If I took a poll of small business owners of whom they felt were their most difficult employees in relation to hiring, managing and performance, an over sounding majority would say, salespeople. Having been a salesperson in my earlier career and managed salespeople, I will agree, we are not the easiest group to manage due to personalities and traits that tend to run throughout. On the other hand, we are that necessary evil within your business that can make or break a business. By the end of this article, hopefully, those business owners that feel this way will have a different opinion.
Something else to keep in mind is that a majority of salespeople who have worked for business owners that have this opinion have interesting stories to tell about their tenure in a small business. Many business owners believe that because they hire a sales rep this will solve all the issues in their business and they should hit the ground running. Many are not provided training on the business or given time to get up to speed on the products or services being sold. Many are not managed by someone within the business and given direction. Another thing that is common is that they are not provided with a contract, quotas, and key performance indicators. The ones that are given quotas are provided with unrealistic quotas that were not met before the arrival of the rep by anyone else in the business.
The Importance of Sales Personnel to a Business
Sales personnel are one of the greatest assets to a business as they are responsible for bringing in revenue which keeps the lights on in a business, pays other employees, and funds the business. With that being said, it is important that you hire the best you can find and make sure they are trained, managed and treated with respect within the business, as replacing sales personnel can be expensive.
Hiring Sales Personnel for Your Small Business
Since these individuals are your greatest asset, finding and hiring the right people is going to be key. You need to develop a job description that outlines realistic expectations of skills, objectives, and provide an understanding of salary and commission. Paying a base salary that is peanuts for a salesperson will get you a monkey. If in Ontario, it is now a requirement that they earn minimum wage. If you let them go and they have not earned at least minimum wage, (even if they sold nothing) you will be paying this on their exit.
If you are not experienced in hiring salespeople, hire an outside firm to help you find the appropriate candidates for your business. Use professional sites to list your opening such as LinkedIn, Monster, and Indeed. Do not post a job for a sales professional on Kijiji or a job board.
Once you have found the right candidates, it is well worth the money to invest in someone either inside or a recruitment firm to do a background check, check references and provide them with a sales aptitude test. Having this completed will provide you with the best candidates. Salespeople are good talkers, and most make a great first impression, so it is important that you be prepared to interview them properly to find out if they will fit in your organization and if they have the skills outlined on their resume. If you are not comfortable doing this, enlist outside help. It is important also to look for salespeople that have sold similar products or services. Just because someone sold cars last week does not mean he or she can sell industrial products this week. They may, but there may be more of a requirement on you for additional training. You need to hire someone who is comfortable dealing with your target customer. For example, high tech or industrial salespersons usually have some level of technical knowledge in the industries they have sold. Very different than someone selling retail commodity products.
Once you have found your top candidates (2-3), you will want background and reference checks performed and have sales aptitude tests performed to ensure the best hires. For the individuals that you send an offer, you should have an employment contract that includes points related to the position including quota, salary, commission, bonuses and key performance indicators that are going to be measured. Contracts should be vetted by a corporate lawyer or paralegal who has experience with employment and sales contracts.
On boarding and Managing Sales Personnel
Before hiring a salesperson, it is important that it has been decided who will manage them. Managing salespeople is different from other employees as they are generating the revenue for your business. You need to have someone who can take the time early on to make sure the individual(s) are trained on your products and services as well as how the business functions. You also need to make sure they have the proper tools to track and manage leads and have a defined sales process already in place.
Salespeople should be providing your forecasts and progress reports on a weekly basis and informing the sales manager (usually the owner) of their progress and where leads are in the sales process. Salespeople should be treated and feel a part of your team, as they are one of the essential assets to the success of your business. They should understand the company vision and mission and know what goals and objectives you have set for the business since you are relying on them to meet most of them.
You also want to make sure that if you have multiple sales reps that you ensure equal and protected territories, You do not want to cause conflict between your sales reps fighting over the same business. That will frustrate them and is a waste of their time and hurts your business as well.
As with any employee, you should be performing regular performance reviews. It is important for them to get positive and constructive feedback as well as them having the ability to tell the owner or sales manager what issues they are facing. As with any employee, if there are issues that you are having with the salesperson, they must be documented, and there must be a corrective plan of action. Just getting rid of someone because they are not selling is not good enough. You need to make sure that you did your part as well and provided help. Too many times, we have seen businesses who are not truly ready to hire sales personnel. They do not have the proper processes or training in place or have people with the time to manage.
We have seen too many times where we have been brought in to a business to deal with sales personnel employee issues to find out that due diligence was not performed before hiring. They then were brought in, were given a desk and a phone, ignored, and then there was confusion about why they were not performing.
The Importance of an Accounting System and Chart of Accounts
Most business owners, when they think of financial statements, think of the compiled statements that their accountant produces at the end of the year for them. In some cases, these were created by providing them a box of receipts and in other cases they were produced from your accounting system. In many cases, we find business owners are not looking at them unless they need them for financing or providing to their bank which is insufficient.
