Small Business Guides

UK Business Advisors Ltd

Small Business Guides Getting the Most Out of a Limited Sales & Marketing Budget..........................2 Pay-Per-Click (PPC) Advertising for Small Companies......................................5 Public Relations (PR) for Small Companies.............................................................6 Sales for Small Companies.............................................................................................8 Manufacturing for Small Companies.........................................................................10 Installing Quality Systems for Small Companies.................................................12 Business Process Improvement for Small Companies.....................................13 Human Resources (HR) for Small Companies.....................................................14 Health & Safety (H&S) for Small Companies........................................................15 Getting the Most Out of Your Accounting Systems............................................16 Raising Finance for Small Companies.....................................................................18 Getting the Most for Your Company When You Decide to Sell.....................20

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This straightforward 4-step process has been successfully used to help many small and medium sized enterprises get the most value from their sales and marketing budget.

Applicable to all types of businesses it has become practical and cost effective because of the new opportunities and facilities available to small businesses by the Internet, websites, low cost and powerful computer systems and, more recently, digital and lower cost printing.

Your challenges, opportunities and problems are unique. However these four practical steps have been proven time and again to lead the way to substantially improved profitability.

STEP 1. A BUSINESS DEVELOPMENT PLAN Are your marketing materials, brochures, websites, sales activities and IT systems working together properly to help you successfully achieve your business objectives?

Although it is inexpensive to do, this first step, a business development plan, is fundamental if you are to successfully get the best value from your website, marketing and sales activities.

This first step starts with a systematic and structured review of all the important aspects of your business.

These should include: owners goals and objectives for the business; an analysis of the products and services you offer; a thorough understanding of your customers, who they are and why they buy from you; detailed knowledge about competitors, who they are and how they operate; industry structure, your company’s strengths and weaknesses; and any major changes in your marketplace.

The outcome of this first step should provide good answers to the following questions: • What products and services to offer?

• In which markets and market segments to operate?

• Who are the best potential customers?

• How best to reach them?

• How best to convince them to buy your products and services?

• What differentiates you from your competition?

In addition, this first step should provide a fresh perspective and uncover substantial new opportunities and improvements to your existing practices.

Much of the research can be successfully carried out on the Internet, but it should be remembered that this information is also easily accessible to your competitors.

In order to gain competitive advantage it is absolutely vital that you are fully aware of your competitors and what they are doing in your marketplace and how they are likely to respond to any marketing you do.

Sometimes the business planning process throws up unexpected first priorities such as the need to make better use of IT systems to improve productivity.

Although creating a business development plan can be carried out in house there are significant benefits to this work being done by an external person or organisation.

Firstly the time involved. Are there people within your business who have the time to do this as well as perform adequately the role they are employed to do?

Secondly will your people be able to use a tried and tested methodology? This helps get to the heart of the matter quicker. Also, will your people have the experience to ask the right questions and interpret those findings correctly?

Thirdly will your people be able to bring fresh eyes and experience to your business? This is often difficult for somebody working on a dayto-day basis within the business.

The Business Development Plan does not need to be a lengthy document. We recommend one to four pages.

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STEP 2. WEB SITE DESIGN & IT SYSTEMS Are you using your website to cost effectively test out your marketing communications?

The business plan should give you a clear vision of how to move your business forward and where you want it to be in 2 and 5 years time.

Your website should accurately reflect not just who you are, but who you want to be. In every instance where we have completed a business development plan for a client, it has resulted in substantial changes to their website if they already had one.

A website is the least expensive medium in which to develop, change, experiment, monitor and publish. And therefore makes an ideal platform on which to prototype your marketing messages.

Once you are sure it is effective you can confidently publish in more expensive media such as printed leaflets, brochures and advertisements.

If correctly planned from the outset, this also allows maximum reuse of the text and graphic material produced for the website, reducing development and production costs of your other marketing material as well as creating a consistent company image.

Your website should act as the "master document" for all your marketing messages.

The images and text on the website should always be the most up to date reference point whenever you are creating any other form of marketing communications.

Your website allows you to inexpensively publish comprehensive information about your company, it’s products and services. If the website comes up high in the free search engine listings, it can also attract new customers very cheaply.

As the Internet has become more and more popular as an everyday business tool and more companies are trying to exploit it’s potential, the criteria for getting your particular website high up on search engines have become more complex and sophisticated.

To achieve high free search engine positions, a website needs to be designed with this in mind from the start. You also need to know which two or three keyword terms are most likely to be typed in by a potential customer when searching the Internet for the sort of products or services you provide.

With a small marketing budget this is absolutely vital. It is also extremely important to make the website easy to navigate by potential customers. This is most easily done

by having a rollover menu near the top or near the top left hand corner. It is also important to develop a consistent page identity, so that visitors always know when they are on your website and when they leave it.

Your web designer therefore needs to be able to demonstrate the ability and experience to provide you not only with websites that are easy to navigate, but are also optimised for the search engines.

In addition to the actual design of your website other aspects need careful consideration.

These include: domain name selection, web hosting; email set-up; website maintenance; and up-date planning to ensure costs are kept as low as possible and the best value for money is achieved.

Quite often businesses operate in more than one market or market sector and in such situations more than one website and domain name may be required to achieve the best results.

STEP 3. MARKETING COMMUNICATIONS If the very essence of marketing is clear persuasive communications, how effective are your marketing materials?

Your marketing communications should answer your potential customer’s key questions: • Who are you?

• What do you do?

• What’s in it for me?

• What makes you better than others?

Having completed steps one and two, your website will already clearly and persuasively have answers to these questions.

The business development plan will also have indicated what mixture of sales and marketing activities to pursue and included priorities and cost estimates.

Therefore as soon as the first release of your new or redesigned website is completed, you will be well prepared to begin developing specific marketing programmes, reusing the proven text and graphics from your website.

Before Windows XP, it was not practical for small businesses to bring Desk Top Publishing (DTP) in house, as previous PC systems were not capable of handling photographic files properly.

Now Windows XP, combined with low cost powerful computers and software, allow the production facility for quality marketing tools to be brought in-house cost effectively.

Add in inexpensive digital cameras producing good high resolution photographs that can be cropped and manipulated by the software and it really does become practical for even the smallest businesses to help produce their own high quality marketing materials.

This can further reduce the cost of developing and prototyping your marketing and sales campaigns, which can now be targeted individually or to very small customer groups.

