anticipated that their former employer would come at them with a vengeance, and they should have developed a plan based on that likelihood.
"Frankly, it's quite possible that the old company's salespeople have been told to do whatever is necessary to take business away from Christopher's company. There's only one way to fight back in that situation. You need to have a value proposition that appeals to the decision makers at different levels of the customer's organization.
"When you start a business, you're typically dealing with the buyers, who focus on price. Someone like Christopher, who doesn't have the overhead of his former employer, can come in and offer better service at a lower price, and it works until the big company decides to take him out. To survive, you have to offer something that appeals both to the buyers, who will insist that your prices be competitive (although not necessarily the lowest), and to the senior managers, who are looking for tools to help them grow and improve the company. Figuring out what all those people want requires research, but Christopher and his friend have to do it, or they'll be sitting ducks for their former employer."
Should I Stay or Should I Go?
I have a business that I purchased from my dad when he retired, in 1985. My goal has been to run a $10-million company, and we are two-thirds of the way there. Lately, we've been approached by companies wanting to buy us. The business is doing great, and overall I still enjoy running my own company. On the other hand, who knows what lies down the road? I am 50 years old. Should I be giving serious consideration to selling? --Peter
You should definitely give it serious consideration, Peter, but that doesn't mean you should accept one of the offers you've received. "I don't think Peter is ready to sell," says Bill Samuels Jr., president of Maker's Mark, the legendary bourbon distiller. "It sounds as though he'd really enjoy the satisfaction of reaching his goal.
"That said, he should absolutely be preparing for an eventual sale. Right now Peter still has a lot of options open to him, and he has time to create new ones. If he waits too long, his options will narrow. When he goes to sell the company, the buyer will control the agenda.
"In particular, Peter should think about bringing in a couple of strong young managers to help him reach his goal more quickly. He could have an understanding with them that if certain conditions are met, he'll sell them the company. In the worst case, he winds up with a stronger business, and the managers have shared the burden. They'll also give him a sounding board, which is even more important in a small company. I know I became a much better manager when we started hiring smarter people -- because I had someone to talk to."
HAVING TROUBLE SLEEPING LATELY?
Could you use some advice from an experienced entrepreneur who has been where you are and figured out what works and what doesn't? Send your questions to incquery@inc.com. Editor-at-large Bo Burlingham, aided and abetted by Street Smarts columnist Norm Brodsky, will find the best people around to answer them. If you don't like their answers -- well, you can tell us that, too.
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The Bulletproof Business Plan
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