When Should You Hire Company Valuation Services?

As you prepare to sell your business, your due diligence should include a proper business valuation. But when’s the right time for you to hire company valuation services? In many cases, owners lose value when selling their business because they waited too late for a valuation — a situation any small business owner will want to avoid.

Let’s take a look at a common scenario. You’ve been running your business for more than a decade. In the past few years, you’ve thought about selling, but you’ve made no concrete plans. Recently, your circumstances have changed: it’s time to sell your company. Before listing your business, you hire a company valuation service to determine the fair market value of your business.

The catch? Your business is worth a lot less than you thought. Worse yet, you no longer have enough time to sufficiently increase its value before it goes on the market. Suddenly, you’re looking at a much smaller nest egg for your retirement.

If you want to avoid this kind of situation, you should get your business valuated well ahead of time. This way, you’ll have an earlier sense of your company’s value. More importantly, you’ll have the time and the guidance you need to ensure your business will net the figure you expect to make your next move.

The Benefits of Company Valuation Services

A lot of small business owners think of valuations as little more than a formality. You need a number that you can stick on the price tag for your business. Company valuation services provide that number.

This line of thinking overlooks important benefits of getting a professional valuation. More importantly, it can lose you untold value when it comes time to actually sell your business.

A business valuation offers more than a simple dollar figure for the value of your business. It also shows you where that value comes from. What’s more, it can help you identify issues that are lowering the value of your business.

Using this information, you can develop a strategy for increased value. With help from a valuation specialist, you can come up with a plan that will strengthen areas of positive value and address areas of weakness. This way, your business will be worth much more when you finally list it for sale.

The benefits of this approach may seem glaringly obvious. After all, every business owner wants to maximize the value of their business when selling. But there’s an obvious drawback to this approach: it takes time and effort. If you wait until the last minute to have your business valuated, you won’t have the time you need to increase your valuation figure.

That’s why it’s a smart idea to hire company valuation services well in advance of selling your business.

When to Hire a Valuation Specialist

If you want to maximize the market value of your business, you need to start planning your sale well in advance. Rather than contacting a valuation specialist 3 to 6 months before you intend to sell your business, your initial valuation should take place 24 to 36 months in advance.

While this might seem excessive, it’s the only way you’ll have the time you need to increase your business’s value.

Let’s say you hire company valuation services 24 months ahead of selling your business. After your valuation, you learn that your business is worth less than half of what you expected. Accounting for the 3 to 6 months it will take to sell your business, you have roughly a year-and-a-half to address this deficit. If anything, you’ll probably regret not having valuated your business earlier.

That raises another important concern. Not only is it important that you hire company valuation services early, but it’s equally important that you find the right valuation service. If you hire an unqualified, inexperienced, or unreliable professional, you could end up wasting untold hours and/or dollars based on faulty advice.

Our suggestion? Contact your local Murphy Business® office to request company valuation services. All of our valuations follow the Uniform Standards of Professional Appraisal Practice of the Appraisal Foundation (USPAP), as well as the Business Appraisal Standards of the Institute of Business Appraisers.

As business brokers, we also know what it takes to increase the market value and appeal of your business. We pride ourselves on working closely with business owners in preparation for business sales and transfers, including professional consultation and strategic planning for raising the value of your business.

One final note: While it’s best to valuate your business well in advance of a sale, that’s not always possible. Even if you’ve waited until the last minute, there are steps that you can take to maximize the value of your company and position it for sale. So make sure to hire a trusted and experienced valuation specialist!

Need company valuation services? Call Murphy Business (888) 561-3243 to connect with a local business broker and request a valuation.

Overview of Business Valuation Services in Kirkland

Business valuation, also known as business appraisal, is the process when a neutral third party conducts a defendable, impartial assessment of the value of a company, business ownership interest, intangible asset, or security. Having an unbiased evaluation from a professional consulting service can be vital when selling a company, liquidating a business, building a prenuptial agreement, and countless other circumstances. When you choose Murphy Business Kirkland-Redmond, business valuation services are just one of the many consulting services we offer. 