In the past year, breakthroughs in printing technology have resulted in significant reduction in the cost of high quality, short run printing.

Very small companies can now present themselves to their customers in ways that have only previously been cost effective for much larger organisations.

Any printed material should reinforce the information on the website.

It is extremely important that a consistent identity and message is projected in order to get the best return from your marketing spend.

STEP 4. SALES CAMPAIGNS Does your company make effective presentations to well qualified customer prospects?

For most businesses that provide products or services to other business the actual sales discussion is usually conducted in a face-toface meeting.

The website, printed sales material and the marketing programmes must all support these sales meetings and compliment what is communicated verbally.

Often the website, a printed leaflet or flyer will be the first point of contact with your company, so it must do the initial selling and motivate a prospective customer to telephone you.

However good a product or service you offer, the decision as to whether it is purchased from you or one of your competitors is influenced by the way your company is perceived through your website and the quality and presentation of any printed material you send to them – and by the salesperson communicating with them on your behalf.

In many small businesses staff that do not come from a sales background carry out this task and they have simply acquired or grown into this additional role.

You owe it to your business to ensure your staff who do the selling receive the best possible training, help and support because they play the pivotal role in converting enquiries generated into orders for your company.

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What often happens is once they understand the business development plan, see the new or revised website and have at their disposal good printed sales material, their own enthusiasm and commitment is re-energized bringing an effective new focus to the sales activities.

The result is almost inevitably more sales.

COSTS As the chart on this page illustrates the cost involved in creating an effective Business Development Plan is very small in comparison to the amount of money typically spent on subsequent sales and marketing activities.

Obtaining good answers to the questions posed in the Business Development Plan is

usually the least expensive part of this process, but this is vital to ensuring that the money spent on the other parts of the plan is as effective as possible and not wasted as is often the case.

SUMMARY This 4-step process exploits all the tools and technologies that are now available to small businesses to create a very effective marketing and sales capacity in house.

It cannot be emphasised enough however, that the first two steps are fundamental, and if completed properly, make the remaining steps much easier and minimize their cost as well as making them more effective.

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So you have a website, but you are not getting many hits or relevant leads from it. Without spending a fortune, how can you compete with the billions of other pages on the web and how can you make the search engines take notice of your site?

As far as direct marketers are concerned lead generation is the Internet’s killer application, with search engines the main medium. Search engines can be equally beneficial for companies selling products direct to consumers or even for smaller businesses selling to other businesses.

Search engine marketing (SEM) helps websites get seen, delivers leads and can achieve a high return on investment (ROI).

There are three main techniques that should be considered:

1. Organic Search Engine Optimisation Search engine optimisation (SEO) aims to improve the ranking of a website in search engine listings. When it works, and a customer enters a relevant keyword terms, your site comes up on the first few pages.

To help get towards the top of the listing, you need to fill your site with well-written content and offer value to visitors. The search engines measure your content and score it according to its value to users.

Select keywords and keyword terms that are most likely to be used to search for your product or service. Know your limitations and select keywords that won't draw a big number of competitive web-sites in a keyword search.

Have a lot of quality sites linking to your site.

Links are viewed as 'votes' for your site, and the 'better' the voting site, in the search engine's eyes, the higher the value assigned to your site.

Ensure your website designer knows how to design your site in a search-engine friendly way.

2. The Directory Listings Online directories can drive good traffic and be useful in building SEO value links to your site.

Generally you pay a flat listing fee, so you can get masses of great clicks or you can get nothing for your money. Use the common sense that you would for a press ad and buy into the online directories that are significant for your industry or area and beware of any you haven't heard of.

3. Search Pay-Per-Click (PPC) Advertising Google is currently valued at over $100bn and 99% of its revenue is generated by advertising.

The ads are placed next to, or above, the free search results. Only when a visitor clicks on the PPC ad, is the advertiser charged a small amount.

The most popular Pay-Per-Click search engines are Google AdWords, Yahoo! Search Marketing and MSN AdCenter. You choose keywords that best describe your product or service and bid for each keyword phrase.

Many professionally run campaigns have hundreds of keyword terms. Minimum bid prices are a few pence, but it is a dynamic marketplace and the higher you bid, the higher and more often your advertisement will be displayed in the list.

You pay only when a searcher clicks on your listing and connects to your site. You don't pay to display your advertisement.

You have control over when your ad is shown.

You can define which searchers see your ad by geography and you regulate what you pay for each click. Campaigns can run globally, nationally or locally and in practically any language you choose. With the right tracking in place you can accurately and instantly evaluate your sales and return on investment.

There are many advantages over SEO. PayPer-Click campaigns require no changes to a current site's content, just a willingness to pay.

Also, the implementation of a pay-per-click campaign is relatively quick - it can take just a few hours to start getting targeted traffic rather than months or years for SEO campaigns.

But there are also limitations to consider. New bids can lower the positions of other firms, and many will react by raising their bid to regain a previous ranking, so monitoring your position is crucial. This can also cause campaigns to become prohibitively expensive as the prices of sought-after keyword phrases soar in aggressive markets.

Search Engine Optimisation, where practical, is fundamental to long-term success, but if you want short and medium term traffic and sales then Pay-Per-Click may be your solution.

But be sure to remember that it is an auction.

Don't lose your head - it is crucial that you pay a reasonable price for each visitor, that each visitor is highly targeted, that you maintain your exposure over time and that you monitor your results to maximise ROI. If in doubt enlist the help and advice of an experienced professional.

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Public Relations (or PR as it's more commonly called) covers a multitude of techniques and methods for raising your profile and publicising your offerings to your ideal target audience(s).

This can be through conventional mediums such as magazines, newspapers, on-line journals and exhibitions, or higher profile methodologies such as television, radio, and national billboards.

There are also some very effective techniques for web marketing such as Google and other pay per click (PPC) search engines. Viral Marketing is increasing in popularity with larger companies.

This is where the product or brand you are trying to advertise is wrapped inside some form of entertaining or amusing media (sometimes a game or competition with a good prize is also used). The most common format is an e-mail containing an MPEG video attachment (car manufacturers are particularly good at this).

The idea is that friends will forward the mail onto each other so the message spreads of its own volition, in a similar way to a computer virus.

Once your advert is designed in the correct format, you will need to submit it. Many publications run "feature stories" throughout the year and you may want your submission to coincide with an appropriate "feature story".

Check the publication’s editorial feature list for the timing of articles that will complement your business.

What does it cost?

