Are You Ready to own your Own Business?

Gordon Bizar
1 Mar 202438:38

Summary

TLDRGordon Bizar hosts a webinar advising entrepreneurs on determining their readiness to own a business. He provides an 11-question self-assessment covering industry experience, financial preparedness, leadership skills, time commitment, and other areas. Bizar then reviews 6 critical concerns including financial analysis, legal due diligence, market research, operational review, growth potential, and value addition. He concludes by highlighting 6 essential skill sets for successfully running an acquired business: leadership, financial management, marketing/sales, operations, adaptability/problem-solving, and industry knowledge.

Takeaways

  • πŸ˜€ You must evaluate if you have the experience and knowledge to succeed in the industry you want to enter
  • 😊 Make sure you understand the financial commitment and risks of business ownership
  • πŸ‘ Analyze potential legal issues and ensure regulatory compliance before acquiring a business
  • πŸ” Research the market, competition, industry trends and outlook thoroughly
  • βš™οΈ Review operational processes, systems, equipment and workforce quality
  • πŸš€ Consider the growth potential and how you will enhance the business’ value
  • πŸ€” Identify if your skills and capabilities align with the business’ needs
  • 😎 Develop leadership, financial, marketing, operational and problem-solving skills
  • πŸ“ˆ Understand how to read financial statements to make informed decisions
  • πŸ’‘ Be open to advice from mentors and build industry-specific knowledge

Q & A

  • What are some key things to assess when considering acquiring a business?

    -Some key things to assess are your industry knowledge and experience, financial preparedness, leadership and management skills, ability to handle uncertainty and stress, problem-solving skills, vision and goals alignment with the business, time commitment required, and your exit strategy.

  • What are some hidden liabilities to look out for when analyzing a business's finances?

    -Some hidden liabilities to look out for are unfunded or underfunded pension plans, undisclosed debts, pending lawsuits or legal disputes, and issues with compliance to regulations.

  • Why is it important to understand financial statements when owning a business?

    -It's important to understand financial statements to effectively analyze your revenue streams, expenses, and profitability to make informed business decisions. The statements provide critical data to manage cash flow, ensure profitability, and determine areas for improvement.

  • What causes many business owners to hit a plateau in growth?

    -Many business owners hit a plateau in growth because they struggle to delegate tasks and responsibilities. They continue trying to do too many things themselves rather than building teams and management systems.

  • How can you determine if a business's processes are becoming less efficient?

    -Key performance indicators (KPIs) can track processes from month-to-month to detect inefficiencies. Shifts in the metrics will stand out compared to baseline goals.

  • Why are marketing and sales skills important for a small business owner?

    -Marketing and sales are critical for small businesses to drive revenue, especially when there isn't an established sales team in place. The owner often needs to directly oversee finding new customers and closing sales.

  • What are some key operational expertise skills needed?

    -Some key operational expertise skills are supply chain management, inventory control, quality assurance, process optimization, and being able to innovate solutions to tackle issues.

  • Why is adaptability important for business owners?

    -Adaptability is key because the business environment changes rapidly. Being open to new ideas, adapting to market changes, making decisions under pressure, and finding creative solutions are essential.

  • Should you acquire a business in an industry you have no experience in?

    -It's better to gain some initial industry-specific experience first rather than take on the steep learning curve of unfamiliar areas on your own in a new business.

  • What should you add to a business to pay down debt faster?

    -Value-added offerings that boost earnings, cash flow, and growth rate allow debt to be paid down quicker while still having surplus cash for reinvesting and profit.

Outlines

00:00

🀡 Introducing today's webinar topic: assessing your readiness for business ownership

Gordon introduces the webinar topic - evaluating if you are truly prepared and qualified to own your own successful business. He will go through 11 key questions to ask yourself and provide a downloadable self-assessment checklist document.

05:00

🀡 Reviewing 6 critical leadership and management skills needed for business owners

Gordon emphasizes the importance of having strong leadership and management capabilities before acquiring a business, including motivating employees, resolving conflicts, delegating properly, and more.

10:01

🀡 Assessing your financial management skills and ability to understand financial statements

Gordon stresses the necessity of having at least basic financial management skills to run a business successfully. This includes reading financial statements, managing cash flow, tracking expenses, and making informed decisions.

15:02

🀡 Considering the time commitments and personal sacrifices often required of business owners

Gordon notes that owning a business requires long hours and significant personal sacrifice, especially in the early days. Reflect carefully on your willingness and ability to commit the required time and energy.

20:02

🀡 Evaluating your stress and uncertainty tolerance along with problem-solving abilities

Gordon emphasizes the importance of handling uncertainty and stress well, along with having strong creative problem-solving and quick decision-making abilities - all crucial for business owners.

25:03

🀡 Identifying the 6 most critical concerns to address before acquiring a business

Gordon outlines the 6 key areas that must be addressed before proceeding with a business acquisition - financial analysis, legal due diligence, market/industry analysis, operational review, growth potential and value addition.

30:03

🀡 Reviewing the 6 most essential skill sets needed to run a business after acquisition

Gordon lists the top 6 skills needed to successfully operate a newly acquired business - leadership, financial management, marketing/sales, operational expertise, adaptability and problem-solving, and industry knowledge.

35:04

🀡 Answering audience questions about affiliate programs and readiness evaluations

Gordon responds to a participant's query about affiliate programs. He emphasizes assessing your weaknesses and seeking experienced advice to become truly prepared for business ownership.

Mindmap

Keywords

πŸ’‘business acquisition

The process of purchasing an existing business. The video discusses assessing your readiness to acquire a business, key concerns to address before acquisition, and necessary skillsets to run the business after acquisition. Examples of discussing business acquisition include the sections 'are you qualified to own a business' and 'six most critical concerns to address before acquiring your business'.

πŸ’‘financial management

The ability to manage budgets, understand financial statements, and make informed business decisions based on financial data. The video emphasizes financial management as an essential skill, stating business owners need to "analyze financial data to make informed decisions, manage cash flow effectively, and ensure the business remains profitable."

πŸ’‘leadership skills

Skills to effectively lead teams and organizations. This includes inspiring employees, setting a vision, making strategic decisions, planning, and overseeing operations. The video lists leadership and management skills as one of the "six most important skill sets needed to run your business after acquisition".

πŸ’‘operational expertise

Deep knowledge of a business's day-to-day operations including supply chain, inventory, quality assurance and process optimization. The video emphasizes the importance of operational expertise to run a business efficiently and compete successfully.

