19 Dec Searching for the Right Employees with Eric Knam

This month, we are featuring Eric Knam with ActionCOACH Tulsa. Eric is a certified business coach providing business help, advice, and mentoring services to small and medium-sized businesses. We’ve watched many of our business colleagues move from working IN their business to working ON their business, enjoying the perks of being the boss as a result of partnering with Eric.

Keep reading for a few great tips on how to find the right employees in the current hiring climate!

Searching for the Right Employees with Eric Knam | Action COACH

19 Dec Power Ratios Your Business Should Be Tracking

This month, we are sharing another blog post from Eric Knam with ActionCOACH Tulsa. Eric is a certified business coach providing business help, advice, and mentoring services to small and medium-sized businesses. We’ve watched many of our business colleagues move from working IN their business to working ON their business, enjoying the perks of being the boss as a result of partnering with Eric.

Keep reading to learn more about the power ratios your business should be tracking!

Is Your Business Tracking These Important Power Ratios?

Doctors in the developing world measure their progress not by the total number of children who die in childbirth, but by the infant mortality rate – a ratio of the number of births to deaths.

Baseball’s leadoff batters measure their “on-base percentage” – the number of times they get on base – as a percentage of their at-bats.

Those looking to acquire a business also like tracking ratios, and the more ratios you can provide a potential buyer, the more comfortable they will become with the idea of buying your business.

Better than the blunt measuring stick of an aggregate number, a ratio expresses the relationship between two numbers, which is what gives them their power.

If you’re planning to sell your company one day, here’s a list of six ratios you should be tracking in your business now, so you can start building value:

1. Employees Per Square Foot

By calculating the number of square feet of office space you rent or own and dividing it by the number of employees you have, you can judge how efficiently you have designed your space. Commercial real estate agents use a general rule of 175–250 square feet of usable office space per employee.

2. Ratio of Promoters and Detractors

Fred Reichheld and his colleagues at Bain & Company and Satmetrix developed the Net Promoter Score® methodology. It is based on asking customers a single question that is predictive of both repurchase and referral.

Here’s how it works: survey your customers and ask them the question, “On a scale of 0 to 10, how likely are you to recommend <insert your company name> to a friend or colleague?”

Figure out what percentage of the people surveyed give you a 9 or 10, and label that your ratio of “promoters.” Calculate your ratio of detractors by figuring out the percentage of people surveyed who gave you a score of 0 to 6.

Then calculate your Net Promoter Score (NPS) by subtracting your percentage of detractors from your percentage of promoters.

The average company in the United States has an NPS of between 10 and 15 percent.  Reichheld found companies with an above-average NPS grow faster than average-scoring businesses.

3. Sales Per Square Foot

By measuring your annual sales per square foot, you can get a sense of how efficiently you are translating your real estate into sales. Most industry associations have a benchmark. For example, annual sales per square foot for a respectable retailer might be $300.

With real estate usually ranking just behind payroll as a business’s largest expense, the more sales you can generate per square foot of real estate, the more profitable you are likely to be.

4. Revenue Per Employee

Payroll is the number one expense for most businesses, which explains why maximizing your revenue per employee can translate quickly to the bottom line. Google, for example, enjoyed a revenue per employee of more than $1.5 million in 2021, whereas a more traditional people-dependent company may struggle to surpass $100,000 per employee.

5. Customers Per Account Manager

How many customers do you ask your account managers to manage? Finding a balance can be tricky. Some bankers are forced to juggle more than 400 accounts, and therefore do not know each of their customers, whereas some high-end wealth managers may have just 50 clients to stay in contact with.

It’s hard to say what the right ratio is because it is so highly dependent on your industry. Slowly increase your ratio of customers per account manager until you see the first signs of deterioration (slowing sales, drop in customer satisfaction). That’s when you know you have probably pushed it a little too far.

6. Prospects Per Visitor

What proportion of your website’s visitors “opt-in” by giving you permission to e-mail them in the future? Dr. Karl Blanks and Ben Jesson are the cofounders of Conversion Rate Experts, which advises companies like Google and Apple on how to convert more of their website traffic into customers.

Dr. Blanks and Mr. Jesson state that there is no such thing as a typical opt-in rate because so much depends on the source of traffic. They recommend that rather than benchmarking yourself against a competitor, you benchmark against yourself by carrying out tests to beat your site’s current opt-in rate.