Financial statements provide a view into how your business is performing and should be looked at more than at the end of the year, because at that point it may be way too late to react to less than desireable results.
This is why it is important that you have a professional accounting system such as QuickBooks, Sage, or even one specific to your industry. Once you have the system, it is important that you have your Chart of Accounts set-up for your business. You should want to see a breakdown of your revenue by product or service lines, target markets, sales channels, or maybe even geographies. The same is true of your Cost of Goods. It may be important down the road to understand the cost of raw materials, packaging, labour, shipping, or anything else that is included in your costs; especially if you want to understand how each product line contributes to your profit or loss. Expenses within a business tend to be the same across industries. Setting up accounts for your balance sheet should be very specific to your business.
If you are not sure how to set a chart of accounts up for your business, ask a professional for help.
If you are putting receipts in a box and printing bank and credit card statements at the end of the year along with invoices and providing them to your accountant, you are not managing your financials and this is where we find businesses end up in trouble.
Keeping your Bookkeeping Up to Date
Once you have an accounting system, it is important that you keep the information up to date on a monthly basis. Broadly this includes invoices, expenses, and purchases. For other businesses this can include job costing and inventory as well.
Bookkeeping is not a data entry job, it requires someone to understand the chart of accounts and have some understanding of accounting principles. Most small businesses do not need a full-time bookkeeper and in many cases they can get by with a few hours a month based on the number of transactions their business has. Speak to your accountant, as many firms have bookkeepers on staff and for smaller ones, we find they usually have one or two bookkeepers that they have worked with and can recommend. A good bookkeeper can be a business life saver.
If you are not keeping on top of your bookkeeping, this is where we find businesses run into trouble with paying GST / HST (depending on province) and payroll taxes. You may be small enough now to pay annually for GST/ HST, but at some point you are going to be required to pay quarterly and if you do not know what you have earned, if you are not tracking this closely, you may not have the funds to pay which paying late can result in fines and interest. The CRA (Canada Revenue Agency) are very unforgiving when business owners and operators borrow their HST funds for other business purposes – this is considered “trust funds” and should be allocated to any other use than remitting to the CRA.
The Importance of Finding a CPA
As a business owner, you want to make sure that you find an accountant for your business that has a CPA designation and has experience in performing assurance exercises and filing taxes. Just as with any professional that you hire, you want to make sure that you feel comfortable with the individual and are able to sit down and talk to them about your business. Just like with any professional you hire, you need to perform due diligence. Different firms will have different focus areas and designations of accountants with specific expertise. Make sure you find one that meets the needs of your business. In some cases, there might be accountants who focus on particular industries as well.
Too many times we hear from clients that they drop off their books once a year with their CPA and pick up their statements and taxes once completed and never speak to their accountant. As an owner, it is up to you to build a working relationship with your accountant and meet with them to get their advice. They are professionals, so this is not a free service, but is an important one.
Running and Reviewing Monthly Reports
There are reports that as a business owner you should be running on a monthly basis to understand how your business is performing. At minimum you should be running the following reports.
Having Compiled Statements Developed
Every incorporated business should have compiled statements developed by a CPA. The level of compilation is dependent on your requirements. In most cases, most businesses have a Notice to Reader performed. In the case of Notice to Reader statements, your accountant is relying on your books and what you provide them to be accurate and the covering letter will reflect this. If you are having them performed as a management exercise, Notice to Reader statements are adequate. It is important if you don’t understand the statements that you ask your accountant to sit down with you and go through them with you. Too many times we have clients tell us they have them done every year, but do not understand what they are telling them about their business.
This is also why it is important to review statements within your accounting system monthly , as compiled statements are after the fact which means they are completed and there is not anything that can be done to alter what has already happened. It is best to catch it early and make the necessary changes, so there are not any surprises at the end of the year.
For businesses who are looking for financing or investment in their business, a bank or a lender may want Reviewed or Audited Compiled Statements. These two assurance exercises perform more due diligence by the accountant on your books to provide a stakeholder an assurance that the financial statements being presented is fairly accurate. What is required will be dependent on your credit rating, the amount you are looking to borrow or have invested, and your past history with the financial institution. Only Licensed Public Accountants can perform assurance exercises such as Reviews and Audits.
There are several ratios that as a business owner you need to understand about your business, because when you go to a bank in many cases it will be these calculations that will determine whether you get approved for a loan or not. It would be better to know ahead of time before approaching a lender that you do not qualify versus waiting to be turned down. If you have your compiled financial statements, then you can calculate the ratios for yourself.
As a business owner, it is important that you have a good understanding of the financials of your business . If you do not have a good understanding of how your business is performing or where there are potential issues and where to look, it will be difficult to move your business forward and meet the goals that you have set for your business.
If December is your year-end, it is now time to develop a budget for your next fiscal year. A budget is not that difficult to do and is there to help guide you, not to constrain you and your business. An actual budget does not just look at your income statement, but also on your balance sheet.