πŸ’‘problem solving skills

The ability to creatively solve problems and tackle challenges. The video states problem solving skills allow business owners to "make critical decisions under pressure and find creative solutions to various issues" within a dynamic business environment.

πŸ’‘sales skills

Skills in marketing, driving sales, identifying target audiences and developing compelling offers. The video states understanding sales and marketing is "critical" even for small businesses, as driving revenue growth is essential.

πŸ’‘scalability

The ability of a business to scale up operations and grow over time. Assessing scalability is called a "critical concern" when evaluating a business to acquire, to ensure alignment with growth objectives.

πŸ’‘succession planning

A strategy for transitioning ownership and leadership of a business. The video poses "what is my exit strategy" as an important self-assessment question and discusses options like passing the business to children or selling it.

πŸ’‘value added

Increasing a business's earnings, cash flow and growth rate by improving operations, products/services after acquisition. The video emphasizes the importance of having a value-add strategy before acquisition to transform and enhance performance.

πŸ’‘vision

Having clarity on where you want to take the business in the future. The video discusses aligning your "strategic vision" to your goals and planning business growth intentionally based on that vision.

Highlights

Assess your readiness and qualifications to acquire and run a business through 11 key questions

Ensure you have the necessary industry knowledge and experience before acquiring a business

Evaluate if you are financially prepared for the investment required to acquire a business

Consider if you possess strong leadership, management, delegation and team-building skills

Assess your financial management skills including budgeting, accounting and analyzing statements

Reflect on your time commitment and willingness to make personal sacrifices as a business owner

Evaluate your stress tolerance and ability to make decisions under pressure and uncertainty

Determine if you are a self-starter who can self-motivate and have an entrepreneurial mindset

Have a clear strategic vision and goals for the business you aim to acquire or start

Be open and willing to continuously learn, adapt and evolve as the business landscape shifts

Address key concerns like financials, legal, market, operations before acquiring a business

Consider what value-added elements you can bring to increase the business's growth potential

Assess alignment of your skills, experience and vision with the business's opportunities and needs

Develop key skill sets like leadership, financial management, marketing, operations and problem-solving

Gain industry-specific knowledge and continuously learn from experts and mentors

Transcripts

play00:00

good morning good evening good afternoon

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whatever time it is for you wherever you

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are right now and welcome to another

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session of bizar financing I'm Gordon

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bizar and topic for today is are you

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ready to own your own business I'm

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continually surprised at the number of

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people who come through bizarre

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financing Essentials and when I have the

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opportunity to talk with them in many

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cases they are not ready to own their

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own business and so I want to review

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that with you today because being in a

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place where you're ready for the

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opportunity to seize it when it comes

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along is critical and and there isn't

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anything that would cause you to be not

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ready that can't be fixed and fixed

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really quickly so here we go today and

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I'm going to take you through a selfs

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survey and a checklist of things to do

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that will make you business ready so

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when that opportunity is there for you

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you can sees it with confidence and

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execute it successfully I want to bring

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your attention to the message in the

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lower right hand corner and that's

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download the document from the handout

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section we wanted this to be a true

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survey and checklist for you so I wanted

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to have a handout that goes over the

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things that I'm going to cover today so

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that you have it in your hands you can

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perhaps review it as we're going through

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it but more importantly after our

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webinar is over today is something that

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you can now work through as a checklist

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to make sure you're on track to be

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business ready to own and operate your

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own successful business all right topic

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today are you qualified to own a

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business of your own I'm going to go

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through 11 questions to ask yourself and

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then based on your own answers and you

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don't have to give them to me today but

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you are going to want to make note of

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them for yourself because they're going

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to tell you where you are in the process

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of being business ready when considering

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the acquisition of a business it's

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crucial to ask yourself a series of

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introspective questions to assess your

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Readiness and qualifications this self

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assessment can help you understand

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whether you're well suited for the

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challenge and the responsibilities that

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come with acquiring and running a

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business and here are 11 essential

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questions to consider to ask yourself

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one is do I have the necessary industry

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knowledge and experience

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assess your understanding of the

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industry in which the business operates

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so in other words if you're going to go

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into a specific field you need to spend

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some time with yourself and ask yourself

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what do you know about this business do

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you really understand the industry that

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it's in and do you understand how a

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business in that industry operates and

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then consider whether your background

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and experience align with the business's

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requirements I see so many people in my

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career here that are mismatched they go

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into something that they know nothing

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about and then they struggle and many

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times fail not because they're not conf

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ENT or intelligent or hardworking or any

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of that it's because they start out

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behind they start out where they don't

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really know or understand an industry

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and even though the seller may stay on

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and train them the learning curve can

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still be long and the experience if it

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isn't there can be lethal it can

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literally be lethal first question to

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ask yourself second question is am I

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financially prepared for this investment

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it's an investment of money it's an

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investment of time it's an investment of

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your ego if you undertake something and

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don't make it work it's a big investment

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for your family it's a big investment to

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go into a business you're literally

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doing something life-changing so the

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question you want to ask yourself are

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you financially prepared for this

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investment that is multifaceted in what

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you're going to invest but understand

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the financial implications of acquiring

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a business now we cover that in many

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ways here in bizar financing so you're

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in the right place to learn this stuff

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you also want to consider if you have

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the capital required or if you can

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secure financing now a lot of you are

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here in bizar fin ing because you don't

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have a lot of capital or you're not sure

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if you can secure financing you may have

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an impaired credit rating all of those

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things we have techniques for but you

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don't want to remove yourself from the

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fact that business is about money it's

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about accumulating money the more money

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you have access to the better you can be

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in business the more success you can

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have and so all along the way you're

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going to want to be looking at how do I

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get more Capital into my pocket to make

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my business work how do I get more

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Capital into my business it's a

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NeverEnding process in business and the

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more you can get comfortable with your

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ability to raise money to understand the

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sources understand their requirements do

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the things that are required to position

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yourself to accomplish this frankly the

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more successful you're going to be also

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think about your ability to manage

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Financial Risk I talk to again people

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all the time they got Capital they have

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the ability to get loans and financing

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but they're paranoid about financial

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risk putting their signature on a piece

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of paper that could obligate them is

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paralyzing if you're that way you got to

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get past that you got to get past that

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in order to be successful in the

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business your ability to manage

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Financial Risk to undertake it properly

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but not be afraid of it when the

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opportunities are there and the time

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comes is again a very essential part of

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your preparation to be a business owner

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third question is do I possess

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leadership and management skills if all

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your life you have found yourselves in

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positions where people were telling you

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what to do and now maybe you're upset

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you want to be in a business because you

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don't want anybody telling you what to