Acquirers have a healthy appetite for data. The more data you can give them – in the ratio format they’re used to examining – the more attractive your business will be in their eyes.

19 Dec How to Attract Your Target Customer in Five Steps

This month, we are sharing another blog post from Eric Knam with ActionCOACH Tulsa. Eric is a certified business coach providing business help, advice, and mentoring services to small and medium-sized businesses. We’ve watched many of our business colleagues move from working IN their business to working ON their business, enjoying the perks of being the boss as a result of partnering with Eric.

Keep reading to learn more about how to attract your target customer!

Five Steps to Get Your Target Customer to Raise Their Hand | Action COACH

Does it seem like it’s getting harder and harder to attract the attention of potential customers? If your answer is yes, it might be worth looking at how you are approaching them.

In this digital world, we often forget to begin a dialogue with our target customers. Instead, we immediately focus on trying to sell them something and skip right over the getting to know you phase. Learning what they need and identifying how your product or service might bring value to them is a key component in creating a relationship that leads to the sale.

Think about that used car salesman who doesn’t even give you time to get out of your car before he starts pushing you toward a vehicle that doesn’t even interest you. How likely are you to hang around to hear what he has to say? Not very! A better approach might be to engage your target audience by asking them to ‘raise their hands’. So how do you get them to ‘raise their hands’?

Step One: Identify Who Your Target Customer Is

Defining who you wish to serve is vital to the success of your marketing initiatives. The more targeted you can make your message, the easier it will be for your ideal customers to find you. To start, create a list of your ideal targets. Start with a broad scope, then narrow it down until you are super focused on one specific target group.

Here’s an example:

Broad Category
Someone who owns a business
Narrow Category
People who own bakeries
Super Targeted Category
Female Bakery Owners

Defining your target audience will allow you to dial in on their pain points.

Step Two: Figure Out a Problem With Which They Struggle

Google has made this pretty easy to do. Just look at the different search trends, habits, and activities for your targets. Then, focus your content creation on the challenges they are facing. If female bakery owners are having challenges hiring or creating reliable supply chains, figure out what you can offer to them that would cause them to engage with you

Perhaps your research determined that several female bakery owners are looking for additional finance options so they can develop reliable supply chains. Now you can create content that helps them find new finance options, provide different financing resources, or highlights best practices for those looking for additional funding.

Step Three: Create Content in Multiple Forms

Writing a long-form blog about the issue is a great place to start. You can then break the content down into smaller posts. Use the information from your research to create infographics. Record and post videos that highlight what you’ve discovered.

Offer a free checklist or tip sheet filled with best practices. You can also save yourself some time by sharing articles or other resources that were created by someone else.

Step Four: Don’t Give Everything Away at Once

A lot of people create their content, post it, and then hope for the best. Here’s another option to consider. Post only the headline of the article you found with the following message:

“I just read a great article on (TOPIC) if you’d like more information or the link, type (WORD OF CHOICE) in the comments.”

Now your target audience has the opportunity to ‘raise their hands’, which will allow you to start a conversation. Their activity will also boost the engagement of your post. You might also consider asking anyone interested to DM or private message you to get the link or content.

Step Five: Respond Quickly

You must respond promptly to all messages, reactions, and requests to keep the engagement on your post high. This also provides you a great chance to continue building your relationship by asking more questions.

It’s important to vary your content and posts. Everything you put out doesn’t need to have a ‘Raise Your Hand’ goal. Make sure you are also putting out content that will educate, entertain, or inspire your audience. This will ensure that you are offering multiple ways for your audience to engage with you. Mixing up your content will help you keep your audience interested.

Here are some additional types of content to consider:

• Write a Blog
• Create Your Own Video
• Interview Customers or Subject Matter Experts
• Develop Infographics
• Share Tip Sheets or Checklists
• Post White Papers
• Offer E-Books
• Post Links to Articles

Providing value to your target customers is always a great way to get them engaged in a conversation. Once you have their attention, focus on their needs, then help them understand how your service or product will better their lives. Once you do that, the rest should be easy.