If you have been in business for at least 2-3 years, you should have a run rate and understanding of your annual growth each year. Forecasting not only looks at your prior years and seasonality, but also should look at the plans you have in place for generating new or increased revenue next year, which could include a new product, new pricing, or a new channel to market. The forecast should also include any expected income from customers in the new year.
Cost of Goods
Depending on your business, your cost of goods sold is most likely going to increase which includes raw materials, labour, and inbound shipping associated with selling the finished product to the end customer. It is vital to plan for this as it will affect your margin.
To budget for your expenses, you will need to have an understanding of the changes that will occur within your costs in the next year and see how this will affect your bottom line. With the changes in the minimum wage, your payroll expenses are going to increase. Once you have completed your marketing budget, this should be input into the expense line as well, along with any other changes such as increases in rent, utilities, or insurance for example. You will need to account for any new headcount or expenses that you may plan to spend this year versus previous years such as travel.
Balance Sheet Items
If you are developing a budget, you have to look at your balance sheet as well as your income statement items. Here is a list of a few items on your balance sheet that need to be planned for and have an understanding of how this affects your cash flow monthly.
IIf you ask 20 people, "What is a marketing plan?", You will get 20 different answers. Most refer to a marketing plan as a promotional plan which are the marketing activities that a business executes to to generate leads and revenue.
In reality, a marketing plan is much more than that, as a promotional plan without re-looking at the other 3Ps can end up not being as useful as it could be if you look at your overall marketing. It is also important to look at your branding and your target market as well. It is vital to develop a budget for the next year as well to determine how much you plan to spend as well establish the metrics that you are going to track to determine the success of your spend.
Product looks at the products and services you provide to consumers or businesses. It is essential to look at all of the products and services you sell and determine if there are ones that are not making money for your business are not sold on a regular basis and decide whether they should be discontinued.
At the same time, you should be looking to determine if there are additional products or services that make sense to add to your business.
With some of the changes that are or could occur over the next year or so with minimum wage increases and possible modifications to NAFTA that will affect businesses, it is going to be essential to relook at your pricing. You cannot wait until legislation is in place and make a drastic change to offset your costs. You are going to need to look at slowly increasing pricing over time to not lose customers. All businesses are in the same boat, so be sure to understand if you are going to be able to withstand the changes without an increase in your prices.
Promotion is where you will need to focus on what activities will drive sales to your business and will be important to develop a marketing budget to track what you plan to spend along with what achievements/metrics you expect for that spend. Do you need to update your website, outsource your social media, develop new brochures for new products and services, or look at events that make sense for your industry and business? You need to have an understanding of what you are doing, when the activity will be performed, the metrics for the activity, who is responsible, as well as what is the cost.
Placement is where you plan to sell your products and services. Do you plan to add an online store this year, or look for other channels to market? Placement can help in providing additional revenue to your bottom line and needs to be planned for in advance.
In speaking with several small business owners, when asked who their target market is they will say, everyone. The problem with this is that you are not focusing your market dollars on those who are those consumers or businesses who are best suited for your products and services and are fishing everywhere. Take the time to focus your marketing on those who will generate the most profitable revenue for your business.
Does your brand need some updating? Does your current mission, vision and value proposition still make sense for your business today? Does your branding resonate with your customers? The start of a new year is an excellent time to launch new branding if it is needed.
Human Resources is a very broad but is an area in which we find many of our clients struggle with and require help in their business. Below is a set of tips focused on the areas in which we find our clients ask for the most help.
Organizational and Management Structure
Once there are employees in an organization, it is essential to have an organizational chart which shows the hierarchy, responsibilities, and reporting structure of the organization. Every employee needs to have one boss from where they get direction and guidance. It is not that others cannot prove input, but an employee cannot be pulled in twenty different directions by multiple people, as this will affect their productivity.
Every manager who has employees reporting to them need to an understanding of the responsibilities of being a manager.
Before you start hiring employees, you should develop a hiring process that you expect all managers to follow. What are some of the key components of the hiring process?
If you have employees that are working for your business, it is imperative that you provide an employment contract as this not only protects the employee but you as well down the road. If you do not have an employment contract that outlines rules and policies regarding their employment, do not be surprised when they leave and you find they are working for your competitor and are calling on your clients, you do not have a leg to stand on. Make sure you have a lawyer review your contract, as there is nothing worse than having an agreement that will not protect your business.
As an employer, it is up to you to understand the requirements regarding employees, labour laws, and human rights as they relate to your business and industry. There are many general requirements such as health and safety training, written policies around health and safety, workplace violence and harassment, as well as accessibility, to name a few. There are some additional ones that are specific to industries or business types that will need to be understood as well.
As a business, it is up to you to file and pay payroll taxes (employee and company) and know how much WSIB or equivalent is required for your industry/business type. Failure to submit payroll or WSIB (in Ontario) can result in harsh fines and interest and can put your business in jeopardy.
Employers need to understand the rules concerning part-time, full-time, and contract employees. If you are not sure, check with your accountant or corporate lawyer. You cannot hire a contract employee to avoid paying payroll taxes. There are a set of tests that the government checks for and if you have a contractor that is really an employee, you will be responsible for all back payroll taxes and in one case we saw CRA make the employer pay for the employee’s portion as well.