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do anymore but you never been in a

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position of leadership or you've never

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been in a position where you've had to

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develop management skills then this is a

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critical area that you're going to have

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to address before you Walt into your

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business of your own because this is

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where these characteristics have to be

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present in you and you might want to be

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thinking about the experiences you need

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to have to prepare you for business

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ownership so you want to evaluate Your

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Capacity to lead and manage a team this

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includes your ability to motivate

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employees manage resources and navigate

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business challenges all of those things

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you got to have a comfort factor with

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them if you really want to see yourself

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as prepared to own your own business

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number four is how strong are my

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financial management skills you're going

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to be managing money that's what you do

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in business and you want to consider

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your ability to manage a budget

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understand financial statements and make

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informed decisions now I have to tell

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you I talk to people who have been in

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business for years 10 20 years and they

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can't read a financial statement I can

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also tell you these people never grew

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their businesses they remain mama papa

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small operations since the day they took

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over the business or since the day they

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started the business they never Advanced

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because they didn't understand what a

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financial statement tells them about

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their business and how to make decisions

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based on what those numbers tell you and

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I tell them all the time look you got to

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take an accounting course County 101 you

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don't have to be an accountant you have

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to have an ability to understand figures

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to look at a financial statement being

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able to look at it and read it in a way

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that it's telling you where your weak

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spots are where your strengths are where

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you're underperforming all those things

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are important and they can come right

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out of that financial statement now

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again in bizar financing Pro we have a

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whole section on reading a financial

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statement and we make it really simple

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really basic so that everybody can

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follow it understand it understand what

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those numbers mean make decisions from

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those numbers really important but

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before you wal into the business you got

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to know this stuff why because even

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before you're in the business if you're

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acquiring it guess what you've got to do

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you've got to be able to assess the

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value of what you're buying and that's

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going to be in those financial

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statements in their tax returns you got

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to have ability to look at those and

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understand what all those numbers mean

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and they will scream out at you what's

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right about the business and what's

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wrong about the business and you've got

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to be able to read that if you're going

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to be in a business of your own question

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number five am I prepared for the time

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commitment and personal sacrifices again

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I talk to people all the time who have

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up till now or up till the time they

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came here they've been employees and

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when the 5:00 whistle blew they wanted

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to go home and they didn't work

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Saturdays they didn't work Sundays they

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didn't take work home with them they

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understood that their families came

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first I still think an entrepreneur's

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family may come first but you're going

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to be making some serious time

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commitments to a business and the

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personal sacrifices that you and your

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family may be asked to make need to be

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understood running a business often

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requires long hours and significant

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personal sacrifice and it especially

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requires that in the early days of your

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business whether you're starting it or

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whether you're requiring it you got to

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get your sleeves rolled up you got to

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dig in there you got to understand every

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aspect of what's going on you've got to

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check the things that are happening even

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if you have people handling things for

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you you got to be able to follow up and

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supervise them and you can't let

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anything slide because it's your money

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on the line when you own the business

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nobody else's and employees even if they

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work for you even if they're good

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employees it's not their money and they

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don't perceive things they don't handle

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things quite the same as you want them

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handled and as you would handle them and

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until you get great people working for

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you and until you have great systems in

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your business you're going to be

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spending a significant amount of time

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handling those areas where only the

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person whose money is at risk whose

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business is at risk will pay that level

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of attention and reflect on your

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willingness and ability to commit the

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necessary time and energy if you're

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saying to yourself oh look I love

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football I love sailing I love skiing

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that's where I'm spending my time on the

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golf course guess what you're not ready

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to own a business because your time has

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to be committed to the building of that

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business especially in the early days

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can I handle stress and uncertainty this

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is important because business ownership

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can be unpredictable and stressful

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that's the nature of business no matter

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how big you get it's always going to be

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true and even when you're big and you

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have teams of people working for you and

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you're successful and rolling this is

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unpredictable you don't know what the

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competition is going to come up with you

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don't know when something's going to

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happen to your supply chain and all of a

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sudden you're virtually out of business

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because you can't get your product or

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the parts to manufacture the rest of

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your inventory of final products and so

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it's stressful and access your ability

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to cope with uncertainty and make

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decisions Under Pressure some people get

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paralyzed when they're under pressure

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they can't make a decision and they

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vacillate and they go back and forth and

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they flip and they flop can't do that if

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you're going to run a business you've

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got to be able to get your arms around a

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problem cope with the uncertainty

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understand you'll make wrong decisions

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and you'll fix them as soon as you see

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that they're wrong and you got to be

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able to make the decisions Under

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Pressure you can't go home and have a a

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hot drink okay you got to be able to

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just simply be on it deal with it

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question number seven is do I have

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effective problem solving and

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decisionmaking skills you'll know that

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because you've done things in the past

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that show you have that that you're a

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good Problem Solver you see what's wrong

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very quickly you're Innovative and how

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do you come up with a a solution you'll

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try some things if they don't work

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you'll retry something a little

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different and you'll keep working it

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until you solve it and then having the

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decision-making skills to actually make

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that decision and make it in a way

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that's flexible but yet assertive enough

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that it has a chance to succeed but

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being willing to change if it doesn't

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consider your ability to analyze

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situations solve problems and make

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strategic decisions all right question

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number eight am I adaptable and willing

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to learn now I'm an old guy I joke

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around about that but I've been in

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business for 55 years plus so I'm at an

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age where people are supposed to be

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fixed in their ways they're supposed to

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be not very malleable I have to tell you

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I am and I remain adaptable and willing

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to learn that a day goes by in my life

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that I'm not willing to learn something

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new in fact seek out things new to learn

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because the economy changes the

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marketplace changes people change rules

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and regulations change technology

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changes everything you do today is

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changing so fast that if you aren't

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adaptable and willing to learn

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constantly then you're going to get left

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behind in that business and so adopting

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that attitude towards life that I'm

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adaptable and willing to learn and I

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never think I know so much that I

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nothing more for me to learn can't be in

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that place the business environment is

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constantly changing and so reflect on

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your willingness to adapt learn new

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skills and evolve with the business

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because your business is among the

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things that will be changing the way it

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works who's employed there who your

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suppliers are who your customers are

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everything's going to be changing

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everything constantly and you've got to

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be able to flow with that number nine do

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I have a clear vision and goals for the

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business without Vision the people

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perish and it's also true about

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businesses you need to have a Clear

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Vision for what you want this business

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to be what you see its end products are

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what is the goals for that business what

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your mission is you should have a vision

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statement and a mission statement for

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your business so that they're clear and

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you can communicate it to other people

