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If Elvis was an Entrepreneur

exitThe final chord was sung. The noise from the crowd became a roar. The lights came on. But there was still hope … still a chance that he might appear again. And then there was the voice, saying …

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Elvis has left the building.

You’re probably familiar with those famous words. It made us think:

Elvis always knew how he was leaving the building. If he was an entrepreneur, he would surely know how he was leaving the business.

Learning from the pros

Bankers and venture capitalists know at least two ways that they’re going to get their money back (plus the return they need) before they invest in our business. Shouldn’t we know at least one? It’s one of the lessons we can learn from these professionals.

Why you should know how you’ll exit

In 7 Habits of Highly Effective People, Stephen Covey taught us to begin with the end in mind. We should know how we’re getting out of our business before we get into it.

Know your exit. Elvis did. Professional investors do. Yet many entrepreneurs never think about it.

That may be a reason why studies show that a majority of entrepreneurs don’t expect their business to kick in any money for their retirement.

It’s crucial to consider your exit because small businesses are highly illiquid by nature. Unlike shares in a public company, there is no marketplace where you can go to sell it immediately.

Another reason to know your exit – perhaps a more important reason – is that it your exit should be one of the drivers of your business strategy. How you plan to get out affects everything from how you structure your business, where you get money from as well as a number of other things.

3 common exit strategies

  • Sell your business outright
    Just like selling a house or any other asset, you exit the business by giving up any claims to ownership in exchange for an agreed-upon price. On your way out, just say, “Thank you … thank you very much!”                   
  • Redirect cash flows
    Let’s say you invest $25,000 to start a business. Let’s also assume that you make $25,000 after-taxes in your first year in business (after fully compensating yourself for your time).

    Further, let’s stipulate that you don’t need that money for your existing business. Take that $25,000 out and invest it somewhere else.

    You invested $25,000 and you took out $25,000. Essentially, you have no money invested in the business. Yet you still own the business! Get your money out and say, “Thank you … thank you very much!”                     

  • Recapitalize
    You still own the business with this strategy as well. Let’s say that you invested $25,000 to start your business. You got your business started, built it up and are making money.

    You may be able to go to your banker and borrow against your business. Let’s say your banker agrees to a $25,000 loan which you can pay back from the cash flows of your business.

    It’s likely that you’ll need a good use for the money to get your banker’s okay. For example, maybe you have an opportunity to buy a piece of real estate that will house your company.

    In essence, you’ve cashed out of your business because you now have that original $25,000 invested somewhere else. Repeat this strategy over and over until you have enough money to fund the life of your dreams. That’s bigg success!

Thank you … thank you very much for reading our post today.

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Please join us next time when we ask some questions about work – life balance. Until then, here’s to your bigg success!

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Direct link to The Bigg Success Show audio file:
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Shape Shifting Leads to Bigg Success

dog-shape-shifting.jpgLast time, we discussed the two ways to create wealth: other people’s money and other people’s labor (i.e. their time and talent). Historically, there’s been more focus on other people’s money as the lever to riches. Now, other people’s labor holds more promise.

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Today’s show extends that concept and is inspired by one of the characters from the HBO hit series, True Blood. Sam Merlotte, who owns the bar, is a shape-shifter. He can change forms – from human to dog and back.

So here’s a little behind the scenes here at Bigg Success: we often get asked how we get ideas for our shows. We’ve been thinking about this shape-shifting thing for some time as a possible fun topic. Then we saw a Harvard article about a new business strategy.

The words “a shape-shifting enterprise” leapt off the page. Voila … a show was born!

Back to the article – it discusses how many large companies are starting to outsource core activities in order to focus resources on solving customer problems.

The author postulates that the future value of companies will be the sum total of all their arrangements. Let’s emphasis that – using words we use more often here at Bigg Success – the future value of businesses, both large and small, will be in the total value of its relationships.

But a key thing to keep in mind is that businesses don’t have relationships; it’s the people in those businesses who have relationships.

You may have a relationship with a customer who has a problem. How many other customers like this customer have the same problem? With how many do you have relationships?

Once you’ve identified that, who in your network can best solve that problem? By becoming the customer’s go-to person (or company) – by delivering the right product or service at the right time for the right price, you’ll create value for your business.

The Harvard article we talked about references a Fortune article about how Chinese and Indian companies are structuring themselves. The answer: they’re positioning themselves to be shape-shifters!