This article is not an inclusive list of Human Resources, but are the ones we find are the areas where many small businesses have issues and need help. If you have any questions, do not hesitate to ask us on our business forum on our website.
This summer we decided to personally move to Southwestern Ontario which also meant a decision of moving our business. We have been in business going on eight years, and if we had done this even five years ago, it might not have gone as smoothly as expected. Early on we traveling to client locations locally, even when it was not required. In the last few years, we have dealt with a lot of clients across the province or country remotely utilizing technology that, as well as those that were local, where being on their site was not required. Remote service not only increased our productivity by reducing time in our car but kept the costs for the client down. In many cases, we have had clients that we have not met in person and yet have worked with for years. If this weren't the case, it would have been a harder decision to move to the area we live now as a lot smaller population.
Legislation related to Business in Your New Location
Requirements related to a business can differ from one town or city to the next. Make sure you understand the regulations and legislation related to commercial real estate, home-based businesses if this applies, as well as your industry requirements. There may be local differences in what is required in licensing, taxes, or regulations.
Amending Legal Documents, Licenses, and Marketing Materials
For those that have not moved a business, it is essential to understand what is involved even if you are just going to move to the next town. When you move, you have to change your address on your business license, incorporation papers, as well as WSIB or equivalent, and the provincial and federal government for taxes. You then need to change this on all your marketing materials such as your website, business cards, and any printed material that lists your address. You will also need to change any of your contracts which have your old address.
You will need to notify your insurance company of your move as well and in some cases your insurance could increase or decrease depending on your new location.
Marketing and Your New Location
Once you move your business you have work to do to ensure your business does not suffer and some of these key marketing items are sometimes overlooked. If your website or social media sites are optimized for your local area, then you will need to invest time or pay your web development company to reoptimize for your new location. This will take some time if you are ranked high for your past area. You also need to integrate yourself into your new business area with other business owners and join local networking groups like the Chamber and BNI who can help you grow your business. Get involved in the community of your new business to get the name of the business out there. In many cases, it is a bit like starting over.
Suppliers and Partnerships
Depending on how far you move and the type of business, you may need to look for new suppliers and partnerships in your new location. If this is not the case, it is crucial that you inform both of your intention to move, especially if you have contracts in place.
Updating Customers and Employees
It is vital if you have employees that you keep them informed and up to date on your move. If you are moving a long distance, you are most likely going to lose employees and have to replace them with new ones. If you are just moving the next town over, this will still affect many as could dramatically change their commute to work.
Be sure to inform customers as soon as you can so they are aware of your move, so you retain them and do not lose them as a customer. You want to maintain your loyal customers. You will find customers will travel a little further for products and services to keep the quality and customer service they have with their current vendor.
Updating Your Current Budget
You will need to update your current budget especially your marketing one. If your business situation changes based on location, you will need to reforecast your financials based on the change. Your expenses will definitely change. Be sure not to forget to keep all the receipts for your move, as your move is deductible. Talk to your accountant about this in advance. Be sure to make sure you are investing enough in marketing to draw new customers to your new location.
Moving your business is a big decision, so it is important that you plan the move and be prepared. This is just a short list of key things to remember when you are thinking about moving your business. This is by no means comprehensive and does not include tips for the move itself, but we hope it is helpful to those that are considering the move.
I am not sure how many times a month I hear a client or prospect tell me they hate sales people, they do not trust them, and they do not want to hire them. This is usually after a discussion on how you plan to get your sales increased and how as the business owner, you cannot be the sales person, the marketing person, and the chief bottle washer in the firm. When investigating why they feel this way there are usually similar answers to the questions asked.
How Did You Find and Hire the Sales Person?In too many cases I hear I found them on Kijiji or this person was the son of a friend of mine and they used to sell something. Ask yourself if you think this is a good standard. A sales person represents your business to your prospects and customers who are key to the success of your business. Does it make sense that you would not hire someone with the necessary skills and experience to represent your business in a professional manner?
Hiring a salesperson is similar to how you should hire all personnel, but with a little extra due diligence. You need to develop a job description that includes the requirements and expectations for the position, the qualifications for the jobs, and the soft skills that you believe are necessary to fit into your business. If you do not understand what this should require, get help in developing a professional job description.
Do not list the job on Kijiji or hire the son of a friend who sold something once. Sales is a profession just as marketing and finance. You cannot make just anyone into a sales person. Use professional job boards such as LinkedIn or hire a recruitment firm that specializes in hiring sales personnel. In many cases, some firms specialize in particular industries. Because someone was a top tier salesperson selling cars does not mean that that individual will be successful selling technical equipment. Sales is not sales – it is industry specific, and the sales process and sales cycle is most likely completely different.
It is also important to understand that the skills differ for direct sales people and those that sell through channels. If you are hiring a direct sales person to run your channels, you may find your salesperson is trying to sell for your channels. If you hire a channel sales rep who is more relationship focused to do direct sales, this could be a skills mismatch. Understand the type of sales person and the skills you need to perform the job.
