After five years of living in our new house, my wife and I decided to buy a new clothes washer and dryer. We figured we'd upgrade to those new, ultra-efficient machines that use really little detergent, water and energy.

But right as I was about to make the purchase, I started to feel really bad for the washer and dryer manufacturer.

Why?

Well, we bought it at Best Buy, and before we made it to the front, where the registers are, our son Max stopped us in the video game section.

And so I started thinking. When am I going to buy my next washer and dryer? Maybe in another 5 years? 10 years? 15 years? 

And when is Max going to get his next video game? Probably next month. And then the month after that. And then the month after that. (If he keeps up the good behavior and good grades as I expect he will.)

What an amazing difference! The washer and dryer manufacturers may only get one sale from me in the next decade while the video game companies might get 120 sales over the same period. Sure, the washer and dryer are bigger ticket items, but even if I'm satisfied, that manufacturer isn't getting squat from me for a long time.

Which made me think of the mistake I made when we first started Growthink.

When Jay and I first started Growthink, we focused solely on developing business plans for companies. We helped a ton of companies achieve a lot of success. But oftentimes, after we helped a company, they no longer needed us. The used the plan to raise money and grow their businesses, and didn't need to come back to us for another business plan.

We were like the washer and dryer manufacturer.

So, we set out to correct this mistake.

We started offering more services to help clients after developing their business plans. We launched our investment banking practice to help them raise capital and/or sell their businesses. And we began offering marketing and internet marketing services to help them generate new leads and customers.

And then we launched Growthink University to help clients with everything they need to successfully start and grow their businesses.

It took us years to get to this point, but now things are humming.

So, my key takeaway for you is to really think about your business:

How often will customers buy from you?

What is the lifetime value of your customers?

How can you increase the number of purchases that customers make from you?

Can you develop new products or services for them?

Can you offer them value month after month after month?

As we start this new year and decade, I want you to take some time to think through these questions. Make sure that you are adding as much value as possible to your customers; and giving them the opportunity to pay you month after month, year after year to receive this value.

If you're even considering selling your midsize company in the next couple years, here's the bottom line:  you should start the process now.

No kidding. 

That does not mean you should officially list your business for sale.  It means you as the business owner should start some of the "behind the scenes" efforts (that is, preparation) that will enable you to maximize the value of your company during a sale and enhance the terms you'll negotiate as early as possible. 

Sound counterintuitive? 

We certainly understand:  you've been growing and leading your company for years, not working to sell it.  You've been building it to last, not flip.   The principals at Growthink have been in your shoes.  We've started and grown businesses ourselves.   And we've sold them too.   We've learned lot of lessons along the way during our collective 100 plus years of start-up and business advisory experience.

But only about one of every three or four businesses successfully reaches a closing after they are listed for sale. 

That's a discouraging statistic, but one that can be overcome.    And consider, too, that various sources note that up to 75% of all business owners are planning to sell their businesses within five to ten years, creating a massive inventory of available businesses competing with you for buyers' attention.  

Why should you care?

What's one of the key differences between those business owners who execute a successful sale of their company on good terms and those who fail to close?  

Simply knowing the process well in advance, focusing on a few essential actions as early as possible, and taking a comprehensive approach that is integrated into your overall business management and planning process.    

Growthink's approach is unique and designed specifically for business owners.    Unlike accountants, lawyers, business brokers and other intermediaries, we believe in a comprehensive approach to optimizing the chances of selling a business for the highest price and on the best terms for the owner.

We recommend you focus on three distinct initiatives months (or years) before you officially offer the company for sale:

1. Enhancing Your Business Plan to Increase Your Value - and Sales Price.  Since 1999, we've helped 2,000 clients build their business plans and strategies.  We'll show you how to achieve a value for your firm that includes its future growth opportunities, not only its past performance.   Consider why the stocks of some public companies in a certain sector command a premium price to others in the sector - it's because investors believe in the future prospects of that company compared to the others.   You should work on developing that premium value for your company through maximizing your business strategy - a process you're probably already doing anyway. 

2. A Complete Process.  These include all the steps involved in selling your business, from beginning to end (and even after the close).  Steps include improving your financial statements and records and thinking about future capital gains, estate and other tax issues as early as possible.

3. Creative Financing and Transactions.  You don't have to sell your business to your first bidder through a straight asset or stock sale.  We'll teach you a variety of structures to choose from, including tax efficient sales to your existing partners, recapitalizing the company so you keep a continued role, and selling to another company in your industry, among others.   All options offer advantages and disadvantages.    You'll learn why and what type of approach might be right for you.