Choose Reliable and Experienced Business Valuation Services in Kirkland

To manage a Kirkland business, getting a comprehensive valuation from a trusted business valuation service will be necessary at some point. Having an accurate picture of the value of your company can help in any number of circumstances, whether it's because you're trying to deal with investors, building a partnership agreement, or dealing with taxes. Here are some of the common scenarios that services from Murphy Business can help you with: 

  • Sale, acquisition, or merger of a business
  • Planning for retirement
  • Trying to obtain financing 
  • Building buy/sell agreements
  • Disputes with shareholders 
  • Creating an exit strategy 
  • Dealing with divorce settlements or prenuptial agreements
  • Estate and gift taxes
  • Insurance, such as life insurance
  • Litigation 
  • Structuring a partnership agreement 
  • Appraising intellectual property 
  • Restructuring from a "c" corp to an "s" corp 
  • Creating stock option plans for employees (ESOPs)
  • Liquidation 

Our Business Valuation Services in Kirkland

When you choose Murphy Business, you're getting a business valuation service from an internationally reputed firm in Kirkland. Each valuation is conducted by a trained, expert appraiser who is up-to-date in every aspect of business transfers and valuations. Our reliable appraisers fully comply with industry standards such as the Business Appraisal Standards of the Institute of Business Appraisers and the Uniform Standards of Professional Appraisal Practice of the Appraisal Foundation. This compliance means that our valuations are backed and fully defendable. 

For businesses in Redmond and Kirkland, we offer the following business valuation services:

  • Business Valuation Report. A formalized summary of a business's value, used when selling a business or structuring buy-sell agreements with partners and shareholders.  
  • Business Appraisal Report. A comprehensive report with step-by-step explanations of how a fair value was assessed. Can be used for review by the IRS, in litigation support, and by third parties.
  • Calculation of Value Report. A calculated business value developed in compliance with national standards such as the IBA and NAVCA. 
  • Broker's Opinion of Value. Used by brokers, sellers, and buyers, this small business pricing helps to develop selling and listing prices.

Get business valuation services that are trusted and fully backed, by calling Murphy Business Kirkland-Redmond at (425) 679-6627. 

Overview of Business Valuation Services for Greensboro

With Murphy Business Greensboro, business owners can get comprehensive business valuation services that are impartial and defendable. At some point or another, every business needs a thorough valuation from a neutral third party. Whether you're building a partnership agreement, creating employee stock options, or liquidating, understanding the fair market value of your company can be vital. With Murphy Business, you get a local business with global connections and practices that are backed by national industry standards. That means sharp business acumen from experts you can trust. 

Comprehensive Business Valuation Services From The Experts in Greensboro

When it comes to business valuation services, Murphy Business can help business owners in Greensboro navigate how to proceed with a fair assessment of your company. Our experts are fully trained on all aspects of valuations, and are up-to-date on the latest developments, court cases, and issues. We can help you in the following circumstances: 

  • Financing or applying for a loan 
  • Liquidation 
  • Selling or acquiring a business 
  • Planning an exit strategy, retirement, or life insurance
  • Structuring a prenup
  • Divorce proceedings
  • Building a partnership agreement or stock options for employees 
  • Litigation
  • Estate taxes or gift taxes
  • Shareholder issues
  • Shifting from a "c" corp to "s" corp
  • Assessing intellectual property 

Choosing Business Valuation Services in Greensboro

As a brokerage firm in Greensboro, Murphy Business understands how necessary it is for companies to receive fair, impartial business valuation services. We strictly adhere to national standards, so you know you're receiving a defendable assessment that will hold up in legal and sales environments. For business owners in Oak Ridge, Summerfield, and Greensboro, we offer the following expert services: 

  • Business Valuation Report. This shortened report typically provides enough information to determine a fair selling price for a business, or to assist in non-legal purposes such as agreements. 
  • Calculation of Value Report. This report provides a calculated value compliant with national standards such as the National Association of Certified Valuators and Analysts. 
  • Business Appraisal Report. This formalized document can be used in legal proceedings and for third-party review. Includes detailed step-by-step of how the appraisal was conducted. 
  • Broker's Opinion of Value. The BOV is created specifically for small businesses. It presents a pricing report used by business brokers and sellers to determine listing prices for companies. 