Once you decide to interview candidates, make sure that you have an understanding of the type of interview questions you need to ask and you do the proper background and reference checking. If you are not sure how to do this, get help from the outside. There is even testing you can have sales people take which can help you for a small fee and is offered by many recruitment firms. They also can help you take care of the interviewing and background and reference checking.
Sales people are good talkers, and we all want them and need to be, but it is important if you feel you are not able to see through the “talk,” be sure to get some help with the interview process.
Before you bring a salesperson on board, you need to have an employment contract reviewed by a lawyer that outlines expectations, probationary periods, confidentiality clauses, quotas, pay & commission structures, and any additional job requirements.
How Did You Train the Sales Person?I do not know how many times that I have heard it said, “They came in and did nothing and didn’t sell anything.” I then ask, what kind of training did you provide. In many cases they say, none, as they were an experienced salesperson when I hired them.
Someone can be good at selling and understand the requirements for sales in general, but they do not know or understand your products, services, and company. The ownership of training of sales personnel or any staff for that matter about your business and products and services is up to you. The sales process for your products and services may be different from the last ones that they sold, so it is important that you explain how this works in your business.
If you are hiring someone that is out of school that has not worked as a sales person, then it is your responsibility to train them in sales skills as well. You cannot expect someone who has never performed in a sales role to hit the ground running.
How Did You Manage the Sales Person?Did you make a mistake before of thinking that once you hired the sales person, they would work on their own and would be ready to go out and do their job? Sales people are employees like any other employee you hire, and they need to be managed, but this management is a lot different than other types of employees.
Sales personnel are goal based reward-driven people. They should not have to apologize for this as this is what sets good salespeople apart from low performers. You need to set KPIs (key performance indicators) which are realistic and obtainable for your business, and you or the manager of the sales personnel need to track and monitor performance.
As a manager of sales personnel, you need to provide them with the tools to track their contacts, prospects, opportunities and other key performance indicators that you are measuring. This can be a CRM (Customer Relationship Management System) or could even be Excel Workbooks. There is no excuse for any business not having a CRM today, as there are several that offer free options for small businesses which include HubSpot, Insightly, and Zoho to name a few.
Meeting with sales personnel on a weekly basis is vital whether this is in person or over the phone to get an understanding of your forecasts, pipelines, and issues that they might be having. As their manager, it is up to you to help them in resolving issues and finding out why the forecasts and pipelines are not as expected. Early on there will most likely be the requirement of four-legged sales calls where you accompany them on a sale.
We had a client that was upset that after they hired a new salesperson that they did not hit the ground running. In talking to the owners, it came to our attention that most of their sales to date had been referrals, and through people they knew, so even they had not done “real sales” for their business, and now they were expecting a salesperson to come in and know their business and sell without any guidance, training, or management.
If you find yourself in this predicament, this is when you need to bring in a coach or consultant to help you understand what needs to be done for your business and possibly guide and train your sales personnel.
What Happened When Your Sales Rep Quit or You Let Them Go?Getting rid of a sales person if it is your choice is harder than other employees, as you have to have shown that you have provided them with goals and set expectations, training, and proper management. If there is an underperforming salesperson that you choose to keep after the regular probationary period of 90 days, it will take you 60-90 days to get rid of them if you do not wish to pay severance and the possibility of them taking a lawyer.
For non-performance of sales personnel, you have to provide in writing a notice of non-performance and provide them with 30 days to improve their performance. This needs to be placed on their file. This is the first violation and is why it is important to do this sooner than later. During this period, you as their manager have to show that you have gone out of your way to help them improve performance. At the end of the 30 days, if nothing has improved then you need to provide them a second written notice of non-performance and that if improvement is not seen this could be grounds for termination. In many cases, sales people will have already started to look for another position and will leave before the 60 days is up. If they are still in your business, you need to provide them a final letter stating that this is the final letter and if performance is not seen at the end of this period, they will be terminated. By going through this process and documenting properly, could most likely mitigate and lessen your exposure to legal action and severance pay.
The last complaint that we hear is that the sales person just up and quit on them and took their customer list and gone to the competition. The question they ask is if there is any recourse? In most cases, we find out that there has not been a formal contract where this type of information was outlined as part of their employment contract. Without a contract that outlines the terms of their employment, there is not really any legal recourse.
SummaryWhen it comes time to hire a sales personnel for your business, this will be one of the most important hires you can make. You want to hire the right personnel to represent you and your brand outside your business, so it is important to take this decision seriously and invest the time and effort in bringing the right person on board, training them on your business, and managing them properly so that you have a productive sales force.
If you need help in this area, this is an area where we have helped many of our clients. We can also help you hire other professionals to work with such as recruitment firms for finding candidates or corporate lawyers for developing the right employment contracts and advising you when you need to terminate employment for performance.
This is a rewrite of an article that I wrote almost 7 years ago as the LinkedIn product has changed dramatically and has been since purchased by Microsoft. There are definitely some pros and cons that I have seen over the years, but LinkedIn still is the premiere and primarily only true B2B social networking platform.