Costs vary depending on the frequency, readership figures, distribution area and whether the publication is paid for by advertisers or bought by the reader, but as a very rough guide a quarter page ad will cost around £500, a half page £900 and a whole page around £1,500.

For comparison purposes let’s say you advertise in 4 magazines with a quarter page advert, i.e., £2000 excluding any cost to produce the design and layout. Now let’s look at editorial.

Editorial

Which should you choose?

Assuming the research has been completed and the target publications have been established, editorial works in a slightly different way.

Virtually every business has a definable target market segments and several common mediums to reach them. Your company's marketing plan should clearly define the most cost effective medium to reach your target audience. Most businesses use common routes like newspapers, trade journals, website advertising and directories.

It’s best if you look at producing a series of interesting articles and news that can be released throughout the year. Too many companies try to announce all of their interesting items in one big announcement and then have nothing left for the following months — it is far wiser to plan at least the next 3 releases!

For this article we'll examine the typical costs of editorial versus the cost of advertising.

You will need to call each magazine and establish who the right editorial contact is for your article. Take the time to introduce yourself and discuss the theme to ensure they would be willing to print it (they’ll always reserve judgement until they’ve seen it) but ask for an agreement for the theme.

How it works and the costs involved Fact: The cost of magazine advertising is far more expensive than editorial. With either method you’ll need to select your publications carefully. You will need to know the readership figures and obtain rate cards to understand the advertising costs and gauge the best return on your investment. Let’s look at advertising first...

Advertising Once you have set your budget and decided the size of the advert(s) you’ll need to create the design.

You can do this yourself (if you have the software and skills) and you can also gain some help from the magazine’s art department for the layout (some are more willing than others). You can also use an agency to produce the advert for you.

You will need to decide on the copy (written message), a call to action (response), and some imagery to endorse your words. The copy is critical because you have a very limited amount of space and each word must be chosen carefully.

Then you need to write it — this is where a good copywriter can help you make even the dullest of subjects sound more interesting.

Once written and proof checked you can submit to each of the magazines. Always follow-up to ensure they have received it and ask if they will run it.

Note — it’s a good idea to send a picture with a piece of editorial, it will endorse your story and the magazine will prefer it. However be aware that many magazines will charge a colour separation fee of around £75 - £150!

How does the cost compare?

If you submitted your editorial to six magazines and four of them agree to run it, you would pay between £300 - £600 for the colour separation cost, plus the copywriters time (say £600), i.e. between £900 - £1,200 instead of £2,000 but consider the coverage differential as well as the saving.

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Twice as much for half the price The advertisement will only provide you with quarter of a page. The editorial will give you far more; typically half a page and sometimes two whole pages with a good size photograph!

In terms of magazine space - you can easily achieve ÂŁ3,600 worth of exposure for around ÂŁ1,200 of expenditure.

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However effective your marketing is and however good the leads it helps to generate, whether a potential customer decides to do business with your company or not, comes down to the person who is ‘closing the sale’.

And we all know that even if we are producing the best product in the world or providing a service of fantastic quality and value, unless enough people buy them, they are in fact worthless and our business will not flourish.

For many small businesses the person doing the actual selling is often not from a sales background but has simply inherited or drifted into the role.

Good training for them is absolutely vital and a fantastic investment if your business is to survive in an ever more competitive environment let alone grow in the way you might want it to.

Because there have been literally millions of words written about different ways of selling, hundreds of thousands of articles published on the subject and thousands of books have been printed, it can be very confusing as to where to start.

With that in mind we have set out here Seven Steps of the Sale, which the inexperienced sales person should find useful as a structure to follow.

1. Planning & Preparation 2. Introduction 3. Questioning 4. Presentation 5. Overcoming Objections 6. Close 7. After-Sales Follow-Up

Step 1. Planning & Preparation Ensure you know your own product/service extremely well — especially features and benefits that will be relevant to the prospect you will be meeting.

Have a thorough understanding of what other competitors are able and likely to offer, and find out which ones are being considered if you can.

Prepare your opening statements and practice your sales presentation, which should be prepared in the format in which you are to give it (e.g. MS PowerPoint slides for laptop or projected presentation). Make sure all materials, samples, handouts, brochures, are easily accessible and in the order that you are going to use them.

Think carefully about what you want to get from the meeting and organise your planning to achieve it

Step 2. Introduction Smile — be professional, and take confidence from the fact that you are well prepared.

Introduce yourself and the company you represent, and what your company does. Set the scene — explain the purpose of your visit.

Ask if it's okay to start by asking a few questions or whether your prospect would prefer a quick overview of your own company first.

Step 3. Questioning The main purpose of questioning is to find out if there is a match between the products or services that you can supply and the needs and requirements of your potential customer.

Good empathic questioning also builds relationships, trust and rapport. Nobody wants to buy anything from a sales person who's only interested in their own product or company — we all want to buy from somebody who gives the time and skill to interpreting and properly meeting our own personal needs Use open questions to gather information — for example, questions beginning with Who, What, Why, Where, When, How? Listen carefully and empathically, maintain good eye-contact, understand, and show that you understand — especially understand what is meant and felt, not just what is said. When you've asked a question, SHUT UP. Do not interrupt; you have two ears and one mouth and use them in those proportions.

Step 4. Presentation The sales presentation should focus on what your products and services can do for the prospective customer.

You will have found out from the questioning stage what those needs are and so you describe how what you have to offer can meet and fulfil those needs to the benefit of the customer.

Also at this stage you need to talk about price.

Always tell the customer what the price is but don’t stop and wait for a response, it is likely to be negative if you do. Instead sandwich the price between benefits.

All sales presentations must be well structured, clear and concise, professionally delivered, and have lots of integrity. The quality and integrity of the presentation is always regarded

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as a direct indication as to the quality and integrity of the product/service.

Keep control of the presentation, but do so in a relaxed way; if you don't know the answer to a question don't waffle — say you don't know and promise to get back with an answer later, and make sure you do.

Let your personality and natural enthusiasm shine through — people buy from people who love and have faith in their products and companies.

Step 5. Overcoming Objections Objections are a reality of the sales process, sometimes as part of the buying strategy and sometimes they arise because of the lack of information provided by the sales person earlier in the presentation.

They are also sometimes a buying signal.

Step - 7 Follow-Up After-sales follow-up depends on the type of product and service, and the internal control operations of both the supplier and the customer but having done the hard work — getting the order it is essential that this "house keeping" part is carried out diligently.