19 Dec Balancing Your Business & Personal Lives with Eric Knam

This month, we wanted to feature Eric Knam with ActionCOACH Tulsa. Eric is a certified business coach providing business help, advice, and mentoring services to small and medium-sized businesses. We’ve watched many of our business colleagues move from working IN their business to working ON their business, enjoying the perks of being the boss as a result of partnering with Eric.

Keep reading for a few great tips on how to balance your business and personal lives in the coming year!

Balancing Your Business & Personal Lives with Eric Knam

It’s that time again when we start thinking about the upcoming year and all we want to accomplish in the next 365 days. Many of us will commit to losing a couple of pounds, reading more, or starting a workout routine. As a business owner, following through on these resolutions can be extra challenging, especially when your business demands so much of your time.

Let’s face it, owning a business is hard. It’s easy to end up in a situation where you are overworked, which ultimately leads to a feeling of burnout. If you find yourself in this situation, you’re not alone. A recent survey showed that more than 50% of business owners put in at least 50 hours every week and roughly 25% worked 60 hours or more!

There aren’t a lot of people who can sustain those levels of activity for a prolonged period. Most of us end up fried, frazzled, and worn out when we “burn the candle at both ends”. Our bodies weren’t made to perform at these levels for an extended period, so exhaustion tends to be inevitable.

If you are reading this and thinking, “Is he spying on me?” then it might be time to look at rebalancing your life. Long hours are a part of business, especially when you are just getting started.  That doesn’t mean that you can’t carve out some time for a personal life.  Finding ways to reduce your workload while maintaining the business’ upward trajectory will make a huge difference in your physical and mental health down the road.

After all, didn’t you get into business to have a better life? If it’s time to change things up when it comes to your workload, give these sure-fire strategies a try, you’ll be glad you did!

1. Delegate

When you start your business, this will probably be very difficult to do. In many cases, you’ll get the honor and responsibility of wearing most if not all of the “hats” in the business. This can be a good thing. When you know how to do something, it makes it easier to teach and train your replacement.

During the early stages of the business, it’s possible you’ll need to put in 50, 60 maybe even 80-hour weeks. If you’re still doing this after a couple of years, you’re doing something wrong!

The only way your business is going to get better is if you hire go-getters who are smarter than you, train them well, share your expectations and then get out of their way. An outstanding manager working with a well-trained crew will make you smile when you look at your bottom line. If you are open to their ideas and feedback, then the sky is the limit!

There is no way you can do everything yourself, so don’t try. A team of motivated, well-trained employees will make you look like a genius. They’ll also make your business and personal lives a lot more enjoyable.

2. Work smarter, Not Harder

Think about the law of diminishing returns. It can hit business owners especially hard. Do you know anyone who brags that they “work” 80 hours a week? Chances are, if you followed them through a day or two in their life, you’d find out that their productivity was exceptionally low.

It’s a good bet that they classify a lot of non-work activities as work. Sitting at a desk for 8 hours a day focusing on things that aren’t urgent or important is the definition of “busy-ness”, not business! 

How can you find ways to get more done in the time you have? Will an upgrade in your technology help you be more productive? Is the layout of your store inefficient? If so, it’s time to change it. Is your business drowning in paperwork? If the answer is “yes”, then it’s time to streamline things.

Your business can be more efficient and profitable while saving time. Here’s an example: the people of South Korea work roughly 2,100 hours a year on average and produce approximately $32 dollars of GDP per hour worked. On the other hand, the French work approximately 1,500 hours a year, and produce twice the GDP of the South Koreans.

Working smarter, not harder may sound cliché, and that’s ok. If increased productivity and profits resulting from fewer hours worked is cliché, sign me up!

3. Manage As Much As You Need, Not As Much As You Want

This is a tough one for a lot of people. You worked hard to build your business and it isn’t easy to let go. You expect your employees to treat it with the same care and attention that you do. The only way they can do that is if you give them the chance. If you hired the right people, trained them well and gave them the tools to succeed in their positions, back off and let them do THEIR job.

Empowering your employees shows them that you trust them which leads to greater commitment and makes your life a lot easier. You will still need to manage and lead. It’s ok to “trust but verify”, it’s not ok to micromanage.

If you find yourself in the middle of everything every day, you messed up somewhere. Either you are being overly controlling, you didn’t hire the right people, or they weren’t trained properly. Regardless of the reason, the fault is yours. You can’t control everything, so stop trying. Focus your time and energy on the things that really matter and the rest will take care of itself.