Linkedin is the best B2B online networking tool that I have seen or used. I have been using the site myself since 2005 and upgraded to a business account years ago (which was grandfathered on) since Microsoft purchased LinkedIn. I have seen some extreme complaints and price changes from those on the newer Premium Packages. Since I have been using this platform for over a decade, I thought I would provide some of my experiences and findings to those who are not as familiar with the platform.
Finding a Job or Finding Employees
When I first joined the site, it was more about it being the “new” way to network and I will admit I initially just stuck my profile up there and didn’t really think much more about it. At first, I was contacted by individuals I had worked with years ago and lost contact. It became a great way to get back in touch. Later on, when I went through a downsizing, it became a great tool for finding potential positions, networking with headhunters, and finding possible contacts within organizations that I had an interest. You will be shocked that once you have a reasonable network how connected you are to other individuals that could be influencers. I was then contacted by a headhunter who only used Linkedin for executive searches and I ended up landing the position.
There is also a great job search capability within the platform and has become the premiere platform for finding a position. I find my daughter and her friends (millennials) have embraced the platform as one of the key places to look for positions within businesses.
From the employer side, this is an excellent platform to use to post positions to find the right candidates for your open positions. The applicants come into you and can save you money in having to hire headhunters for your open positions.
As I used the tool more years ago, I began to think of new ways to use the tool in my job. In my last position before I started our business, I used Linkedin as a lead generation tool. I began profiling potential partners. By this time I upgraded my basic account to a business account which gave me access to InMails. This allows you to contact individuals that are not in your network. I began using the expanded Search to find and target the owner or decision maker at the potential partner and would contact them through an InMail. I have found that anyone I contacted utilizing InMails would respond to my mail which is about the highest response rate I received from any marketing or sales tool. I do find Linkedin does add greater credibility to a blind contact. I signed several partners who I initially contacted blindly through Linkedin. Prior to starting our business, I was looking for market information on start-up businesses and contacted several VC and Angel Investors to ask questions. Of the 15 that I contacted, I heard from 14. One even provided me his cell phone number to contact directly.
Some people seem to compete to add anyone as a connection which I believe really negates the usefulness of networking. The contacts that I have are either people I know personally or through business or those that I have had direct contact with on Linkedin. This could be through a forum discussion, question and answers, or direct contact discussions. What is the use of your network if you cannot even remember how you connected with them? I have called upon people in my network often and likewise have provided help and guidance to those in my network. I will admit I have become less stringent in the last few years in adding people that are either in my industry (other consultants and coaches) or professionals that are relevant for our business such as accountants, corporate lawyers, financing companies, business brokers....etc. I also will add business owners of businesses in Canada.
I do find periodically I do go through and do a purge of contacts as well which is easy to do, you just need to go to your contacts and select those individuals that you believe are not worth keeping in your network. I recently did that as have over 700. As I went through each one, the question I asked was there a good reason for this individual to be a contact that would benefit either of us. Out of 719 contacts, I got rid of 12.
If you decide to request a connection, write a note to the individual telling them why you would like to connect, as just receiving a blind connection request will get you ignored. Tell the individual why you would like to connect. This is something Microsoft has gotten right. It used to exist in the "old LinkedIn" and some developer or marketing person decided this wasn't needed and took the functionality away. Microsoft has now added this back to the product.
Within your profile, it is important to portray yourself in a way that is clear and professional. You need to ask yourself what are the reasons you want to connect with individuals on Linkedin and if those individuals clicked on your profile, would they be able to articulate what you want to portray and what you do. You have I believe 2000 characters to articulate information about yourself, as well as providing information about your career, experience, skills, and activities.
Another important profile option is recommendations. Do not be afraid to ask people that you have worked with, worked for, or have had as a customer with to write a recommendation for you. This truly adds credibility to your profile and lets others know what you are like.
Sharing Content and Blog Platform and Following People
LinkedIn is a Social Media platform, so you are able to share content both from your personal profile as well as your Company Page. They also have a blog platform where you are able to write articles. All of your articles and posts are attributed as well to your profile With LinkedIn, you are able to write articles which have a worldwide audience. Be sure to choose your tags wisely as well as the subject. This is important to gain credibility as a subject matter expert, especially if you do not not have your own blog.
On LinkedIn you are able to follow individuals even if you are not connected to them. It is important to follow people that you think are influencers and who write and share content relevant to your business. By doing this, their information will show up in your feed, thereby providing you with content you are able to share as well.
LinkedIn used to be the network with the best Company Page. This is no longer true as they have taken so much functionality away that all that remains is a basic posting site with analytics. As a B2B business, you should have a Company Page to put the basic information. If I were a betting person, I suspect that Microsoft will upgrade this portion of the product as Facebook has now taken on the features that LinkedIn started with. They are advertising their platform on Facebook which tells me they know they need to be the Facebook of B2B. There have been some cosmetic changes recently that have improved the Company Page.