The sales person should also make follow-up contact with the customer as often as necessary to confirm that the customer is happy with the way the order is being progressed or has been completed. This helps reduce possible confusion and misunderstood expectations, which are a big cause of customer dissatisfaction or order cancellation if left unresolved.

Customers rightly hold sales people responsible for what happens after the sale is made, and good conscientious follow-up will usually be rewarded with repeat orders and referrals to other potential customers.

Qualify each objection one by one and if necessary dig a little deeper to find the real specific objection.

Only once you have isolated the objection can you hope to overcome it.

Avoid head-to-head arguments. Even if you win them you will destroy the relationship and lose the sale.

Step 6. Close Every sales person's aim should be to prepare and conduct the selling process so well that there are few if any objections, and not really any need for a specific close.

The best close is something like — Are you happy that we've covered everything and would you like to go ahead? —, or simply — Would you like to go ahead?

In many cases, if the sales person conducts the sale properly, the prospect will close the deal himself, but always be prepared to ask for the order. There is absolutely no point in not doing so — after all that is what the call was aimed at achieving in the first place and you have nothing to lose.

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Working towards Manufacturing Excellence Directors of manufacturing companies face a multitude of issues every day in the battle to stay competitive, retain customers, motivate staff, improve performance, create cash flow, invest for the future, and so on. The complexities can be mind-bending: • The production plan must attempt to meet customer order due dates, but cannot easily take into account all of the capacity issues along the way • Parts and materials must be made available from suppliers and sub-contractors, but inventory levels must be controlled • Orders must be progressed urgently through the factory, but quality requirements must not be sacrificed at any price • There is no scope for additional people, and yet time must be made available for operator training and personal development • The objective is 100% achievement of quality, cost and delivery, but although any two of these is possible, achieving all three together every day without fail is very difficult, and beyond the capability of some Whatever the industry, however large or small the company, and regardless of the history, the means of working through all of these complexities and achieving real and sustainable performance improvements are available.

The objective has to be to become the best and with that level of commitment, the process of change can begin and will be successful.

The basis of that success will be the implementation of lean manufacturing principles that will provide the foundation for an ongoing programme of change.

When a business embarks on a lean programme it does so to improve performance in the eyes of the customer and to increase profitability. It is sometimes a surprise to realise how quickly some results can come whilst working on the full programme and the achievement of the prime objective.

The programme begins with a review of the current state of the order book and the identification of all issues preventing its achievement in terms of meeting the customer specification in every detail, taking no more than the planned time, and meeting the customer due date. Every item will be recorded as will the root cause of any deviation from planned outcome. This initial diagnosis identifies a number of problems for which immediate solutions can be found, and the start point for the creation of long-term improvement programmes.

From that initial benchmark, all or some of the tools below can be implemented to sustain the progress towards manufacturing excellence and leadership in a company’s sector.

The key is to identify the route to take and manage the programme so that priorities are established for all employees to work towards.

This must not be a random effort without focus in the hope that some benefits will accrue.

Every initiative must be planned and controlled. Companies must run day-to-day whilst the improvement programme is progressing, which requires firm operations management throughout. Typical techniques used in these programmes are: • Process Mapping to draw up current operational sequences and the flow of work through the factory from which shop floor layout changes can be identified to save time, effort, handling and waste • Quality tools to identify the root causes of customer problems and internal rejects using ‘Five Whys’, Pareto principles, Statistical Process Control (SPC), but especially involving operators, supervision and support staff to find solutions • Single Minute Exchange of Dies (SMED) fast changeover techniques to reduce set up times on machines or processes, and reduce line changeover times in order to minimise non-productive time and to help reduce batch sizes and gaining flexibility at reduced costs • Set up kanbans to ensure that parts are not made or purchased until the process calls for them to be available, reducing handling costs and inventories • Total Productive Maintenance (TPM) to keep plant and equipment available and in good condition. Measure equipment effectiveness and set in motion actions to improve machine utilisation • Use all of the above principles to identify bottlenecks in the factory which cause late deliveries, excessive overtime, stress, and confusion. Use the same techniques of ‘Five whys’, etc. to get to the root causes of problems and work with the staff to eliminate them • Sort; Stabilise; Scrub; Standardise; Sustain (5S) techniques to create an obstacle free, orderly environment as part of the fix-it phase. The disciplines for organised good housekeeping will work through into every other area of the company Above are examples of the way to move forward; there are many other tools available.

When it is decided to make a start on the journey to manufacturing excellence the first diagnostic will point the way and indicate the

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tools to use and the best order in which to apply them.

These benefit from outside specialist assistance, either using trained project managers, or interim managers who have the authority to implement as well as recommend.

Success depends on good leadership and commitment. Training and mentoring will form part of the programme so that staff carry the work forward as a normal part of their change to behaviour, giving sustainability to the initial effort.

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Quality is a difficult concept because it can mean different things to different people. The cost and practicality of a people carrier can be a quality car for the family; the affluent young driver may, however, prefer the coupe.

Quality can generally be expressed as "conformance to requirements".

To conform to requirements you have to identify them, understand them and then meet them.

As a successful company you will identify and aim to meet the needs and expectations of your customers to achieve a competitive advantage. You will also wish to meet your own needs and expectations (a wage, a profit, a healthy working environment, etc.).

This can, therefore, mean that quality is something you are already doing After all, if your company remains in business, makes a reasonable profit and keeps your customers happy, you must be doing something right.

The next question to ask is "Are you doing the right thing right first time, on time and every time?"

If you do not always do things right or on time then you may not be as profitable as you could be and your customers may not be as happy as they might be.

Striving for a "right first time approach" does not have to be difficult. The value of a quality management system is that you can get it right first time in an efficient and effective manner.

Deciding not to have a quality management system is easy, just carry on the way you are.

Developing a quality management system and implementing it will require resources and commitment.

An effective quality management system will also require: • Awareness: a shift in the company culture, which everyone understands, and which involves everyone.

• Leadership: management that is personally, actively and visibly involved.

Any quality management system must of course meet your requirements. It can be developed in a bespoke manner to fit in with your company or it can follow a recognised and standard approach.

A quality management system is a collection of management tools to improve the company.

The most commonly recognised and widely implemented quality management system is the ISO9001:2000 standard. It is recognised internationally and certification to the standard is frequently demanded by clients as a mark of quality.