Get a comprehensive overview of your company's value. Call Murphy Business Greensboro to learn more about our business valuation services, or to set up a no-cost consultation: (336) 609-7039.

Our Business Valuation Services for St. Louis

At some point, every business owner will need a comprehensive valuation from a reliable third-party assessor. Whether it's for partnership agreements, employee stock options, or putting your company on the market, a business valuation can help you understand the fair value of your company from an objective third party. You can enlist the trusted help of professional business valuation services from Murphy Business Sales – St. Louis Central. As a brokerage firm with a full staff of trained experts, we can provide you with an impartial assessment of your business.  

Business Valuation Services in St. Louis With A Global Reputation

With offices across North America, Murphy Business is a full-service business brokerage firm backed by a global reputation. We're able to keep updated on the latest trends, issues, and court cases related to business valuations. Our valuations are informed by national standards and the most recent developments in business affairs. That means our St. Louis staff can offer you fair, defendable business valuation services for any number of situations:   

  • Acquisitions, mergers, sales, or liquidation of a company 
  • Financing or loans, going from a "c" corporation to an "s" corporation, managing estate/gift taxes, or calculating stock options for employees
  • Navigating divorce process or premarital agreements 
  • Structuring exit strategy, retirement, or managing life insurance
  • Partnership or buy/sell agreements
  • Shareholder conflicts or legal proceedings

Business Valuation Services For St. Louis Area Businesses

Murphy Business has a full team of experienced, qualified appraisers who are fully fluent in every aspect of business valuation services and transfers. For business owners in Maryland Heights, Clayton, Chesterfield, St. Charles, or St. Louis, we can offer the following industry-backed services: 

  • Business Appraisal Report. This formalized document gives a detailed account of how our appraisers reached their assessment. It can be used for IRS reviews, legal proceedings, and more.  
  • Business Valuation Report. This standard, formal summary document is for non-legal situations and can help you reach a fair selling price for a business, structure a partnership agreement, and more. 
  • Calculation of Value Report. This report presents a value that's been calculated in accordance with national valuation standards such as the Institute of Business Appraisers and other organizations. 
  • Broker's Opinion of Value. This document is specifically designed for small businesses. The report can help determine a clear listing or selling price for independent businesses on the market. 

Get a detailed assessment of your business's value, from experts with a global reputation. To set up a free consultation on our business valuation services, call Murphy Business Sales – St. Louis Central at (314) 845-7000.

Business Valuation Services in Jacksonville

What is a business valuation? Also referred to as a business appraisal, it's when a third party assesses and develops a supportable opinion of value for a company, a business ownership interest, a security, or assets. Business valuations are a necessary and inevitable part of running a Jacksonville area business. Having a defendable assessment of your company from an impartial group can help you in any number of ways, whether you're buying or selling a business, structuring a prenuptial, or supporting a legal dispute.  As business consultants with a global reputation, Murphy Business Jacksonville can provide comprehensive business valuation services to your company.  

Business Valuation Services in Jacksonville With Industry-Backed Standards

With Murphy Business, you get business valuation services that are detailed, reliable, and in compliance with national standards. Our expert appraisers are fully experienced in business transfers, valuations, and other aspects of business affairs. They're also up-to-date on the latest issues in valuations and related court cases. That means they can help you navigate valuations, and can prepare neutral, industry-standardized reports for the following situations: 

  • Buying, selling, merging, acquisitions, or liquidation of a company 
  • Obtaining financing, loans, life insurance, or navigating gift/estate taxes
  • Structuring partnership agreements, planning retirement, or exit strategies
  • Developing prenuptial contracts or dealing with divorce proceedings
  • Litigation, shareholder conflicts, or appraising intellectual property
  • Building buy/sell agreements or stock option plans for employees
  • Going from a "c" to an "s" corporation   