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and so if you're just stretching along

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looking for a business and you find the

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business and you just let it go where it

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was going and you just try and manage

play11:54

little parts and pieces of it here

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thinking you can fix this fix that it's

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not the way to be successful in a

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business you have to have a clear vision

play12:00

of where you want the business to go a

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Clear Vision that's consistent with

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what's going on in this great world

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that's around your business and how that

play12:08

world impacts your business and how your

play12:10

business impacts the world and where it

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is that you want that business to go and

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then you got to break that down into

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goals that are reasonably achievable

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that you can monitor and track and make

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sure that you're on track for the

play12:21

achievement of your vision think about

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your strategic vision for the business

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and whether you can align this Vision

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with your personal goals and values

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that's why so important picking the

play12:30

right business because business has to

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be one that fits your vision and how you

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see yourself manifesting your goals in

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life through your business so if you're

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going to be business ready you really

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want to have a strategic vision for that

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business and you want to be able to

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align it with your personal goals and

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values number 10 is am I a self-starter

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again I talk to a lot of people who have

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come through bizarre financing for years

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remember we started this first one of

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these in 1980 so it's been a long time

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and I have a chance to interview people

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and to find out who's successful and

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who's not and it comes down to are you a

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self-starter and that's a question that

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you want to ask yourself no one will be

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managing you or supplying you with the

play13:09

pathway forward it's you have to start

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yourself you have to be the motivator

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and you may often find yourself in a sea

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of uncertainty where you and you alone

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must discipline and motivate yourself

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nobody is going to give you a poke in

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the butt and say get out there and do it

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okay when you're into business for

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yourself you are the poker you are not a

play13:28

pokey and so if you look at yourself and

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be honest with yourself you got to be a

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self-starter you got to be

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self-motivated you got to be disciplined

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because nobody else is there to impose

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those things on you when you're an

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employee you got supervisors you got

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managers you got Executives you got a

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board of directors you got people who

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will down a line of command a chain of

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command enforce discipline and Supply

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motivation you don't have that it's you

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you got to have it for yourself and

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lastly number 11 for the questions that

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you should ask yourself is what is my

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exit strategy now are we getting in

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front of ourselves here we're looking at

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the end and we're not even at the

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beginning and the answer is yes okay

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because the idea of a business is you're

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going to build it and what are you going

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to build it towards what you build it

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towards depends on how you see yourself

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exiting the business are you going to

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have a succession plan and pass it on to

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your kids are you going to have a

play14:18

succession plan that allows your key

play14:21

Executives to take it over and buy it

play14:22

from you are you going to want to just

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sell it in the marketplace are you going

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to to take it public in other words

play14:26

what's your exit strategy with this

play14:28

business because the day you walk in

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that door you have to be building that

play14:32

business to optimize it at your exit

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that's your strategy and if you don't do

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that you're going to be wasting years

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building a business in the wrong

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direction as opposed to having it be

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what you need it to be at the time that

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you're ready to exit the business so

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it's important to consider not just how

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you enter into the business ownership

play14:50

but also how you might exit or

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transition out of it in the future now

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these 11 questions are questions that

play14:56

you should spend a considerable amount

play14:58

of time with with after this webinar is

play15:00

over and you want to sit in a quiet

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place and you want to ask yourself these

play15:03

questions and if you sit at your

play15:04

computer or you have a pad and pencil or

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a pen in your hand you want to make

play15:08

notes you want to see how you answer

play15:10

these questions and then a week or two

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from now you want to revisit them and

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say is this really the way I feel is

play15:15

this really the answer for me is this

play15:17

something that I can change is this

play15:19

something I'm willing to do differently

play15:20

that's the purpose of these questions

play15:22

because they will position you they will

play15:24

position you to be a great business

play15:26

owner you come up with the right answers

play15:28

be will willing to seek advice from

play15:30

experienced entrepreneurs mentors or

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business advisers the reason that this

play15:34

is important is no matter how successful

play15:36

you ever are in your business there'll

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always be people who know more than you

play15:40

do there'll always be people who have

play15:41

had more experience or had a different

play15:43

set of experiences that gave them

play15:44

different lenses that enable them to see

play15:47

things differently than you do and by

play15:50

understanding how they see it their lens

play15:52

their experience and their advice advice

play15:55

can be gold to you because their eyes

play15:58

that you didn't didn't have their ears

play15:59

that you didn't have their experiences

play16:02

that you didn't have the opportunity to

play16:03

go through all of which can contribute

play16:05

Great Value to the building of your

play16:07

business so be willing to seek advice

play16:09

they can provide valuable insights and

play16:11

help you make more informed decisions

play16:13

none of us know everything and when we

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think we do that's the beginning of

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failure all right you never know

play16:17

everything you want to surround yourself

play16:19

with people who are smarter than you are

play16:21

people who have done more than you've

play16:22

done people who have had experiences you

play16:24

haven't had the time to have and you

play16:26

want to benefit from the insights that

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they can give you okay now we're going

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to shift gears a little bit your sixth