The standard specifies the minimum quality management system requirements where an organisation needs to: • consistently provide a product or service that meets customer requirements, and will • address customer satisfaction through the effective application of a system of processes for continual improvement and the prevention of errors.

An ISO 9001:2000 based quality management system must be documented, implemented and then, to obtain certification compliance, demonstrated by an external audit.

A documented quality management system must reflect your company, not restrict your company.

What is needed is just enough documentation to enable you to run your company effectively, and that will allow you to quickly spot where things need improving - no more!

If you are serious about the quality of your products and the services, then why not show it and at the same time find improvements in your profits?

Improved efficiency, reduced waste and continual improvement are the real benefits from installing a quality management system.

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The Business Plan forms the touchstone for many decisions faced by Directors on a day to day basis. However such plans are not fully exploited if they remain the preserve of only a handful of people in the business.

How many people in your business are aware of the business plan? What progress is being made to achieve it? How their work contributes towards its achievement?

Performance Management

Continuous Improvement Continuous Improvement is a philosophy that encourages teams to look at their processes in a way that helps them really understand the "causes and effects." The better these causes and effects are understood the more stable and predictable the Continuous Improvement process becomes. Stability means no more fire-fighting, midnight crises, and irate customers. Being able to predict, gives us control over performance that is sustainable.

Being able to answer an unequivocal "Absolutely all of us" to the questions above is the very essence of performance management, and a likely characteristic of businesses successfully achieving the targets set out in their Business Plan.

Once initiated, this virtuous cycle of improvement, is highly engaging to teams.

Improvement gains invariably mean their working lives are made more predictable, are less frustrating and much more rewarding.

A wise man once said "If you can’t measure it, you can’t manage it". This is of course very true, but what is often forgotten is that measuring the wrong things can do much more harm than good.

If you would like to understand how your business could benefit from an improved Performance Management System and adopt a Continuous Improvement approach please contact us for a no obligation discussion and site visit.

Identifying and encouraging teams to meet the wrong targets is likely to drive the wrong behaviours and decisions, as will the wrong approach to measurement and management.

Both likely to manifest themselves as demotivation, in-fighting, "cheating" the results or just apathy.

In both manufacturing and service sector businesses it is vital that all the measures and management system encourage the right behaviours and inform the right decisions.

Key to this is asking the question: "Why will people want to do this? What is in it for them?".

Good performance management systems help insomuch as they ensure that the teams are well informed, involved, listened to and their views at least responded to if not acted upon.

Good performance measures focus on the reasons for the change or variation rather than ticking the box when an output measure is met (or worse still pointing a finger of blame when it is not). It is understanding the variations which is key to Continuous Improvement

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Ever changing employment legislation, culture, and the idiosyncrasies of the human species make employment a complex field; indeed large corporations have dedicated teams of HR professionals to administer it.

All too often, however, in smaller businesses the employment of staff is overshadowed by all the other activities and pressures of the business operation.

If you employ staff here are a few questions that you should ask yourself: Do you have written employment documents such as Discipline and Grievance procedures?

Do you have written statements of the main terms and conditions of employment issued to all your employees that contain information on Pensions, collective agreements, and how to appeal against disciplinary action taken against them?

Do you have an Equal Opportunities Policy?

Do you and your supervisory staff know what constitutes bullying and harassment and how to handle it?

Do all your employees have good attendance records?

Do all your employees really know how well or badly their work performance is viewed?

Are you always able to recruit the right people as you need them?

Are you proud of the people you employ?

If the answer to any of these questions is NO, you are, at worst, not legally compliant or, at best, not getting the best from your staff.

Do you need an audit of your employment documents and procedures to ensure they are sufficient and up to date?

Do you need an equal opportunities audit to make sure you are both legal and following the best practices?

Do you need help in training your line managers to handle attendance, discipline, grievance, and discrimination?

Do you need a training review to make sure all your employees have the skills and knowledge they need to do everything you want them to do?

Do you need to reduce the number of people you employ, but don’t know how to do this?

Do you need an audit of your business to see how you measure up to the standards required for Investors in People?

If the answer to any of these is YES then you should seek the help of a Human Resource Service that provides professional support.

We can offer help with: • Provision of integrated employment contracts, policies and procedures • Advice and administration of structured recruitment • Training reviews and training needs analysis • Provision of appraisal and development systems • Advice and assistance on day-to-day legal and administrative employment issues involving both staff and trades unions • Redundancy administration • Development and administration of payment systems • Training of management and operations staff in employment related topics • Introduction of computer based systems for employment records and administration, time and attendance

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Recent years have seen an enormous increase in Health & Safety legislation and, together with the threat of punitive penalties, there is now a considerable burden of responsibility on employers.

In the last year there were 2 million workers suffering from work-related illness, 212 were killed, 146,000 suffered reportable accidents and 30 million days were lost. Alarming statistics — but it’s not only employees and their families who suffer when things go wrong at work. Every year, businesses like yours count the cost — in fines, compensation payments, increased insurance premiums, repair bills and lost production. As the saying goes — "If you think Health & Safety is expensive, try having an accident!"

But it’s not just a legal responsibility; it’s also a moral and financial responsibility.

Here are some of the things that you must do: • Have a written, up-to-date Health & Safety Policy setting out what you intend to do and who is going to do it.

• Carry out a Risk Assessment of your premises and all the activities that your employees are engaged in. Record the findings and act on the results.

• Make a list of all the hazardous substances that you use. Try to eliminate as many as possible, or replace them with less hazardous substances. And for those that are left, assess them and introduce controls to minimise the risk.

• Look at your Manual Handling tasks. Identify those that pose a risk of injury and see if you can find ways to eliminate or minimise that risk.

• Consult, inform, train and supervise your employees.

There are many things to consider but these are the main ones. Proper Risk Assessments are fundamental to good Health & Safety practice and sensible management of risk will do more than anything else to improve safety and reduce accidents in your business!

You probably know quite a lot already and can do many of the required tasks yourself. If not, then get outside help.

Remember! Act now to get control — don’t react tomorrow to an accident!

• Carry out a Fire Risk Assessment (one of the most recent additions to the legislation).

15

One of the hardest tasks faced by small business owners is trying to keep track of the business finances. For the smallest business a spreadsheet or manual record is all that is needed, although as the business grows a computerised accounting system such as QuickBooks and Sage is a must.

There are many pros and cons of each system and each can be used in a variety of ways.