Our Business Valuation Services for Jacksonville 

With a proven track record, a global reputation, and comprehensive industry expertise, our consultants can help you navigate the world of valuations and arrive at a fair, defendable price for your business. For Northeast Florida companies in and around Jacksonville, Orange Park, Yulee, Fernandina Beach, and Jacksonville Beach, our firm can provide the following industry-backed business valuation services: 

  • Business Appraisal Report. This formal, detailed report includes a step-by-step summation of how our trained appraisers assessed your business. Suitable for the litigation process, IRS, and others.  
  • Broker's Opinion of Value. Designed for small businesses, this report helps sellers, buyers, and business brokers to determine reasonable selling/listing values and exit planning. 
  • Business Valuation Report. For non-litigation scenarios, a business valuation report is a formal summary of your business's value. Can be used to structure agreements, the sale of a business, and more. 
  • Calculation of Value Report. You'll receive a calculated value adhering to national standards such as the Institute of Business Appraisers and National Association of Certified Valuators and Analysts.

Get a detailed valuation from experts you trust. Contact Murphy Business Jacksonville at (904) 683-6655 for a free consultation, and to learn more about our business valuation services today.

How to Manage Change in Your Organization

Revisiting the basics that small business owners often overlook will bring about the need to change your organization.

Change can be daunting. But, it doesn’t have to be daunting if done as part of a disciplined process. In this post we look at how to manage change in four steps. It is a process that will sharpen your focus and give you a repeatable methodology for continuing to fine tune your business efforts.

 

 

 

 

The four steps are:

Empowering Others to Act on the Vision

  • Getting rid of obstacles to change
  • Changing systems or structures that seriously undermine the vision.
  • Encouraging risk taking and non-traditional ideas, activities and actions.

 

Planning for and Creating Short Term Wins

  • Planning for visible performance improvements
  • Creating those improvements
  • Recognizing and rewarding employees involved in the improvements.

 

Consolidating Improvements and Producing Still More Change

  • Changing systems, structures and policies that don’t fit the Vision
  • Hiring, promoting and developing employees who can implement the Vision.
  • Recharging the process with new projects and themes.

 

Institutionalizing New Approaches

  • Articulating the connections between the new behaviors and new successes
  • Creating the means to ensure leadership development and succession.

 

These four steps, if properly executed will allow you, as an owner, to change your organization not only in an orderly and non-disruptive way but in a way that willingly involves those most affected by change – the people who work for you. However there are some assumptions we need to visit before tackling these four steps:

  • Assumption 1:  You have established a sense of urgency regarding your small business vision and the need to change your organization.
  • Assumption 2: In forming your guiding group you have included participants from all levels of your organization . . . not just managers and executives but line staff too . . . to gain credibility throughout the organization.
  • Assumption 3: You have created that vision AND the strategies to be used to achieve it.
  • Assumption 4: You have widely communicated the Vision and the strategies to be used to ALL stakeholders both internal and external, such as business consultants, and have gained their buy-in.

 

Now, to add some clarity, let’s go back and look at some specific guidance on how to manage change, following the four-step process:

Empowering Others

  • Getting rid of obstacles- Unfortunately almost every organization has a “Bill” . . . someone who has been there forever, is resistant to change and often starts his objections with, “But we’ve always done it this way ….” If you have a “Bill” in your organization it may be time to retire him or re-assign him as difficult as it may be.
  • Encouraging risk taking and non-traditional ideas etc.- If the only “authority” any given employee has is the ability to say “No” (not yes) you be absolutely certain that employee will use it often and most likely with the folks you don’t want to alienate. . .you customers. Broaden your employees’ authority and encourage them to seek creative ways to solve problems. Then trust them to do it.

 

Planning for Short Term Wins

  • Planning for visible performance improvements- identify those areas that need qualitative and quantitative improvements then plan for empowering employees to create the solutions.
  • Recognize and reward employees involved in creating and implementing qualitative and quantitative improvements.

 

Consolidating Improvements and Producing Still More Changes

  • Use the increased credibility gained with the staff to change systems, structures and policies that don’t fit the Vision and the called for strategies and tactics.
  • Hire, promote and develop only those employees that can willingly help to implement the Vision
  • Keep the process ongoing by initiating new projects and themes, all of which are continually measured against the Vision.