You are also now easily able to add job postings to your company page as well.
I have joined several groups on Linkedin over the years. Some are personal such as alumni groups, others are areas of interest, and others are business related. I use to enjoy them and learn from them. What I have found is that real discussions are not taking place in many of the groups. They have become a huge advertising area for companies to push their products and services and really defeats the purpose of a group. I have seen too many where a person has asked a legitimate question hoping someone might help them and they receive 10 responses telling them if they contact their company they will help them. As a consultant this bothers me greatly. What they don’t realize is that by offering advice to someone they are developing themselves as trusted individual and expert and if that person actually needed a product or a service in the future, they most likely would come back to you or recommend you to someone else just providing a helpful answer. Do not be that person that spams groups. If you are going to join, participate. It will be interesting to see what Microsoft does longer term with the groups to possibly make them useful again.
LinkedIn used to have the worst advertising platform among Social Media platforms, but recently since the purchase by Microsoft, if you look at the advertising platform it is starting to look more like Facebook. You are able to boost content you have shared much like you can on Facebook. They also have sponsored InMail as well which goes to your target's mailbox, as well as dynamic, display and text ads which are very targeted very much like Facebook Ads.
I look to try LinkedIn Advertising again soon, now that they have new options for advertising outside the small text ads that were not useful and have never spoken to anyone that saw great value in running campaigns.
If you are considering using Linkedin, it is important that you provide both enough information on your Personal Profile aso that when you contact someone, they can quickly understand information about you and your company and see the value on the relationship even before reading through the message you sent them (remember to send that message) .
Linkedin is a valuable online networking tool. Nothing is the be all and end all and networking face to face is still very important, but it is a tool that you can definitely use to promote yourself, your business, your products, and aid you in finding new contacts, customers and partners for your business. I am excited to see what Microsoft will do next to add to the number one B2B social media platform for networking in North America at a minimum.
Most articles I see focus on providing information and guidance to those who want to sell their business, but not as much on those who are first time buyers of a business. If you were looking to buy a larger business, you should engage a Mergers & Acquisitions professional who will work on your behalf for a fee and help you in assessing whether a business you want to buy is worth what the owner’s asking price. Unfortunately for smaller businesses, there is not that much help available, as in most cases the focus of most business brokers is working on behalf of the seller. Business brokers are governed by the real estate board and typically help smaller businesses find buyers for their business. There are some that will work for the buyer, but in many cases buyers are not prepared to pay someone for this function, so the main focus is on selling.
If you are dealing with a business broker as a buyer and have been contacted by a business broker on behalf of the seller, as with a real estate transaction, they are not working for you, they are working for the seller, so it is up to you to make sure that you do your due diligence. Just because a business is listed at a price, it does not mean that the business is worth that price, so it is up to you as the buyer to understand what you are getting into. As with a real estate transaction, the business broker wants to sell his/her client’s business as high as possible as in most cases, their fee is a percentage of what they get for the seller, depending on what other services they provided the owner.
What Is The Value of The Business I Am Buying?
There are professionals that are Business Valuators (Chartered Business Valuator, CBV))who can be hired to come in and assess what a business is worth, and if you are buying a business that is over a a few hundred thousand dollars, it would be highly recommended that you engage their services. You are going to pay a few thousand dollars in most cases, but if you are going to make that large of a purchase, it is well worth the money and peace of mind. If you choose not to go that route, here are just a few things that you need to look at and find out about the business before you sign on the dotted line:
Though you can get a valuation of a business, at the end of the day, a business is worth whatever the buyer is willing to pay. Current owners almost always overvalue their business. Most buying decisions are emotional and do not always focus on the true valuation at the time, but you want to make sure that you know what you are getting into and do not sign an agreement to purchase before you have done some level of due diligence.
You want to engage the right professionals to help you make the right decisions and make sure that you have individuals working for you and are not taking the word of the owner or business broker who is working on behalf of the seller.
We have written a couple of articles in the past about the expectations of lenders, investors, or even the government when it comes to financing or grants, but this is an area that seems to be the most misunderstood and where we receive many calls. This question comes up the most in respect to those starting businesses which in many cases just have an idea and have not started a business and are pre-revenue.
Having a Sound and Defined Business Strategy
There tends to be a misunderstanding of those who are looking to start a business of what is required by a lender, investor, or grant provider to gain an understanding of your business. In all cases, a full business plan is required that documents the detail of your business in every area to a level that shows you have thought through your business and can demonstrate them in the plan how you got to the numbers and how you intend to execute on the plan and generate the revenue that is projected.
Having a business strategy is the responsibility of the owner(s) in the business. If you have not defined your business strategy and understood all areas of your business, you will not be able to get a business plan developed. The exception being unless are willing to pay for the consulting required to help you develop your business strategy. Developing your business strategy is not part of a business plan development engagement, it is expected that as the business owner that you have this already developed.
For not having a developed business, a start-up will pay 25-50% more than a mature business for having a business plan developed. In 7 years, we have had only two start-ups who could answer the questions we provided about their business to develop a business plan. If you cannot tell us the information and convince us how are going to generate revenue, how are you going to convince a bank, Investor, or the government to give you funding?