Sage is favoured by many accountants generally because they have used it for a number of years, and are therefore more familiar with it. However QuickBooks reporting is far superior and capable of full drill-down from any report right back to originating entries. Current versions of Sage do not facilitate this usually essential feature.

"Off-the-shelf" systems are relatively cheap and easy to install and are often sold on the basis that computerising your bookkeeping is fast, easy to do and that you can be up and running straight away. This is a common myth and most small businesses fail to set up their accounts systems properly. This is because users are not accounts office trained and have no in depth knowledge of accountancy, double entry, control accounts or the software package.

Many businesses even fail to appreciate that errors have been made and the first time that anyone knows that anything is wrong is when the backup and records are given to the accountant at the year end. Any mistakes that have been made, particularly early on, can be extremely complex and very costly to resolve.

Even the accountants of the business may struggle to correct these mistakes on the "live" system and end up keeping their own set of balances! Because of this accountants’ fees are often much higher than they need to be which may come as a big surprise when a lot of effort and investment has been made in installing and working the accounting software.

payable by supplier, top revenues by customer and sales and contribution by product may be obtained. You will get this information from your accounts system but this has to be accurate and procedures applied consistently if any figures are to be relied upon.

There is also a legal requirement to keep accurate accounting records. The accounts that you submit to HM Revenue & Customs and, for Limited Companies, Companies House form the basis of your tax calculation each year. Company accounts submitted to Companies House are available to the public.

Very careful planning and analysis of your accounting requirements must be made. Good professional assistance is therefore essential.

This guide is written to help you keep accurate records and get the most out of your system.

No two systems are identical but they all follow the same logic. This guide is no way exhaustive nor does it cover stock control, but has been written to help you understand what procedures you need to go through to produce accurate information.

Firstly you need to start off on a good footing with accurate balances that you can reconcile to. You should involve your accountant to make sure that your current system balances have integrity and that all proper procedures and controls are in place.

The statutory accounts include a Balance Sheet and a Profit & Loss Account which are taken directly from your accounts system.

These contain each of the accounts taken from the trial balance of your system which will include totals for: • Sales Turnover • Other Income • Cost of Sales • Overheads & Expenses

If the setting up is carried out correctly and the opening nominal ledger balances together with opening sales and purchase ledger items are entered accurately and agree to the balances that your accountant is working from then there should not be any problems. If good procedures are in place, personnel are properly trained to use the system and you get the system housekeeping in order, it is relatively simple to maintain a good system.

• Taxes

If used correctly business accounts systems are a goldmine of useful management information and are a very powerful tool.

• VAT Liability

In addition to the usual Profit & Loss accounts and Balance Sheet reports, detailed reports such as budgets versus actual results, accounts receivable by customer, accounts

• Dividends • Fixed Assets Cost & Depreciation to Date • Bank & Petty Cash Balances • Trade Debtor Balances (Customers) • Prepayments • Wages Liability (Wages Control Account) • PAYE/NIC Liability (PAYE Control Account) • Trade Creditor Balances (Suppliers) • Accruals • Director Loan Accounts • Accumulated Reserves • Share Capital 16

• Enter Petty Cash Expenses • Enter Cashed Cheques • Enter Supplier Invoices and Credit Notes • Reconcile all Bank Current and Deposit Accounts

USING YOUR ACCOUNT SYSTEM Before you start you need to agree the opening balances on your system at the start of you current financial year with your Accountant.

You need to make sure that all items that we have included in the Task List below have been completed.

• Check each Balance Sheet account in your system’s Trial Balance as at the period/month end: - Fixed Assets - Bank accounts - Petty Cash Accounts - Stock account - Aged Debtors - Aged Creditors - PAYE & wages balances - VAT balances - Director Loan Accounts • Print out the Profit & Loss for the year from the start to the end of your accounts period • Print out the Balance Sheet as at the year end • Print out the Nominal Ledger report from the start to the end of your accounts period • Print out the Aged Debtors (detailed) up to the end of your accounts period • Print out the aged Creditors (detailed) up to the end of your accounts period • Complete & print out the Bank Reconciliations at the end of your accounts period.

TASK CHECKLIST To get the best out of your accounts system the following tasks should be completed:

Daily • Raise Sales Invoices • Receive/Enter Customer Payments • Enter and account for any transfer of monies • Review and Enter Recurring Entries • Review and Enter Direct Debits and Standing Orders

- Use the bank reconciliation function of your accounts system to agree the balance in your system against your bank statements. If you have online access to your bank statements then reconciliation should be completed daily if possible.

• Make Data Backup • Verify Data Backup

Weekly • Process Payroll for Weekly paid staff • Take Data Backup and store securely

your accountant for the best way to account for and enter these. These could include telephone, gas and electricity, etc.

• Review your fixed assets reports in the nominal ledger of your system and adjust for any items that need to be written off. Check with your accountant what rates to use.

There are two methods: Straight Line based on cost price over a number of years and Reducing Balance based on book balance after depreciation to date. Rates may vary but are typically 25% reducing balance for Motor Vehicles, 20% reducing balance for Plant & Equipment and 33.3% straight line for Office Equipment.

Quarterly • Enter vehicle VAT fuel scale charges

• Enter/Raise Payments to Suppliers

• Prepare VAT Return and agree the balance of the VAT account in your system against your VAT return.

• Enter Bank Charges

Annually

• Enter Bank Interest Paid

Ensure that all transactions for the year have been entered and that all bank accounts have reconciled.

Monthly

• Enter Bank Interest Received • Process Payroll for Salaried staff • Enter payments for PAYE/NIC liabilities to HMRC • Enter Expense Claims • Enter Credit Card Expenses and Charges • Reconcile all Bank Current and Deposit Accounts and print reconciliation reports • Reconcile Petty Cash Account • Reconcile Credit Card Account • Agree Aged Debtor balances against trial balance. Any differences should be found and corrected.

• Create Customer statements

Prepare Backup and reports for Accountant.

The most important report printouts to be taken are: • Trial Balance as at the year end • Profit & Loss for the year from the start to the end of your accounts period • Balance Sheet Standard as at the year end • Nominal Ledger from the start to the end of your accounts period • Aged Debtors (detailed) as at the year end • Aged Creditors (detailed) as at the year end • Bank Reconciliations

• It is a good idea to also print out and reconcile (check and agree manually) the detailed Aged Creditors report against supplier statements.

• Agree Aged Creditor balances against trial balance. Any differences should be found and corrected.