play16:32

most critical concerns to address before

play16:35

acquiring your business if you don't

play16:37

address these six concerns you're

play16:39

limiting your ability to get into the

play16:41

business or succeed with it afterwards

play16:43

so let's take a look at them and see how

play16:45

it is that we can address those critical

play16:47

concerns in a way that's meaningful for

play16:49

us and our businesses acquiring a small

play16:51

business is a significant decision and

play16:54

it's crucial to address several key

play16:55

concerns before proceeding and here are

play16:58

the six most critical areas to consider

play17:01

one financial analysis this involves a

play17:03

thorough review of a business's

play17:05

financial statements including profit

play17:06

and loss statements balance sheets and

play17:08

cash flow statements so if you're saying

play17:10

to yourself I'm not a good numbers

play17:12

person I am not good in math I don't

play17:14

understand financial statements they are

play17:15

Greek to me then you're not alone for

play17:19

one thing that's true of a lot of people

play17:20

but you need a rudimentary understanding

play17:23

of the financial aspects of a business

play17:25

and if you take a course called

play17:27

accounting one you're not going to be in

play17:28

accountant which you'll understand the

play17:29

stuff basically you'll know a debit from

play17:31

a credit you'll know what the p&l

play17:33

actually tells you the profit and loss

play17:35

you'll know how to understand income

play17:36

you'll know how to understand expenses

play17:38

if you're smart you'll also pay

play17:39

attention when they talk about certain

play17:41

financial ratios and again we have a

play17:43

very thorough section on this in Pro

play17:45

because it is so essential otherwise you

play17:48

have no way to really understand the

play17:50

intricacies of your business and what

play17:52

contributes to its success and what

play17:53

doesn't it's all broken down into

play17:55

Financial numbers on these statements is

play17:57

the very hard part and basis of a

play17:59

business and in order to understand what

play18:01

your business is doing good bad or ugly

play18:03

you've got to understand at least the

play18:04

rudimentary aspects of financial

play18:07

statements understand the revenue

play18:08

streams expenses and profitability where

play18:11

do they come from how do they manifest

play18:13

through your business remember you're

play18:14

going to be looking at a company now to

play18:16

buy so you got to be able to look at

play18:17

those financial statements and see

play18:18

what's working right in the business and

play18:20

what isn't otherwise you're buying a pig

play18:22

up poke as they say you got a big bag

play18:24

that's surrounding this company and if

play18:25

you don't have the ability to open up

play18:27

the bag and see what's in the bag you

play18:28

may not like what's in the bag once you

play18:30

own it right so it's really important to

play18:31

do this and you want to check for any

play18:33

hidden liabilities or debts sometimes

play18:35

people say they're hidden how do I find

play18:37

them right how do I find them there are

play18:38

tests that an accountant can do based on

play18:41

certain invoices and check ledgers they

play18:43

can go in and do a search to see where

play18:45

evidence pops up that there is this

play18:47

liability but it's not showing up on the

play18:48

books anywhere so there is ways to do

play18:50

that and you don't want to go into a

play18:51

business blind do you want somebody on

play18:53

your side who knows how to just do a

play18:54

quick check to see if this company has

play18:56

hidden liabilities or debts one of of

play18:58

them is in the pension plans of some of

play19:00

these companies they have what are

play19:01

called unfunded pension plans or not

play19:03

fully funded pension plans so it shows

play19:06

that they have these employees they have

play19:07

all of this money put away in a plan for

play19:09

when they retire the problem is it isn't

play19:11

enough to provide what the plan calls

play19:13

for so when the person retires the

play19:15

company has to pull from its then

play19:17

earnings to pay off some of that

play19:19

retirement so if that's true you're

play19:21

buying a company where you're going to

play19:23

be the one who owns it at the time that

play19:25

it has to pay for that portion of the

play19:27

employees retirement they're gone

play19:28

they're not contributing to your

play19:30

business but now it's you not the old

play19:31

owner who's playing for the employees

play19:33

pension that motivated that employee at

play19:36

the time the old owner owned the

play19:37

business not you all really important

play19:39

stuff so you're going to check for

play19:40

hidden liabilities and debts and it's

play19:41

often wise to involve a financial

play19:43

advisor or an accountant to help you

play19:45

with this because you're not supposed to

play19:46

be an accountant but you need to know

play19:48

that there are these pitfalls here that

play19:50

you need some professional help

play19:51

sometimes to watch out for you the next

play19:53

critical concern is legal due diligence

play19:57

examine any legal concerns associated

play20:00

with the business this includes

play20:01

reviewing contracts leases and

play20:03

agreements with suppliers and customers

play20:05

also includes any employment contracts

play20:07

the list goes on and on so again you

play20:09

want to have a legal professional who's

play20:11

available to you especially for your

play20:13

first purchase now even today I hire

play20:15

lawyers to help me with an acquisition

play20:17

but I've been through so many of them

play20:19

that I don't need to hire them on day

play20:20

one in fact I draft most of the

play20:22

agreements myself there are things that

play20:24

I undertake for due diligence and review

play20:26

but at the end of the day after after

play20:28

I've drafted the agreement I'll still

play20:29

send it to my attorney and I'll say to

play20:31

sprinkle holy water on this and what

play20:33

that means to them is we don't want them

play20:34

to write the agreement we're not going

play20:36

to pay them to write the agreement we're

play20:37

going to pay them just to make sure that

play20:39

we haven't overlooked something silly

play20:41

that we should have caught or that maybe

play20:43

there's been a change in a rule or a

play20:44

regulation or a tax or something like

play20:46

that that only somebody who does it

play20:48

every day would know that changed and so

play20:51

that's why we do that but after a while

play20:53

you'll have less and less Reliance on

play20:55

legal professionals but on the first one

play20:57

or two you're going to be paying for the

play20:58

education okay you're going to pay them

play21:00

but you're going to learn you're going

play21:01

to see what goes into the agreement

play21:02

you're going to have these agreements in

play21:03

your file cabinets or on your computer

play21:05

when it comes time to write an agreement

play21:06

you literally take it use it as a

play21:08

template you write it yourself and then

play21:09

you just send it to your attorney saying

play21:11

sprinkle some holy water on this you can

play21:13

do that once you've been through two or

play21:14

three of these ensure there are no

play21:16

pending lawsuits or legal disputes now

play21:18

attorneys do searches for that they have

play21:20

the software and the S Services that

play21:22

enable them to go in and search for any

play21:24

of these types of things that you would

play21:26

have difficulty doing without those kind

play21:27

of services

play21:28

compliance with local state and federal

play21:30

regulations is also crucial you don't

play21:32

know that the business isn't for sale

play21:33

because the city just put through a new

play21:35

zoning ordinance that now puts this

play21:37

business out of business because it

play21:38

can't stay there any longer it can't

play21:40

conduct that kind of business in that

play21:41

environment any longer so you got to

play21:43

know all that stuff so you're going to

play21:44

have to get a little professional help

play21:45

here but the point is legal due

play21:47

diligence without it you could be buying

play21:50

a disaster and that's the reality of it

play21:52

consider Consulting a lawyer with

play21:53

experience in business Acquisitions

play21:55

because it's only somebody who's done

play21:57

business acquisition it's really going

play21:58

to be aligned with the right information

play22:00

that you're going to need okay critical

play22:01

concern number three is a market and

play22:04

Industry analysis understand the market

play22:06

in which the business operates analyze

play22:08

the competition market trends and the

play22:10

overall health of the industry they're

play22:12

critical to the future of your business

play22:14