Shape-shifting is a key for us, as entrepreneurs, to survive and thrive in all economic conditions. It extends well beyond outsourcing. It’s an even deeper relationship, which will create more opportunities for small businesses to work with large companies.

To become a shape-shifter:

Watch your operating leverage. The more fixed costs your business has relative to its total costs, the greater your degree of operating leverage. Just like with financial leverage, higher operating leverage can work against us if things take a downturn.

That’s one of the secrets to being able to be a shape-shifter. If you keep your fixed costs low, you can quickly maneuver your organization to take advantage of opportunities that may present themselves.

Seek out strategic alliances. Explore opportunities to collaborate or joint venture with other people and organizations. The do-it-all-yourself mindset is so yesterday. Focus on what you do best and work with people doing what they do best. This is another key to shape-shifting.

Work with anyone and everyone where it’s mutually beneficial, including your competitors. You may find ways to do more together than either of you can do on your own.

Sometimes you may take the lead; sometimes they may take it. You don’t care. You’re shape-shifting yourself to bigg success!

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Get the tips and tools you need to be a BIGG success.
Subscribe to the Bigg Success Weekly – it’s FREE!

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We thank you so much for reading our post today. Please join us next time when we’re “getting to know you.” Until then, here’s to your bigg success!

Subscribe to The Bigg Success Show in iTunes. 

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Direct link to The Bigg Success Show audio file:
http://media.libsyn.com/media/biggsuccess/00417-061609.mp3

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Marketing in Tough Times: Part 2

marketing2 Today on The Bigg Success Show, we continue our conversation with John Jantsch, the Duct Tape Marketer. Last time, John talked about the importance of getting closer to customers and strategic partnerships to build business. Let’s get back to the conversation …

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georgeJohn, one of the businesses I used to own was a plumbing company. In that business, I learned that many times there are ways to work with competitors – especially if they aren’t direct competition. Even within an industry, people may have specialties and you may find people that you can partner with that are better at something than you are.

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johnThe way to really look at that is, “How can you become more valuable to your customer?” Look at it that way as opposed to, “Who can I go to who will refer business me to me?” That’s the mistake that a lot of people make. They reach out to people and say, “Hey, why don’t you send me some business?” And even though they may be capable of doing so, what’s the motivation in that? If the motivation can be, “How can I help you grow your business? How can I provide more value to my customers?” Building a strong network around everything that your customers might need, with you being the go-to person to recommend other people to them, is a great marketing and business strategy. Your customers will become much more loyal if they can see you as somebody who cares about their success as opposed to somebody who is just there to sell them something.

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marylynnIt’s all about being real – now more than ever. Going back to what’s been going on in 2008, some of the big guys have fallen and so has trust. People want to feel like they can rely on you.

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johnRight. In fact, my book starts out with my definition of marketing for the small business: finding someone who has a need and getting them to know, like, and trust you. That’s the real business that every small business is in. Well, frankly any business, but certainly the small business who can’t “buy” know, like and trust. If you keep that as the focus, it becomes the filter for every decision that you make that has a customer impact in your business.

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georgeIt seems to me, John, that you’re saying we need to focus on the relationships and not so much on the revenue. The revenue will come.

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johnI certainly believe that. I’m the first to acknowledge that sometimes you have to put food on the table. There is a lot of pressure to actually make the sale. But long-term, the companies that will survive this economic storm will focus on adding value, differentiating, and building a brand that can be trusted. In some cases, these companies won’t experience any downturn and may even find it to be an opportunity. Because people who haven’t been doing things right – not treating people very well, not doing good work, but the phone keeps ringing because people need stuff done – will be the first to go. If you’re in there doing things right in good times and bad, a shakeout in your industry may be an opportunity.

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Get the tips and tools you need to be a BIGG success.
Subscribe to the Bigg Success Weekly – it’s FREE!

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We’re so grateful that you took time to read our post today. Join us next time when we wrap up our conversation with John. You’ll hear about the one thing you have to embrace to keep your business from being left behind. Until then, here’s to your bigg success!

Subscribe to The Bigg Success Show in iTunes. 

Subscribe to the Bigg Success feed.

Direct link to The Bigg Success Show audio file:
http://media.libsyn.com/media/biggsuccess/00309-011509.mp3

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