Experience has shown that only a relative few midsize businesses start the sales process early and focus on a comprehensive approach.   Quite frankly, these business owners have a better chance of a successful outcome that those who don't plan. 

We encourage you to learn the basics - whenever you think you'll sell your business. 


Online Seminar - Thursday, January 7th at 1 PM PDT/4 PM EST

Join the expert Growthink team businesses for 45 minutes, and learn key lessons that will benefit you whenever you decide to sell your firm.   The official Growthink "Bottom Line Guide to Selling Your Business" will be provided to seminar attendees.  


Thursday, January 7th at 1 PM PDT/4 PM EST

During the online seminar, we'll also disclose the top mistakes owners make when selling their businesses (the land mines to avoid), as well as government actions that may be coming soon and affect your sales process (yup, think capital gains taxes). 

Sign up here.

Join the expert Growthink team and two entrepreneurs who recently sold their businesses for 45 minutes, and learn key lessons that will benefit you whenever you decide to sell your firm.   The official Growthink "Bottom Line Guide to Selling Your Business" will be provided to seminar attendees.  

Seminar Fee Waived for this Program.   Strictly First Come, First Serve
 
Since our webinar system is limited to 200 registrants, sign up right away to attend via the link below.
 
Sign up here. 

Look forward to your participation,

The Growthink Investment Banking Team

Looking for venture capital? Or looking for great insights to grow your business?

Well, we've scoured a year's worth of great blog posts from hundreds of venture capitalists and industry experts, and are pleased to present you with our 50 favorite posts of 2009.

Some great information is included in these posts, and savvy entrepreneurs and investors will heed this advice.

And we'd love to hear your comments...what posts did we miss?

Enjoy!

1. Ed Sim (Dawntreader Ventures)

When Jay Turo and I founded Growthink a decade ago, we each had a ton of responsibilities.

We had to find new clients, serve clients, develop our website, answer incoming phone calls, manage the books, pay receivables, negotiate partnerships, and so on and so on.

Like other successful entrepreneurs, as we grew our company, we knew we had to hire great people. There is no way that Jay and I could have possibly managed everything the company had to accomplish.

In fact, according to management guru Peter Drucker, an entrepreneur must narrow their role as they grow their organizations. The entrepreneur must focus on the areas that provide the most value to the organization, and delegate the rest.

Yes, your ability to determine what to delegate and to delegate to the right people is the only way to grow a successful company. As author Jim Collins states, "the most important decisions that business people make are not 'what' decisions, but 'who' decisions." That is, determining "who" should do the work is absolutely essential to the work getting done right, and the company being successful.

As a result, it's no coincidence that new ventures succeed, or fail, based on the quality of people they hire. It's no coincidence that Apple was so successful with a key early employee like Guy Kawasaki. Or that PayPal was so successful with Steve Chen, Chad Hurley and Jawed Karim as key early employees? (Steve, Chad and Jawed would later found YouTube.)

Simply put, your ability to hire the right people is absolutely critical to your success as an entrepreneur.

In order to teach you how to hire like an expert, I interviewed Dr. Geoff Smart. Dr. Smart is the Chairman & CEO of ghSMART, which helps companies and investors identify the right people to hire to ensure that they can achieve success. He is also the co-author of the current New York Times Bestseller "Who: The A Method for Hiring."

Interestingly, part of his research in conducting his book was interviewing more than 20 billionaires and 60 CEOs, investors, and other thought leaders, so Dr. Smart was able to learn real-world methodologies that allow entrepreneurs like you to hire with precision.

During our interview, Dr. Smart gave tons of actionable information. Some of the highlights included:

1) Tap referrals when seeking new employees: 77% of successful hires come through referrals. That is, by asking your employees and advisors/friends/colleagues who they know that could be "rock stars" in the open position, you can find great talent.

2) Don't just create a job description. Rather than simply creating a job description for your open position, create a "scorecard." Among other things, this scorecard should focus on the desired outcome of the employee. For example, rather than saying that the employee will be responsible for calling on prospects in Indiana, the scorecard must include numeric sales and prospecting goals (e.g., must make 10 to 15 sales calls/day and close $250,000 worth of sales each quarter). Importantly, entrepreneurs should also use the scorecard to judge employee performance after hiring them.