you don't want to go in where the

play22:15

competition is going to clean your clock

play22:17

or where market trends are heading in

play22:18

the wrong direction or where the overall

play22:21

health of the industry is in serious

play22:23

decline you don't want to do that so a

play22:25

little bit of research work and Analysis

play22:27

there is going to be really important

play22:29

and it's important to assess whether the

play22:31

market is growing stable or in Decline

play22:34

and how the business fits into the

play22:36

broader industry landscape so you're

play22:37

going to want to know all this so that

play22:39

you can acquire the company with

play22:41

confidence and if you own a business you

play22:42

want to go through the same evaluation

play22:44

because do you want to continue to owe

play22:45

this business or maybe it's time to get

play22:47

out maybe it's time to sell it to

play22:48

somebody else and research a different

play22:50

business to go into that's healthier and

play22:51

then number four is an operational

play22:54

review look into the business's

play22:55

operational aspects including the

play22:57

efficiency of process processes the

play22:58

condition of equipment Inventory

play23:00

management and the quality of the

play23:02

workforce what kind of employees do they

play23:04

got are they drug addicts or are they a

play23:06

serious Workforce with high levels of

play23:08

training and education high levels of

play23:10

commitment loyal workers who've been

play23:12

there for a long or a reasonable amount

play23:14

of time that they're committed to the

play23:15

company that the company's probably

play23:16

treated them right along the way so that

play23:18

there's a mutual affection of the

play23:20

company for them and them for the

play23:21

company an operational review how does

play23:23

this company function do they produce

play23:24

quality product do they have a high

play23:26

return rate because they don't how to

play23:28

manufacture correctly or they don't

play23:30

package well so things break there words

play23:32

what's going on with the company truly

play23:34

you want to understand all of its

play23:36

aspects and assess the business's

play23:37

location infrastructure and Technology

play23:40

systems today every business has a

play23:42

technology system of some kind and

play23:43

you've got to understand it you got to

play23:44

know it works you got to know they're

play23:46

operating reasonably at the

play23:47

state-of-the-art they don't need the

play23:49

state-of-the-art but they don't want to

play23:50

be too far behind either and if they are

play23:52

then you've got to have as part of your

play23:54

plan how you going to fix that what are

play23:55

you going to do don't overlook the fact

play23:57

that if you're going to change change

play23:58

the technology systems you have this

play23:59

thing called behavior modification which

play24:01

is very difficult in adults everybody

play24:03

wants to do things the way they've

play24:05

always done them you don't want to be

play24:06

the person that goes into the business

play24:08

says I know how to do this with today's

play24:09

modern technology and new processes and

play24:11

all these things can be different and I

play24:13

can take this struggling barely growing

play24:15

business and I can turn it into a

play24:17

rapidly increasing state-of-the-art

play24:19

company to be the Envy of the industry

play24:21

and the reason that you can't do that or

play24:22

you certainly can't do it easily and you

play24:24

can't do it inexpensively is because

play24:25

everybody you got working there does it

play24:27

the way they do it now they love the way

play24:28

they do it now they don't want to change

play24:30

and they will resist that change that

play24:32

resistance can mean that you can go

play24:34

literally years and still not have your

play24:36

new technology new processes implemented

play24:38

and all along the way you got people

play24:40

sabotaging you because they don't want

play24:41

to change it's the human nature folks

play24:43

it's out there it's what you have to

play24:44

deal with operational strengths and

play24:46

weaknesses can significantly impact the

play24:48

future success of the business all right

play24:50

you got to know what they are you got to

play24:51

be realistic about anything that needs

play24:52

to change you got to be realistic about

play24:54

your ability to change them but you got

play24:55

to know how they do it you got to know

play24:56

how it needs to change you got to be

play24:58

able to evaluate that number five future

play25:00

growth and scalability you don't want to

play25:02

buy a business that just stays the way

play25:04

you bought it you got to grow it which

play25:06

means there's got to be scalability

play25:08

within that business consider the

play25:10

potential for future growth and

play25:12

scalability this involves evaluating the

play25:14

business models viability in the long

play25:16

term potential areas for expansion and

play25:18

the capability of the business to scale

play25:20

up operations so if they're still doing

play25:22

things with pens and paper and in order

play25:24

to triple and quadruple your volume it's

play25:26

got to go digital you got to know that

play25:28

you got to understand that you got to

play25:29

know what you can do in that business

play25:30

and what you can't so if you're going to

play25:32

buy a business unless you want to run it

play25:33

the same 10 years from now as it's

play25:35

running right now and have the business

play25:36

never grow or never produce anything you

play25:38

really got to look at this element this

play25:40

concern this critical concern for what's

play25:43

the future growth and scalability of

play25:44

this business also consider your own

play25:46

vision for the business and whether it

play25:48

aligns with its current trajectory maybe

play25:50

you're buying a company and it's growing

play25:52

five or 10% per year and there's nothing

play25:54

wrong with that they don't have staff

play25:56

there they don't have people there they

play25:57

don't have a Marketplace there that

play25:58

aligns with your vision to double and

play26:00

triple your sales year after year after

play26:02

year okay so you got to make sure that

play26:04

there's an alignment with your

play26:05

expectations and what the business

play26:06

itself and the industry itself is

play26:08

capable of there's got to be an

play26:10

alignment all right and number six this

play26:11

is the one to me that's probably the

play26:13

most important I shouldn't say that it's

play26:14

just very important very important and

play26:16

it's value added and what this means

play26:18

essentially is asking yourself the

play26:20

question of what are you going to add to

play26:21

the business that will increase earnings

play26:23

cash flow and the rate of growth because

play26:25

that's where value is in the business

play26:28

okay but it only happens if you add

play26:30

value so if you're buying a business and

play26:32

it's on a trajectory of 5% growth per

play26:34

year that's all you're going to get when

play26:35

you own the business unless you do

play26:37

something dramatic to add a new product

play26:40

to add a new service to change a process

play26:42

to do something that adds value to that

play26:45

business so that when you own it it's

play26:47

capable of increasing its earnings

play26:48

beyond what the old owner was able to do

play26:50

increasing its cash flow beyond what the

play26:52

old owner was willing to do and creating

play26:54

a steeper incline in its rate of growth

play26:56

so it's going to grow FAS faster and

play26:58

more dynamically than the old business

play26:59

and it's because you added something to

play27:01

that business and before you buy that

play27:03

company exactly what it is that you're

play27:05

going to add and exactly what that

play27:07

addition is going to do to earnings cash

play27:09

flow in rate of growth if you are using

play27:11

financial leverage other words you're

play27:12

going to borrow a lot of money to buy

play27:14

the business which is part of bizar

play27:15

financing we find ways to leverage all

play27:17

this financing that we need to acquire

play27:19

your business and if you paid a fair

play27:22

market price for the business all of the

play27:24

existing cash flow that comes with the

play27:25

business now will be consumed Debt

play27:27

Service it's an axiom okay you take the

play27:30

business you paid fair price for it you

play27:31

borrowed all the money to pay for it

play27:32

none of it was yours now where does that

play27:34

cash flow in that business go every

play27:36

penny of it is going to go to pay off

play27:37

your debt service it's by definition if

play27:39

you paid market price and you're

play27:40

borrowing at Market rates then every

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dollar you earn is going to go into