 

Institutionalizing New Approaches

  • Point out the connection between the new behaviors and new successes then reward those responsible.
  • Appoint someone to be the plan “sponsor and guardian” whose responsibility it will be to keep the process circular and repeatable as well as monitoring the measurements of success.

 

This last point may be the key to how to manage change successfully. Creating a Vision, sharing it and implementing a single series of changes then putting the plan on the shelf never to be visited again, will guarantee that your company will fall back on previous habits and lose their enthusiasm for fine tuning processes and making your business more competitive and more successful.

Why You Need a Small Business Vision Plan

Having a vision plan is one of the basics of owning a small business, but it’s sometimes unintentionally neglected. A small business vision plan is important because it articulates the owner’s strategy and goals to all stakeholders.

Many successful small businesses are often led by a charismatic and driven entrepreneur who is not only seeking to be successful but also wants to build a business of lasting value that can be passed on to heirs and successors. Usually this type of leader has a very clear business vision plan and roadmap for getting there. The biggest problem is that the plan and the roadmap are, more often than not, in his or her head and are not clear to others in the organization.

More than one manager employed in a small business has complained, “I know my performance is somehow being measured by ownership against some standard or plan but, for the life of me, I don’t know exactly what that is. ” Asking your employees to perform against some vision they can’t see is like asking someone to put together a jigsaw puzzle but not allowing them to see the picture on the box. If they don’t have a clear vision of what the puzzle should look like, they have no idea of how to link the pieces.

It works the same way in your business. Market planning, sales planning, product planning, goal setting and financial forecasting could all be rendered useless if your staff doesn’t have the big picture –a strategic small business vision — of what your organization wants to look like five, 10 or even 20 years from now. In other words, without a business vision plan, how will you know if your strategy is valid — and even more importantly, how will you know when you’ve gotten “there?”

The process of creating a well-organized, facilitated small business vision plan will help you assess and articulate some concepts you may intuitively know but may not have formalized, such as:

  • your organization’s core values;
  • your organization’s core purpose; and
  • a well-defined map to your goals.

 

A formal small business vision plan can help you achieve much-needed ancillary results, such as:

  • creating short term wins for your organization;
  • buy-in from employees; and
  • buy-in from other stakeholders, both internal and external.

 

But even more importantly, that small business vision, once formally articulated and widely shared, becomes the yardstick against which all other planning is assessed and measured. This applies to financial, market, sales and product plans.

Notice the comment about the business vision plan being widely shared. You will probably want to form a relatively small but empowered group to help put your vision into something that can be clearly seen by others.

Once done, the impulse is to share it only with management or those people to whom you have given certain authorities. But that would not be getting the greatest use from your planning efforts. Once complete, the business vision plan should be widely shared with all employees. Why? Well, the obvious answer is that you want their buy-in and you want them to embrace the plan. But an even bigger reason is that if they know what you know, 90% of the time they will make the same decisions you would make.

In addition to your employees, you will want to share the plan with suppliers and key clients, plus your banker, CPA, attorney and estate planner. Doing so will help every one of your external stakeholders –people who have no financial ownership in your business but have a stake in your success — deliver better and more targeted services to your organization, often at a savings in costs and logistics.

Another outcome from engaging in a small business vision planning process is that it will bring about change in your organization, and change can be a very scary word. In the next post, we’ll look at how to deal with change in your organization in such a way that it is not only manageable but welcomed.

Do You Have a Product-Driven or Market-Driven Business?

The first step in identifying your company's driving force is to determine whether you have a product-driven or market-driven business.

In the previous blog post we told you that in the next few weeks we’d be focusing on some of the basics of owning and managing your own small business. In that first post we defined a market and suggested you might want to revisit the definition of your particular market and use that definition to aid you in how you produce your product or service and for whom. This week’s post assumes you have done that whether formally or informally. And if so, then you are now ready to take a look at another of the basics: driving force.