3) Probe in your interviews. Most interviews don't unmask the real information and insight you need to make quality hiring decisions. For example, if a salesperson said they generated $2 million in sales in their last job, it might seem very impressive. But, only by asking the three "P" questions can you really tell if it was. These questions include how the $2 million compared to the Previous year's sales in that territory, how the $2 million compared to the Planned amount of sales, and how the $2 million compared to sales by the individual's Peers.

Dr. Smart made tons of great additional points that entrepreneurs can use immediately to start building stronger teams and achieve more success. In fact, we are in the process of hiring more customer support staff for Growthink University, and will be employing his techniques immediately.

To hear a short clip of the interview, click the blue triangle on the player below:

Growthink University members can download the full interview here: http://www.growthinkuniversity.com/members/376.cfm

I just finished conducting an interview on how to be an entrepreneur.

And near the end of the interview I asked an interesting question.

I wasn't sure regarding the response I would get, but I was pleasantly surprised.

The question I asked was, "What do you think makes the difference between a good and a great entrepreneur?"

I was expecting a list of qualities that the great entrepreneurs have.

But instead, entrepreneurship expert Dr. Bruce Barringer, gave a really great answer.

He said, "A great entrepreneur makes a difference in your life."

He went on to explain that the founders of Google have changed his life as he spends so much time on Google these days. But you don't have to be the next Google to be a great entrepreneur.

The founders of the local coffee shop have also changed his life. As have the companies that created the podcasting technologies that he employs every day.

The point is that great entrepreneurs are those that create products and services that truly benefit their customers in such a way that the customers integrate them into their lives.

When I think about my life, I can concur. The entrepreneurs who started the gym I go to, the gasoline station I frequent, and the supermarket where I buy my lunch have done a great job creating products and services that meet my needs. If they didn't, I'd patronize their competitors.

So, as you start and/or grow your business, you should make all of your key decisions with this question in mind: "will this decision allow my company to better serve customers and make a bigger difference in their lives?" As Dr. Barringer pointed out, if you solve the customer need, the money will follow.

To hear Dr. Barringer's answers to all of my questions on how to be a more successful entrepreneur, listen to the full interview on Growthink University here:

http://www.growthinkuniversity.com/members/361.cfm

Why Every Entrepreneur Should Wear a Top Hat

Last week, I had the great honor of attending the annual Inc. 500/5000 Conference, which celebrates the fastest-growing companies in the United States.  Surrounded by the country's most inspired and innovative entrepreneurs, I was constantly amazed at what people can accomplish when they set their minds to it.  Truthfully, I took a look back at my life and career and thought, "Should I be doing more?  Am I inspiring others?"

It was a question that hung around me, like a text bubble in a cartoon, as I met and spoke with the many attendees, honorees, and sponsors at the event.  The answer came to me via multiple sources, interactions and conversations.    

The first of such was when I sat in a session hosted by Norm Brodsky, author of "The Knack", Inc. Magazine columnist, and notable entrepreneur.  For those who have yet to hear him speak, he's a cross between Mickey Rooney and Carl Reiner; so it's no wonder he's a dynamic CEO and writer.  One of his main credos in life is, "A smart person learns from his own mistakes; a wise person learns from the mistakes of others."  Brilliant.  As I applied this wisdom to my daily responsibilities with Growthink, I realized that it held an ultimate truth for ALL growing companies: analyze where competitors fall short or stumble, and make THEIR mistakes YOUR advantages.  In business planning, we do this all the time when we assess the competitive landscape: what can our clients do right, that predecessors did wrong?  By way of illuminating these insights for clients, I truly believe we help inspire them.  

While I was exiting the above discussion, a young man to my right looked at my name tag - which displayed Honoree, and said, "Congratulations."  Why did I have that moniker on my badge?  A compliment meant for Growthink Founders, Jay Turo and Dave Lavinsky, the designation let other attendees know that the company I represented was on the distinguished 500/5000 list.  Running into that same young man later - the founder of a recruiting firm - I learned that he aspires to be on one of the lists someday.  He humbly asked if he could send his business plan for review, to which I was very receptive and began speaking to him about his vision.  The fact that he was able to come to the conference and talk to people that were once where he is now, or who could help him set and achieve growth milestones, was something that he treasured.  Maybe one day, at another Inc. conference, I will see him again with Honoree on HIS name tag. Wouldn't that be something?