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paying off that debt that doesn't do you

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any good now you have no cash left over

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to grow you have no cash left over for

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you to have a nice life and you're going

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to spend five to seven years in the

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business advertising debt you don't want

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to do that so you're going to have to

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add something when you own the business

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that means your business is now worth

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way more after you own it because of

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what you've done the additions you've

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made the things you brought to that

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company that make it a more viable

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company that increased the cash flow and

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now that increase in cash flow the

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increase in earnings the faster rate

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growth enables you to pay down that debt

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faster and as a result of paying it down

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faster is also Surplus cash that's left

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over for growth and for you to put in

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your pocket and go to Hawaii with or

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wherever it is you like to vacation so

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adding value very important so added

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earnings cash flowed growth rate are

play28:26

essential for your business to succeed

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because you're going to leverage but now

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you got to add something in order to

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make that leverage really pay so value

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added very important concern know how

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you're going to do it before you sign on

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the dotted line to buy the company

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understand your goals and capabilities

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in running the business assess whether

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your skills experience and resources

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align with the needs of the business and

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remember acquiring a business is not

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just about its current state but also

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about its potential and how well it fits

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with your objectives and capabilities

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much bigger process than just just say

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oh it's a good business that's made

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money in the past that's not enough

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let's talk a little bit about the six

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most important skill sets needed to run

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your business after acquisition you need

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certain skill sets if you're going to be

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successful running the business so you

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don't want to buy the business and then

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sit there and say oh my gosh I don't

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know how to do this I don't have the

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skill sets to do this I better go back

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to school you know want do that all

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right so six most important skill sets

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needed to run your business after

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acquisition so you're going to focus on

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how do you make sure you have these six

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important skill sets so that when you're

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in your business you're Rip Roar and

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ready to go successfully running a small

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business after acquisition requires a

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diverse set of skills and here are six

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of the most important skill sets one is

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leadership and management skills

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effective leadership is crucial this

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includes the ability to inspire and

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motivate employees set a Clear Vision

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and make strategic decisions those are

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skill sets you need to have you need to

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be comfortable with them management

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skills are equally important for

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organizing planning and overseeing

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business operations all right remember

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you're in a business it's not just you

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you got all these people that are

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working for you you're going to have

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teams dedicated to certain functions

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they have to be inspired motivated they

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have to have a clear vision and then you

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have to make strategic decisions make

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the decision and you enforce those

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decisions because if you don't the

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employees will do what they want to do

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and that's not where you want to go

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being able to delegate tasks manage a

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team and resolve conflicts is key one of

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the single biggest reasons that people

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who go into a business whether they

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start or buy they get to what's called a

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plateau and they can't get any further

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okay no matter what they do the business

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won't grow it's a plateau year after

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year the business is stagnating it might

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be making money but it's stagnant and

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the single biggest reason is the

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remember an owner is a doer right

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they're really good at doing stuff

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that's how they got into business in the

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first place and they will give a task to

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an employee the employee will screw it

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up they'll take it back and continue to

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do it themselves can't do that can't

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grow that way you've got to develop a

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skill set that enables you to delegate a

play30:50

task monitor the performance of what's

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Happening educate and instruct so that

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the person understands how to do it how

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to do it well and that there's a

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supervision process that makes sure that

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they do it well and then after a while

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what will happen is that employee will

play31:03

get so good at doing it they'll do it

play31:04

better than you did but it's got to be a

play31:05

process it's got to be an ability to

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delegate and then manage a team of

play31:10

people orchestrate between the team

play31:12

members as to what needs to happen

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you've got good team leaders then you

play31:15

don't have to do too much of that but

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you won't get good team leaders until

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you yourself have been a good team

play31:18

leader and you understand what goes into

play31:20

it and that you're able to resolve

play31:22

conflicts quickly because if you got

play31:23

people butt in heads about how

play31:25

something's going to get done you want

play31:26

to be able to resolve that conflict

play31:28

before it becomes counterproductive all

play31:29

right leadership and management skills

play31:31

crucial growing a business okay so this

play31:33

is an important skill set you got to

play31:35

work on it you got to develop it

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financial management a solid

play31:38

understanding of financial management is

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essential this includes budgeting

play31:42

financial planning accounting and

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understanding financial statements so

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this isn't the first time today you've

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heard this right so it's really

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important that you have a background in

play31:50

this stuff you have a comfort level with

play31:52

it you may have an employee who is more

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of an accounting type than you are and

play31:56

they run these numbers and they do these

play31:57

things but you have to understand them

play31:59

you have to be able to interact with

play32:00

that employee to ask the right questions

play32:02

and to make sure that they're

play32:03

undertaking it in a way that's going to

play32:05

get you the results that you're looking

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for you should be able to analyze

play32:08

financial data to make informed

play32:10

decisions manage cash flow effectively

play32:12

and ensure the business remains

play32:14

profitable I can't tell you how many

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people don't know how to read financial

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statements don't understand the numbers

play32:18

they're doing something and months go by

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when something has changed and all of a

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sudden the business is losing money and

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they don't know why they don't know what

play32:26

costs went up they don't what process

play32:27

slowed down they don't know because they

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don't have a way to track it without the

play32:30

numbers you don't know now there are

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some things maybe that might be obvious

play32:34

and you can fix those things without

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understanding the numbers but at the end

play32:36

of the day your business is multifaceted

play32:38

it's got so many moving parts to it that

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unless you have good track numbers

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unless you have what are called key

play32:43

performance indicators kpis that track

play32:45

different processes in the business and

play32:47

in month-to month you can see when those

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kpis are shifting and you know by the

play32:51

shift in that kpi that this is less

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efficient than it's always been or it's

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not meeting the efficiency goal that you

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set for it for the next month if you

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don't have that you're trying to run the

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business blind it's like flying by the

play33:00

seat of your pants it's like getting in

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the cockpit of a plane and saying I

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don't know what all these instruments

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tell me so I'm just going to fly by

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field all right that's not the pilot I

