Inadequate Marketing and Sales Efforts

Inadequate Marketing and Sales Efforts When Selling a Business

In Issue #58, we discussed the obstacle created by Low or Inconsistent Gross Margins.  This issue will provide insight on another commonly encountered obstacle which can negatively affect cash flow, and thus valuation - Inadequate Marketing and Sales Efforts.

A Favorite Famous Quote
"If you do what you've always done, you'll get what
you've always gotten."  Anthony Robbins

Inadequate Marketing and Sales Efforts When Selling a Business

Inadequate sales and marketing efforts leads to inadequate seller's discretionary cash flow which results in an unsalable business.

Based on my past business brokerage experience, the great majority of small businesses have little or no marketing/sales efforts or plans in place.  Amazingly, though, when asked how a prospective buyer might be able to grow the business, the typical owner would provide a litany of marketing-related activities that "the new guy" could implement to substantially increase sales.  Unfortunately, in most cases, by the time I met with the average owner, he had to sell quickly due to “outside forces” or circumstances beyond his control, and didn't have the time, desire or inclination to implement what he knew should be done.

Work on your business, not in it

So, why didn't owners implement a marketing program several years before I talked with them?  Inertia - the tendency of a body at rest to remain at rest or a body in motion to stay in motion in a straight line unless acted on by an outside force.  We are all so involved in our day-to-day activities and responsibilities that those same behaviors become our inertial "straight-line" (typically downhill).  "We can't see the forest for the trees."  As a small business owner, at times it's important to work on your business, not in it.

Where to start?

Anywhere.  Doing something is better than doing nothing.  Especially (as discussed in Issue #6) if your Seller's Discretionary Earnings are under $100,000, you need to do something, otherwise you might not have a saleable business.   Remember, one definition of crazy is "doing the same thing over and over and expecting a different result."

Quite frankly, by that definition, many small business owners I've met over the years are "crazy."  But, they don't need drugs, they need to Overcome the Power of Inertia.

Again, where to start?  Imagine you were talking with a prospective buyer for your business.  The buyer asks, "How can I grow this business?"  Your response to that question is your clue as to where to start.  Pick out the two least expensive options and implement them.  By doing so, you will Overcome the Power of Inertia.  You'll be surprised by the positive reinforcement and results achieved from simply implementing one improvement, and it will lead to bigger and better marketing/sales ideas.

You can increase your cash flow by acquiring more customers, selling more (and more expensive) products to existing customers, increasing the profitability of each sale and, in some cases, "firing" unprofitable customers.  Know your niche, be aware of your strengths and weaknesses, target your market ...