All businesses — both small and large — on the basis of their successful experience operating in the marketplace, develop certain mindsets, usually based on the owners’ and managers’ perceptions of their competitive edge or the uniqueness of their product or service. These mindsets become the driving force behind the strategic and tactical decisions made by owners and managers. In their epic treatise, authors Tregoe, Zimmerman, Smith and Tobias identified eight such driving forces. They are:

  • Products offered (think General Motors or tobacco companies)
  • Markets served (think Proctor and Gamble)
  • Technology (think Apple)
  • Production capability (think agriculture)
  • Operations capability (think hospitals and airlines)
  • Methods of distribution and sales (think Amazon and Wal-Mart)
  • Natural resources (think oil companies)
  • Profit/return (think General Electric)

 

Realizing your particular driving force is another basic that will help you focus your sales and marketing efforts and get more bang for the dollars spent in promoting your product-driven or market-driven business. It will also help you in making strategic and tactical decisions about how to grow your business. For the purposes of this blog we’ll deal with only the three driving forces most small businesses need to consider. That’s why the first step you may want to take is to decide whether you have a product-driven or market-driven business. The difference is actually quite simple.

A product-driven business has a finite set of products, usually unique or without a lot of competition in the marketplace. Tobacco companies are the classic example. A fairly well-defined and finite set of products — cigarettes, cigars, chew and their variants — is their hallmark. Thus, in order to grow, they must continually look for new markets (groups of people) who will find their products attractive and who have the ability to buy them. Conversely, a market-driven business — perhaps like yours — has a well-defined market and pays attention to their wants and needs and continually adjusts their product lines to meet those needs. These companies constantly seek information from their market about what it is they want and what they are willing to buy. (Go back and look at the example of the small sportswear manufacturer in the previous blog post.)

I can hear some of you now: "But my driving force will always be profit/return!" Be careful there. Obviously every business, both large and small, seeks to be profitable; otherwise they won’t be in business for long. But businesses driven solely by the need to meet a predetermined amount of profit or a targeted rate of return often make huge mistakes in decisions to expand their product lines or offered services or where and how to produce those products and services. In particular, they make the wrong “buy, build or partner” decisions. Companies like GE have the luxury of periodically selling off product lines or divisions that do not meet the company’s profit/return standards. Most small businesses do not have that luxury.

Sticking with the product-driven or market-driven business approach is probably the best bet for most small companies. However, if you think your business may be driven by any of the other forces, contact Murphy Business for additional help.

Who is Your Business’ Audience?

Identifying your business’ audience is one of the first — and most important steps — you should take as an owner to set yourself up for success.

We know that running a small business takes a lot of an owner’s time, efforts and focus. There are customers to satisfy, new sales to be made and payroll to be met among a myriad of other issues, all of which taken collectively can sometimes cause owners to take their eye off the ball and lose sight of the blocking and tackling — the basics every business, regardless of size and purpose, must master in order to be successful. The first of these basics we will cover is your business’ audience.

When asked the question, “Can you describe your market to me?” the answer most often heard by business intermediaries is something like, “All of Washington County, the eastern half of Hillsborough County and the northern third of Pasco County including everything on Highway 27.” Now, we all know that such an answer is a description of a territory, not a market. So the question is often re-asked as, “Who is your business’ audience?” The most common response is something like, “All men and women between the ages of 25 and 50.” But such a response is too broad and may not serve your purpose. So what is a market?

Philip Kotler, the longtime professor of marketing at Northwestern University in Chicago, set forth the classic definition when he wrote: “A market is a group of people with similar traits and characteristics; wants, needs, desires, demands and the ability to buy.” What separated Kotler from just about all of his contemporaries and made him the guru for almost every successful marketer since the publication of those words is his insistence that a market is always about people — not geography — and, radically enough, his inclusion of the phrase “ability to buy”.