19 Dec How to Add Millions to the Value of Your Business

This month, we are sharing another blog post from Eric Knam with ActionCOACH Tulsa. Eric is a certified business coach providing business help, advice, and mentoring services to small and medium-sized businesses. We’ve watched many of our business colleagues move from working IN their business to working ON their business, enjoying the perks of being the boss as a result of partnering with Eric.

Keep reading to learn more about how to add missions to the value of your business with one simple shift!

Add Millions to The Value of Your Business With One Simple Shift | Action COACH

Are you interested in knowing what your business might be worth? If so, it can be helpful to look at what buyers are paying for companies like yours these days. It’s a fair bet that you’ll find that businesses like yours trade for a multiple of your pre-tax profit.

Sellers Discretionary Earnings (SDE) tend to be used for small businesses and Earnings Before Interest Taxes, Depreciation and Amortization (EBITDA) is used for larger businesses.

Stressing Over Your Multiple

Very often business owners get laser-focused on their multiple and how they can increase it. After all, if your business has $500,000 in profit, and it trades for four times profit, it’s worth $2 million; if the same business trades for eight times profit, it’s worth $4 million.

Obviously, your multiple will have a significant impact on the size of the check you take home after the sale of your business. Something else you need to consider is the number your multiple is multiplying (your profit).

Profitability Is Open to Interpretation

Most entrepreneurs see profit as an objective measure that is calculated by their accountant. When it comes to selling your business, profitability can become extremely subjective. You should expect several “adjustments” to be applied to your financials to determine how profitable your business might be for a new owner.

Understanding the “adjustment” process and how you can use it to your advantage will allow you to dramatically increase the value of your company.  Imagine your company generates $3 million in revenue and you pay yourself a salary of $200,000 a year. It is likely that you could hire a general manager for $100,000 per year to take over your day-to-day responsibilities and run the business for the buyer.

In this example, you could easily make the case to an acquirer that under their ownership, your business would generate an extra $100,000 in profit for them. If the multiple for your business is five times profit, that one adjustment has the potential to earn you an extra $500,000.

You should be able to make a compelling case for several adjustments that will boost your profit and, as a result, the value of your business. You will need to be ready to defend your case for each adjustment so the buyer clearly understands how profitable the business will be when they acquire it.

Some common adjustments are rent (applies if you own the building your company operates from and your company is paying higher-than-market rent), start-up costs, one-off lawsuits or insurance claims, and one-time professional services fees.

So remember, while your multiple is important, it isn’t the only number that matters. The subtle art of adjusting your SDE/EBITDA will give you the opportunity to put significantly more money in your pocket when you sell your business.

16 Dec 5 Questions to Help You Decide if You Should Sell Your Business Now

When Is the Best Time to Sell Your Business?

Has selling your business crossed your mind lately? Are you having a tough time trying to decide if now is the best time? Do you ever wish you had a crystal ball so you wouldn’t have to spend so much time on this decision? Do the pros and cons continue to play out in your mind like a tennis match?

If you’re just not sure, try asking yourself the 5 questions below to help you figure out if you’re ready to get
out now:

1. Does the Fight Still Seem Worth It?

A recession can take a huge toll on a business and its owner. If your business is running smoothly and
the thought of having to fight through a recession has you worried, it might be a good time for you to
get out.

2. Are Your Numbers Headed in the Right Direction?

COVID hit a lot of small businesses hard. Was your business one that thrived during 2020? Did you “pivot” resulting in profit and revenue growth? If your numbers are going in the right direction, now might be the best time to make your move.

3. Is the Tax Man Lurking?

Governments worldwide continue to look for ways to pay the costs associated with an aging population. One of the easiest ways for them to do that is to increase taxes.

4. Are You Worried That Your Luck is Going to Run Out?

Let’s face it, no economic cycle lasts forever. If things are going well for you and your business, now might be a perfect time to pull a few chips off the table.

5. What is My Business Worth?

To answer this question, determine your industry multiplier (it usually ranges between 2x and 5x depending on the industry), then multiply it by your seller’s discretionary earnings (SDE).

Buyers want to know if your business has the ability to generate future cash flow and how much opportunity exists in the industry. If both of these numbers are strong, then you stand to walk away with a nice payday.