One of the most jaw-dropping moments of the conference was when Bob Williamson took the stage.  Serial entrepreneur and new author with "Miracle on Luckie Street", he came out to applause and started to speak about his experiences.  Jaws hit the floor when he admitted he arrived in Atlanta with only a few dollars, was homeless (living on Luckie St., no less), and began a rampage of drugs and felonies including heroin, crystal meth, dealing, armed robbery, stints in jail, and grand theft auto that led to a head-on collision and months in the hospital.  Long story short, he was an avid reader that discovered the Bible and - shortly after fully recovering - quit all vices cold turkey.  As we sat there, stunned, he brought the crowd to raucous laughter by admitting that "needless to say, [he] didn't have the greatest resume."

So why was he on that stage?  Well, he lied to get a job in the Glidden manufacturing plant and found a way to save them $50K on labels.  Several promotions, years, and companies later, he's a happily-married, soon-to-be great-grandfather who sold his last ground-up company for $75M.  

Whoa.  One thing is certain: I will never again pass judgment on anyone coming to Growthink for services.  

Can I do more?  Yes.  I can believe wholeheartedly in the people who rely upon the guidance of my company to make vital business decisions; and if, at any time, the road gets rough, I'll ask them, "Have you heard of Bob Williamson?"

The most memorable moment of the conference, however, was when U.S. Secretary of Commerce, Gary Locke, spoke in the general session on Thursday afternoon.  He announced a new initiative by the Obama Administration that will surely motivate those starting and running small businesses, whether left, right or center: the creation of an Office of Innovation and Entrepreneurship.   Along with an Advisory Committee/Board, the Office will enable the incubation of new and growing companies across the nation via education and a network of support (follow the Tweets at seclocke).  Echoing the sentiments of the President, Mr. Locke infused the room with a sense of confidence and belief in entrepreneurs, now and in the future, and their ability to exponentially impact the economy, employment, and the generation of new ideas.  Looking around me, the room was alit with the knowledge that each of us - by way of being entrepreneurs or working WITH them - could make a significant difference.

Everything culminated with an awards ceremony and gala, where "Puttin' on the Ritz" was a celebrated notion and all Honorees approached the stage in recognition of their ranking on the 500/5000 lists.  As I accepted on behalf of Growthink, I commended Mr. Brodsky on his top hat; very fitting for such a festive occasion.  It made think of a time when fashion statements like this were the norm for an evening out. During the Great Depression, more businesses were created than ever before; many people lacked money, but what they didn't lack was ambition, tenacity, and a good top hat.  Why is that, do you think?  While I don't expect we'll see a chapeau resurgence, I do think it's a relevant and bittersweet analogy about succeeding when the economic odds are pitted against you.  

With that said, there were so many other speakers from whom I gleaned inspiration.  Not possessing time to write a novella, I will capture their respective wisdoms below while wishing each and every reader tremendous success built upon fortitude, courage, belief, and the ability to endure.

Scott Griffith, CEO of Zipcar: 7 Steps to Success
1) Get the business model RIGHT
2) Use information as a competitive advantage
3) Keep it simple
4) Create a value-based culture
5) Sell the steak, NOT the sizzle
6) Have a world view
7) Innovate yourself, along with the company

Norm Brodsky: "Build a business like you're going to be in business forever."

Bob Williamson: "Bigger is sometimes better, but PROFITABLE is always good!"

Jill Blashak-Strahan, Founder & CEO of Tastefully Simple: 3 Things to Remember
1) Just start (many times it's the 'start' that stops us)
2) Know where you're going (which doesn't mean you always know what you're DOING.  Dream it, believe it, work it)
3) Don't stop (don't get sucked into fear; fear is the gatekeeper to strength)

Herman Chinery-Hisse, "The Bill Gates of Africa": "Everyone saw Africa as a problem; I saw it as an opportunity."

Ray Anderson, author of "Confessions of a Radical Industrialist", on the mindset that transformed him and led to his polluting company evolving into a GREEN company: "If business and industry must lead, then WHO will lead business and industry?"

Jack Stack, author of "The Great Game of Business": "Operate your business, every day, as if you could GO OUT of business.  A little paranoia goes a long way." (Mr. Stack ran his companies profitably through TWO economic down-turns)

And finally, per Tony Hsieh, CEO of Zappos.com: I don't have the exact quote, but suffice it to say that anyone who travels to Las Vegas and wants to visit the Zappos  Corporate Office in Henderson,  will be picked up by a Zappos shuttle, given a guided tour, and driven back to their hotel. Talk about customer service! (Perhaps I could wrangle a pair of shoes out of it as well?)

I hope to see many of you at next year's conference.  In top hats, of course.