Having Skin in the Game
There is a misconception by many who are thinking about starting a business that there is a large pot of gold out there waiting for them to access for them to start a business primarily from banks and the government. Starting a business is a risk, but it is your risk, and your choice and no one made you choose this path. A true entrepreneur takes risks because without taking risks there is no true gain. There is never a time that starting a business is safe.
You have to invest in your own business. Whether that is taking out a loan against your personal assets, using your RRSPs, or using an inheritance from Uncle Bob, no one will give you any funding if you have not invested yourself. You need to ask yourself why would they invest in your business if they do not see that you even believe in your business enough to invest and take the risk with them.
A true entrepreneur works for “free” until the business is making money and all other expenses are paid. You will not have anyone give you financing or investment or a grant to cover your salary. If you need to get paid, then you need to go to work for someone else who can provide you with a salary. We have clients who have not taken wages for years to reinvest in their business. They have used that “skin in the game” such as their RRSP’s, severance, or other sources of money to cover their personal expenses until such time their business can pay them.
Why Banks, Investors, and the Government Lend or Provide Grants
Banks and Investors (whether public or private) are businesses themselves and indirectly so is the Government as they all are looking for a return on their investment. They are not providing money to businesses in “hope” of seeing a return. They are going to provide the money to those where they see the lowest risk and the greatest return.
Banks make money from the interest you pay on the loan they give you. If your business fails, they lose their money and the interest. The risk level may differ by the bank and what industries they shy away from, but if you are a start-up without any history of revenue, the same metrics are being evaluated. Your personal assets will also be assessed. Next, they will look at why you need the money. They are only really going to look at assets or anything that is tangible that they see will aid in generating revenue such as marketing. They will cover a percentage of the assets and the marketing if they feel you can make your payments based on your personal assets and business plan. Banks will follow up to make sure you are executing on the plan as outlined, especially if you are late with any payments.
Investors invest in companies that they believe they will make 2-3 times return on their investment. They want to be out of your business with that return typically within a maximum of a five-year period. They are taking a risk on you and your business, and in many cases, their expertise and contacts will be the reason that they get their money back as well as make you money. For that privilege, you must give up a portion of your business. If you default on your payments, you could have your business taken from you. If you are not earning any money, there is nothing really to give up – they are the ones taking a leap of faith in your products, services & you. If you have not generated revenue from your business, your business is worth close to $0.00 They will look at your investment in the business as well as the potential, but if you can find an investor pre-revenue, do not be surprised if you are not the majority shareholder. The days of high-tech ideas worth millions pre-revenue are few and far between.
The Government provides grants to improve economic development and employment. The grants they provide have a purpose whether provincial or federal. There are grants for manufacturing, as there is a goal of getting manufacturing back in Canada. They are grants for employees and training to help people get hired and trained, so they do not end up on unemployment. They provide grants in the North due to high unemployment rate and closure of businesses to stimulate the economy. The money is not available to give away. They are providing grants for a purpose, so they are looking at the same risks banks, and lenders look at as well. If you are lucky enough to receive a grant, your business will be monitored to ensure that you followed through with the plan as outlined.
What Are They All Looking For?
There are many criteria that all three look for when they are determining whether your business will be approved:
If you are starting a business and are going to need some level of financing, it is important to understand what is required before approaching someone to write a business plan, which you believe will be the key to getting the money you need. You have to have developed your business and be able to articulate every area of your business. It is not the consultant’s job to develop your business.
You also have to be committed and show that you are investing in your business along with understanding what someone will cover with financing. Those providing funding will not cover salaries or items that they cannot attach in some way to reduce the risk.
Having a business plan written does not ensure you will receive funding and no one can promise you this as there are too many factors, including your credit. We always qualify a client fully before proceeding with a business plan, as it does neither the client or us any favour, if we do not believe they will be approved for financing. Our company and individual names are on every plan which adds credibility and assures the one providing funding there has been a level of due diligence. If we do not feel your business is bankable, we will tell you right up front and tell you what you need to do before approaching anyone to have a business plan developed. We have had potential business owners argue with us about not agreeing to do their plan, but it would hurt our reputation and would not help them if we had taken their money knowing that there was not a chance of receiving financing due to the fact the idea has not been developed enough to be a viable business.
RK Fischer & Associates
Our offices are located now in Sarnia, Ontario but are able to provide services across Canada for a majority of services remotely. Our local service area for onsite services is Sarnia, London, Chatham-Kent and surrounding areas with the exception of coaching.
We will provide onsite services that require at least one full day of onsite services in Windsor, Kitchener, Woodstock, Leamington, Waterloo, Cambridge, Kitchener, Guelph, Milton, Oakville, Mississauga, Burlington, Hamilton, Toronto, Vaughan, Markham, Brampton, Richmond Hill, Newmarket, and Durham Region.
For other businesses in Canada who want service onsite and are outside our onsite area, please contact us to discuss your requirements.
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