• Enter adjustments for costs that have been entered on your system but are prepaid, i.e., the expense relates to a period after the date of the entry. Talk to and involve your accountant for the best way to account for and enter prepayments on your system.

These costs could include insurance, advertising and subscriptions, etc.

• Enter adjustments for accruals, i.e., any expense that has been incurred but not yet entered on your system. Talk to and involve

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There are over 4 million registered businesses in the UK, 99.3% of which are defined as Small Medium Enterprises (SMEs).

SMEs find it significantly more difficult to raise the funds required to either start or develop their business than their larger corporate cousins. 98% of their funding applications fail.

So let us first consider what you might want funding for.

Seed Capital This you would need before you have any revenue coming into the business. You have a good idea and the requirement is to prove the concept; usually less than £50,000 would be required.

Proof of concept funding is difficult to raise.

Friends and family, grant funding and specialist incubation funds are the preferred sources of funding at this stage.

Start up Capital You have developed your business plan including market and financial planning and you have started to recruit your management team and are able to start generating revenues.

Finance of between £50,000 and £500,000 is required for marketing and operations to get the business up and running.

There are three probable sources at this stage: equity, debt funding and grant funding, further details of which we will come onto shortly.

Expansion Capital You have an established business, which has the opportunity to grow organically or by acquisition, and you need to raise additional funding, over £100,000, to support this growth.

Again equity, debt and grant funding can all come in to play, but it is more often debt funding in one of its various forms that is the most likely source.

Where the figure required is in excess of £1m, there are an increasing number of specialist investment funds who deal in this type of funding.

Now let’s review those different sources of funding.

EQUITY Private Investors: Can include family, friends and/or Business Angels. Business Angels are high net worth individuals either operating alone, typically investing £25,000 to £100,000, or in groups where the equity requirement is greater. Their investment criteria vary considerably and you should seek investors who will bring considerably more to your business than just money, in the form of their experience and networks. Typically Business Angels will want to take a non-executive role within your business and will be seeking an exit

for their investment within 3 to 5 years. Most will be seeking returns of between 5 to 10 times the original investment and will want to benefit from tax relief under the Enterprise Investment Scheme (EIS).

Regional Venture Capital Funds: There are a number a small regional venture capital funds supported by the Government, which are aimed at the SME market. These funds receive hundreds of applications each year for funding of which less than 2% are successful.

Seed Funds: Many of the seed funds are associated with university incubation centres and therefore focus on technology and innovation. For example NESTA (The National Endowment for Science Technology and the Arts) can invest up to £250,000 in innovation start-ups.

Venture Capital Funds: Traditional venture capital funds are unlikely to invest below £2m and therefore tend to be of little interest to the SME sector.

DEBT Small Firms Loan Guarantee Scheme (SFLGS): Available through most main high street banks, in which the Government guarantees 75% of the loan against an insurance premium of 2%, with the lender taking the balance of the risk. The lending premium over base will typically be 3.75% and you will incur a 1.5% arrangement fee.

SFLGS’s need approval from the DTI and are only available to companies that have been trading for less than 5 years, where the shareholders have already pledged significant personal assets and the business operates in prescribed industry sectors. The willingness of lenders to support SFLGS applications vary from lender to lender and from manager to manager.

Bank Loans/Overdraft: If you are ineligible for a SFLGS loan, you may be able to obtain debt-funding via your bank, but you will be required to provide one or more of the following; Directors Guarantees, Debenture and possibly a Personal Guarantee.

Agreement fees will typically be 1.5% with the premium over base in the range of 2.5% to 5%.

Asset Financing: Hire purchase, finance lease and contract hire can be used to fund the acquisition of certain categories of assets.

Invoice Financing: This is where a finance company or bank buys your debtors and pays you up to 85% of the invoice value. The balance is paid to you once your customer has paid the invoice. You can either continue to undertake the credit control and cash collection directly, or out-source this activity completely to the finance company or bank.

You will be charged a monthly fee to cover administration, typically in the range of 1% to 1.5% of the average monthly invoicing value 18

and the premium over base will normally be in the range of 2% to 3.5%.

WHAT ARE THE DRAWBACKS WITH EQUITY?

GRANTS

Early stage investors will be seeking annual returns of up to 40% to cover their risk; therefore this is an expensive source of funding in the medium to long term. This annual return will reduce for later stage businesses.

There are a number of grants available from a wide range of different sources, although the application process can be lengthy and time consuming. All have various criteria that need to be met, such as location (development areas), purpose (technology, training, etc), sector (innovation, environment, etc) and personal (unemployment, etc).

WHAT ARE MY CHANCES FOR RAISING FUNDING? Whether you are seeking to raise equity or debt funding, you will need to present a business and financial plan, which clearly underpins your investment or lending proposal.

Broadly speaking this is what happens to investor/lending proposals: • 60% are rejected immediately • 25% are rejected after a face to face presentation • 10% are rejected after further evaluation • 3% fail at the negotiation stage • 2% succeed in raising the equity or debt funding

WHAT ARE THE MAIN REASONS FOR INVESTORS/ LENDERS TO REJECT PROPOSALS? • Poor presentation proposition

for

the

business

• Financial forecasts are poorly constructed with weak assumptions

The search for the right investor is time consuming and difficult. Typically it will take 6 to 12 months before cash is received from an investor, whereas the bank lending process can be considerably shorter.

Personal chemistry is always difficult to assess during the early meetings.

Shareholding dilution with potential differing views regarding valuation.

WHAT NEEDS TO BE IN THE INVESTOR/ LENDING PROPOSAL? The business plan will vary slightly depending on whether you are seeking equity or debt funding. The plan should be concise (no more than 20 pages plus financial schedules) and should have the following structure: • Executive summary • History • Market opportunity • Product offering and product development • Intellectual Property Rights (IPR) • Manufacturing or sourcing strategy • Competition and competitive advantages • Routes to market

• Weak cashflow

• Risks and threats

• No track record for the management team

• Management team and organizational resources

• Lack of commitment from the management team

• Financial assumptions

• No clear exit route

• Financial plan

WHAT ARE THE MAIN BENEFITS OF EQUITY?

• Sensitivity analysis

Medium to long term funding with no interest costs or repayment schedules. Shareholders may agree to a dividend policy in the event that cash flow and company reserves enable payments to be made.

Your business plan MUST NOT:

Equity investors can/should bring experience and networks as well as funds.

Bank lenders will require equity investment before agreeing to advance debt.