I know of one small manufacturer of sportswear (excluding shoes) for runners, who offered a broad line of products because he defined his business’ audience too loosely: anyone interested in running and who likes quality goods. For a while, he did well, based on the quality of his goods. As time passed, he added more products he thought runners would like. After two more years, he realized that even though sales had increased, the added products had driven up his manufacturing costs without a corresponding increase to the bottom line. He compounded the problem by looking for ways to cut his manufacturing costs and moved part of it offshore. That worked briefly — until his loyal customers complained about the decline of quality in the merchandise they purchased from him.

One day over coffee he confided to an intermediary he knew (a Murphy Business broker) that he was at a loss as to how to correct the downward trend in his once-thriving business. The agent said, “Tell me about your business’ audience.” The owner gave him the loose definition you read above. It didn’t take long for the agent to figure out the problem. So the two of them set about to find out — using Kotler’s definition as a template — more about who runners are. What kind of people are they? And, into what categories can they be sorted?

What they discovered is that there are people who run for routine exercise, people who run because of some needed health benefit and people who run to compete. When they did more studies, they discovered that of all the types of runners, marathoners were the group who best fit Kotler’s guidelines. Marathoners are a group of people who are competitive, dedicated, extremely fit, and require high-quality, durable goods. They also discovered that of the 18 million Americans who participate in marathons each year, 80% of them are college educated. But more importantly, they found out that marathoners have a median household income of $112,000, whereas runners as a whole had a median household income well below that. In other words, marathoners were “people with similar traits and characteristics; wants, needs, desires, demands and the ability to buy.”

Well, as you can guess, the owner moved his manufacturing back on shore, limited his product line to the needs and demands of marathoners, raised his prices and started focusing his sales efforts to his newly defined business audience. He is still doing quite well because that market continues to grow and he continues to meet their needs.

The point here is that such an exercise and self-audit can be done for any business. Whether you are producing a product or providing a service you must know who your business’ audience is — not what or where. It’s always about people.

Know the Difference Between Marketing and Sales

There are many explanations of the difference between marketing and sales, some quite long. But as is often the case, the best definitions are the simplest and shortest. Marketing is about the needs of the customer. Sales are about the company’s need to make the cash register ring.

One of the most often voiced comments intermediaries hear is something to the effect of, “my marketing efforts just don’t seem to be getting the results I want.” The astute intermediary –such as your Murphy Business broker — usually responds, “Do you mean your marketing efforts or do you mean your sales efforts?” The expected reply: “Same difference, right?” No! Marketing and sales are not interchangeable terms.

The definition of a market is “a group of people with similar traits and characteristics; wants, needs, desires, demands and the ability to buy,” according to Dr. Philip Kotler. So it is easy to accept the fact that a marketing department or a marketing person should be focused on defining who your market is, their common traits and characteristics, their wants and needs and their ability to buy. Then the ongoing task becomes discovering when and how there are changes in those wants, needs, demands and willingness to buy. Marketing data, in its purest form, becomes a huge part of the strategic decisions you need to make about what you will sell and the tactical decisions you need to make about how you will sell it. (Like the difference between marketing and sales, the difference between strategic and tactical decisions is often confused.)

So, now that we know marketing and sales are not interchangeable and very successful small businesses often engage in both, the question becomes: how? What tools and tactics do I use? How do I apply them?

As we said, the very first step is to carefully define your market using Kotler’s definition as your template. Given that you have done that well, and that you have determined whether you are market driven or product driven, then gathering market data — what do the people want and what will the people buy — is not particularly daunting. Among the tools you can use are:

  • email surveys
  • telemarketing
  • focus groups
  • direct mail with pre-paid response cards
  • census and other public databases for data mining

 

Marketing data, if properly collected, will almost always tell you what your customers will buy and often just how much they are willing to pay for it — all of which is strategic in nature.

Once you’ve made the strategic decisions (what we are going to do), then the tactical decisions (how are we going to do it?) are up next. Among the tactical tools readily and inexpensively available to small businesses for sales tactics are:

  • e-tailing
  • coupons
  • BOGOs, two-fers, rebates and other offers
  • tele-sales
  • direct sales
  • phone apps
  • value adds
  • referral rewards
  • frequent buyer programs
  • product or service guarantees

 

All of these are designed to make the cash register ring – a key difference between marketing and sales.