John Jantsch, author of "The Referral Engine," offers tips on how you can get customers to give your business high marks to potential acquirers.
The process of selling a business is a long journey that typically starts with courting a number of potential buyers. Once you have a few parties interested, there will be management presentations and hopefully multiple offers to buy your company. After evaluating the offers, you’ll likely need to agree to one of them in principle and give your preferred buyer exclusivity to perform their due diligence before they hand over the check.
One of the final tasks of diligence often involves a prospective buyer talking to your customers. After you’ve spent years getting your business ready to be sold and months negotiating with buyers, it may all come down to a conversation between the acquirer and your customers. In fact, getting your customers to say nice things about your business may be the final hurdle you have to overcome before selling your business.
In his new book, The Referral Engine, John Jantsch outlines a formula for creating a referable company. I asked Jantsch to provide his best advice for becoming referable. Here’s our exchange:
Q. I think all business owners would like more referrals. I know your book offers a system, but what one thing would you recommend business owners do today that would immediately get them more referrals?
A. It’s not something tactical that you can do today; it’s a matter at looking at your entire customer experience and finding ways to be more referable. Plug the gaps in each client contact, add ways for customers to get to know more about you and your people, offer trial products that let people test the experience, make the experience of becoming a customer the same as when you were courting the customer, measure the value you are giving, and find ways to improve and increase your contacts.
Q. One of the elements of creating a sellable business is creating a business that’s not reliant on the owner. What’s the secret of generating referrals for a business (as opposed to for the founder personally)?
A. I tend to agree that it’s pretty tough to sell a business that’s a personal brand—go to work on getting yourself out of the marketing department, or at least out of being the rainmaker. Until you can delegate the generation of leads and referrals by creating a success system, you’ll have a tough time convincing someone else they could do the same. I know it’s not too sexy, but documented systems, even for selling, are the key.
Q. Assuming you have identified a possible company to buy your business, how can you get someone to say nice things about your company so that the acquirer will get interested without you having to declare that your business is for sale?
A. Well, I don’t think you simply convince people to say something nice about you as an event. This is something you start today. Ask every customer why they buy from you, what you do that others don’t, if they would refer you and why. This line of research needs to be part of the culture of continually understanding how to get better, how to create a better experience. Do this for any amount of time, and you’ll earn the right to get your customers involved in sharing their testimonials and success stories as an integral part of your marketing.
John Warrillow is a writer, speaker and angel investor in a number of start-up companies. He writes a blog about building a sellable company at http://www.BuiltToSell.com/blog
(Inc.com)
This month’s numbers don’t reveal anything earth-shattering. But what’s really changed is the small business owner’s outlook on the state of the economy. Although we’ve had two months of similar hiring and paycheck numbers, the SurePayroll small business owner optimism number plummeted 11 points, revealing that only 55 percent of business owners are optimistic about the economy. That dip is not too far off from consumer sentiment, according to the Thomson Reuters / University of Michigan consumer sentiment index. Their survey shows a 9 point dip in consumer sentiment from June, with 67 percent of consumers indicating they feel good about the economy.
I would say the numbers and rise in number of people who are pessimistic just confirm that we’re in a near holding pattern in our long, slow climb out of the depths of the recession. That is, if you think we’ve left the recession. Unfortunately, most small businesses don’t think we have (3 in 4 business owners we recently surveyed don’t think the recession is over). When asked why, the majority cited a continued high unemployment rate as the main reason and government policies as another reason they don’t buy economists’ views that we left the recession several quarters ago. Perhaps the difference between the small business owners surveyed and these economists is simply a matter of semantics — what does “out of a recession” technically mean? But either way, business owners aren’t yet feeling better about the economy.
Likewise, consumer confidence is in a decline. More business owners may be feeling that the economy is not improving, but they aren’t drastically changing their hiring or pay habits at this point. We learned that consumers, on the other hand, are acting on their feelings. They put a drastic halt on spending in July, which certainly won’t help improve small business sentiment.
The results of this month’s scorecard come out at the same time we get news that the GDP was much lower than expected in Q2. While there were some winners in the report that could be helping some of the business owners who reported that they are optimistic (non-trade business increased and equipment, software, structures and new construction spending rose), the media has concluded what business owners have —without more jobs, we won’t see increased spending. And without increased spending, we won’t see more jobs.
What does this mean for how you operate your business? Clearly, everyone’s situation is different and requires an individual evaluation. However, given the catch-22 we’re in (without increased demand/revenues, it is unlikely businesses will hire and take us out of the recession and without businesses hiring, it is unlikely consumers will have the income to spend to increase demand/revenues), the mantra of the day remains “caution.” Take slow, deliberate actions that limit your risk for now.
(Inc.Com)