• Exit route for equity investors

• Over-sell the business opportunity • Forecast sales that are over optimistic; they should always be conservative and not based on straight line projections • Be overly complex with over emphasis on technical or management jargon • Discount competition

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EXIT PLANNING is perhaps the most difficult yet most important period in the life cycle of Small Medium Enterprises (SMEs). It is an event that probably only happens once, yet has a profound effect upon the future life, particularly in retirement, of the owners. Research clearly shows that many owner managers fail to achieve full or fair value for their business during the exit process. The key reasons for this failure are: • Unrealistic timescales

value

expectations

and

• Poor preparation within the business prior to the sale • Unwillingness to use professional advisors • Inadequate resources allied to the exit process

PLANNING FOR YOUR EXIT STRATEGY Planning a strategy to maximize the value of your business on sale requires careful advance planning. You should start considering the issues several years before you plan to sell. The actual exit process will take 6 to 12 months and may require varying degrees of preparation of up to several years, depending on the condition of the business prior to sale.

EXIT ROUTES There are several different types of exit routes open to owner managers: • Trade Sale – selling the business to another company. It is difficult to retain confidentiality during a Trade Sale. The trade buyer will probably seek to consolidate the acquired business into an existing operation, therefore leading to increased employee uncertainty.

• Partial MBO/MBI – Where the shareholders agree to sell their shareholding in the company in stages.

VALUATION The valuation of your company is not a science, but is driven by market forces and your ability to present your business as a significant investment opportunity. There are a number of principles that can be applied to valuing your business: • Earning Multiples – Normally based on historic and possibly forward projections for earnings, measured before depreciation, interest and tax, but adjusted for “average Directors” drawings. The range for this earning multiple can vary from less than 4 to greater than 10 and is dependent on many factors, some of which are mentioned below.

• Net Asset Value – The book value of the company as declared in the balance sheet.

In many cases owners may expect to achieve a premium when using this approach to valuation.

• Cash Flow – Normally based on historic and possibly forward projections for cash flow.

Debt funders will focus on historic performance, whereas investors may include forward projections, discounted to reflect timings and risk.

Premium valuations are achieved where the business can demonstrate one or more of the following attributes: • Size – larger businesses attract higher valuations than smaller businesses.

• Strong historical financial performance and projections always attract higher valuations. Remember that every £ invested or spent and not fully recovered in the 2 years prior to selling your company WILL REDUCE the company’s valuation.

• Management Buy Out (MBO) – Existing management within the business acquires the Company. MBO team often have difficulty in raising the funding required to complete the transaction. The MBO process is very draining on the Company’s management resources.

• IPR/Technology that is protected by patents, copyright, etc, will enhance the valuation.

• Management Buy In (MBI) – Outside investors acquire the company and place their own management into the business.

Requires the company to be financially secure with a minimum valuation of c£500,000.

INFORMATION MEMORANDUM (IM)

• Buy In Management Buy Out (BIMBO) – The most favoured exit route for the providers of debt funding. This is where the Management Buy Out team (MBO) are unable to either raise the equity or debt funding package and seek an outside investor to strengthen the credibility of the debt lending proposition.

• A business operating in a growing market will attract a higher valuation than a similar business in a market that is flat or declining.

The IM is a document that you and your advisors produce which will set out for interested parties all the salient financial, operational, legal entity and other legal issues that a potential bidder will need, in order to make an Indicative Offer for your company, subject to Due Diligence and Contract. This IM will need to include the previous 2-year’s historical financial performance, the current year forecast and 2 year’s projections for profit, cash and balance sheet. The IM is provided under a “Non Disclosure” agreement to 20

interested parties, confidentiality.

thus

protecting

its

DEAL TEAM You will need to appoint a Deal Team to include: • Specialist Corporate lawyer • Tax Accountant • Corporate Financial advisor The fees relating to these advisors will normally be paid from the proceeds on completion and cannot be charged to the company.

NEGOTIATE DEAL STRUCTURE When you come to negotiate the deal structure remember the following principles: • Competitive negotiations — Retain a competitive bidding environment. Your business will always be worth more when two or more parties are actively involved in the bidding process.

• Cash is King — Maximise the cash on completion as part of the deal structure.

Earn-outs or deferred considerations are always a risk.

• Short time scales — Keep any period of “preferred bidder” exclusivity to no more than 2 to 3 months.

HEADS of TERMS Confirm the deal structure in a Heads of Terms, normally prepared by the purchaser.

This document is non-binding, but never the less should be reviewed by your lawyer.

DUE DILIGENCE The purchaser and their financial backers will undertake a process of verifying the financial, operational and legal information you have provided in the IM. This process is called Due Diligence and will require you to provide hard copies of a wide range of documents related to your company and its activities.

The Due Diligence process will either be covered by the “Non Disclosure” agreement previously signed by the bidder prior to receiving the IM, or by the more detailed Confidentiality clauses included in the Heads of Terms.

The purchaser will normally require 1/2 copies of these data files, with you retaining 2 copies, one of which will be used by your lawyers to create the “Disclosure Letter”. Due Diligence will normally take 2 to 4 weeks and need to be completed 2 weeks prior to completion.

SALE & PURCHASE AGREEMENT (SPA) The SPA is normally prepared in draft form by the purchaser’s lawyers. This is the legal document or series of documents, which cover all aspects relating to the sale and purchase of your company. The SPA will set out the basis under which the assets of your company are being purchased and by whom.

The warranties section will cover those warranties that you are prepared to provide the purchaser, normally 2 years for non-tax warranties and 7 years for tax warranties, against which you will disclose any known breaches in the Disclosure Letter.

The SPA will also include any management handover, which is normal in this kind of transaction and possible restrictive covenants, preventing you from competing against your company post completion.

COMPLETION This is the formal signing of the SPA and other legal documents and the point at which the purchaser will transfer the funds agreed on completion to your lawyer’s bank account. This is also the time when you will be required to pay the fees of your professional advisors.

There may be further payments relating to the consideration post completion depending on the nature of any earn-out or deferred consideration.

DO’S • Prepare business for sale • Appoint specialist advisors • Ensure accounting and legal entity records are accurate and current • Be conservative with financial forecasts • Protect IPR • Remember cash is king • Maintain competitive bidding position

DON’T • Have unrealistic view on value and time scales • Hide skeletons or bad news • Incur/invest in non productive costs/assets before sale process starts • Over sell your business • Agree to large earn outs or deferred consideration

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