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want taking me in my plane that's not

play33:10

the way that the business should work

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financial management you got to sit in

play33:13

that driver's seat and understand it the

play33:15

next area that you need to have a skill

play33:16

set in especially in a small business is

play33:18

marketing and sales skills and

play33:20

understanding how to Market your product

play33:22

or service effectively and drive sales

play33:24

is critical now in a small business it's

play33:26

hard retire good salespeople and if you

play33:29

don't know how to sell your product and

play33:30

you aren't the one who gets out on the

play33:31

road and makes things happen with new

play33:34

customers new sales new introductory

play33:37

offers that get people wanting to buy

play33:38

your prod if you don't how to do all

play33:40

that you're in Deep D my friend okay and

play33:42

the reason is that unless you're buying

play33:44

a company that's got a great sales team

play33:46

you're the only one who's going to be

play33:47

able to get in there and do that and if

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you don't have that skill you shouldn't

play33:50

buy that company because I can't tell

play33:52

you again how many people buy companies

play33:53

they're not good in sales they're good

play33:55

in process so they work in the business

play33:56

they improve all the processes and the

play33:58

company's getting more efficient and

play33:59

everything's going well they're not

play34:00

selling anything all right so all of a

play34:02

sudden the company's income is slowing

play34:04

down and it becomes non-existent and

play34:05

they go out of business and they had

play34:07

great processes they had a great product

play34:08

everything was wonderful they couldn't

play34:10

sell okay you need those skills and even

play34:12

if you got a partner who has the skills

play34:14

that at least gets the skills into your

play34:15

business but somebody in that business

play34:17

better be really good at marketing and

play34:18

sales and this includes knowledge of

play34:20

digital marketing market research

play34:22

customer relationship management and

play34:24

sales strategies all important be able

play34:27

to identify and Target the Right

play34:29

audience develop compelling marketing

play34:31

campaigns and close sales are vital

play34:34

components okay all of these things are

play34:37

important number four operational

play34:39

expertise operational expertise this

play34:41

involves understanding the day-to-day

play34:43

operations of the business what does it

play34:45

do how does it do it who does it what's

play34:47

the supply chain look like skills in

play34:49

Supply Chain management inventory

play34:51

control quality assurance and process

play34:53

optimization are important okay because

play34:56

your business has to be efficient

play34:57

otherwise your competitors will clean

play34:58

your clock these have to be things you

play35:00

have your arms around and that you have

play35:02

the ability to look at things and see

play35:04

when they're not working right and read

play35:05

numbers and let the numbers tell you

play35:07

when things aren't working right and

play35:08

then be Innovative that through both

play35:10

experience and insight being able to

play35:12

innovate Solutions all of which are

play35:14

built around operational expertise

play35:16

efficiently managing the operation

play35:18

ensures the business can deliver its

play35:19

products or Services effectively while

play35:22

maintaining cost Effectiveness that's at

play35:24

the heart of your business operational

play35:25

expertise all right number five

play35:27

adaptability and problem solving skills

play35:30

the business environment is dynamic and

play35:32

being adaptable is key to survival and

play35:35

growth and this includes being open to

play35:36

new ideas adapting to Market changes and

play35:39

being Innovative strong problem solving

play35:41

skills are necessary to tackle

play35:43

challenges make critical decisions under

play35:45

pressure and find Creative Solutions to

play35:47

various issues to me this is what makes

play35:49

running a business so thrilling because

play35:50

I love this stuff I wake up in the

play35:53

morning and I love to solve problems and

play35:55

I love to tackle challenges that I love

play35:57

to make critical decisions see what

play35:59

happens change if I have to find

play36:00

Creative Solutions to various issues if

play36:02

you don't like that stuff and you're not

play36:03

good at it you might want to look at how

play36:05

can you shift your attitude a little bit

play36:07

how can you adapt to having this more

play36:09

present in the way you approach things

play36:11

but adaptability and problem solving

play36:13

skills crucial to building a business

play36:15

and the last of these is industry

play36:17

specific knowledge again I talk to a lot

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of people who go into a business and

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sometimes they'll tell me look I'm fed

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up with the industry I'm in I don't want

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to ever see this type of business

play36:26

business or industry again I want to go

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into something totally new you can do

play36:29

that but now you got a learning curve

play36:31

okay and you shouldn't do it where the

play36:32

learning curve is in your own business

play36:34

you should take that learning curve by

play36:35

going to work for somebody else who has

play36:37

that type of business and let the

play36:39

learning curve happen there instead of

play36:41

happening when you own a business and

play36:42

now you hav a clue what to do in certain

play36:44

situations so going into a business you

play36:46

should go there with a certain amount of

play36:48

Industry specific knowledge before you

play36:50

buy that company or start that business

play36:52

for that matter in addition to these

play36:54

skills it's also important to have

play36:55

industry specific knowledge related to

play36:58

the businesses you're acquiring it's

play36:59

important understanding the nuances of

play37:01

the industry can greatly enhance your

play37:03

ability to make informed decisions and

play37:05

succeed in your Venture continuous

play37:07

learning and being open to seeking

play37:09

advice from mentors or industry experts

play37:11

can also be extremely beneficial this is

play37:13

the second time you've seen this okay

play37:14

mentors industry experts can be

play37:16

tremendously beneficial but if you have

play37:19

a learning curve to learn in Industry

play37:20

you want to equip yourself to learn it

play37:22

quickly to learn it with a mentor to

play37:24

learn it with a guide to learn it with a

play37:25

partner but you've got to have this

play37:27

because if you don't there are people

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who are competitors in your industry

play37:30

that have been doing it for a very long

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time they've succeeded because they've

play37:33

done it well and they will eat your

play37:35

lunch if you don't have a minimum amount

play37:37

of Industry specific knowledge so much

play37:39

for the six most important skill sets

play37:41

let's take a look at the questions that

play37:43

you might have having been through all

play37:45

of this are you ready to have your own

play37:47

business any questions let's start with

play37:50

the written one here do you have an

play37:51

affiliate program I have a distribution

play37:53

network available derell send me an

play37:55

email to question at bizar financing yes

play37:58

we do have an affiliate program I have

play37:59

pride of authorship here but I really do

play38:01

believe that our bizarre financing is

play38:03

one of the best business success courses

play38:05

in existence our success rates and

play38:07

people taking our programs are very high

play38:09

please get in touch with me derella

play38:10

happy to talk to you about that

play38:11

hopefully the information that we shared

play38:13

with you is valuable in terms of getting

play38:15

yourself ready and positioned to be a

play38:18

great business owner so that when your

play38:19

opportunity comes you're going to be

play38:21

Stellar thank you for being here I look

play38:22

forward to seeing you on the next ones

play38:24

that we do which are the fourth

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Wednesday of the month so that's for

play38:28

Essentials and if you're Pro and you're

play38:30

here remember we have a pro webinar also

play38:32

on the second Wednesday of each month

play38:34

looking forward to seeing you all then

play38:36

until then I wish you all the best of

play38:37

success

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