Notes from our meeting on February 5th.

The way to effectively use of Social Media is very similar to traditional networking activities.

• Decide what we want to accomplish before we invest time and money in any activity
• One purpose might simply to stay in front of our prospects and clients so they do not forget us
• Use the social media vehicles our targets are using
• Stay within the culture of the social media we are using
• The more we focus on helping others rather than trying to sell, the more effective our efforts will be

If we have a mass market you are trying to reach, then Facebook and Twitter might be viable alternatives.

If we are looking to connect with professionals, then Linkedin might be a good choice.

Facebook has the best viral component tool and is also an easy way for non-technical types to provide visuals.

The Topic was “How to Select the ‘Right’ Target Market”

Ideas included:

• Identify prospects who have a pain that you are an expert in solving
• Be pragamatic, i.e. Who can you reach and who can you stay in contact with long enough for them to buy
• Chose your market versus deciding your market
• Chose a market that you are excited about
• Understand your prospects’ decision making process
• Keep multiple irons on the fire
• Consider the geography and size of your market
• Consider the lifetime value of a client
• Chose a target market where the prospects will hire you
• Apply the 80-20 rule

The participants included:

1. Ted Backman (Finance)  http://www.linkedin.com/in/tedbachman
2. David Bass (M&A) http://www.linkedin.com/in/davidbassrdu
3. Mark Brown (Consulting Support) http://www.linkedin.com/in/markbrownmybizpath
4. Art Burke (HR) http://www.linkedin.com/in/artburke
5. Chris Cardozo (Sales) http://www.linkedin.com/in/theultimatesalesconnection
6. Van Carpenter (Marketing) http://www.linkedin.com/in/bizdoctorvan
7. Graham Crispin (Business Broker) http://www.linkedin.com/in/grahamcrispin
8. Bill Davis (Coaching) http://www.linkedin.com/in/billdavistn
9. Jake Finkelstein (Marketing) http://www.linkedin.com/in/jakefinkelstein
10. Lori Gayle (Finance) http://www.linkedin.com/in/lorigayle
11. Tracey Gritz (Office Efficiency) http://www.linkedin.com/in/traceygritz
12. Steve Hand (Networking) http://www.linkedin.com/in/shand
13. Jerry Helms (Web) http://www.linkedin.com/in/jerryhelms
14. Whitney Hill (Web) http://www.linkedin.com/in/whitneyhill
15. Jim Joyce (Sales) http://www.linkedin.com/in/jimjoycesalespartners
16. Brian Kinahan (Strategy) http://www.linkedin.com/pub/brian-kinahan/0/3ba/185
17. Frank Lyons (HR) http://www.linkedin.com/pub/frank-lyons/0/b92/865
18. Mike Miller (Sales) http://www.linkedin.com/pub/michael-miller/3/541/299
19. Scott Pearce (Sales) http://www.linkedin.com/in/scottspearce
20. Jack Perez (Marketing) http://www.linkedin.com/in/jackaperez
21. Tim Pedersen (Marketing) http://www.linkedin.com/in/rightbraintim
22. Marieke Pieterman (Compensation) http://www.linkedin.com/in/mariekepieterman
23. Manfred Reithinger (Six Sigma) http://www.linkedin.com/in/mreithinger
24. David Rowe (Finance) http://www.linkedin.com/pub/david-rowe/3/780/249
25. Dan Scala (Coaching) http://www.linkedin.com/in/danscala
26. Jerry Seavey (Coaching) http://www.linkedin.com/pub/jerry-seavey/0/b29/900
27. Nick Trapani (HR) http://www.linkedin.com/pub/nicholas-trapani/11/789/420
28. Sue Weems (Coaching) http://www.linkedin.com/pub/sue-weems/0/790/4b1
29. Latoya Williams (Strategy) http://www.linkedin.com/in/latoyajwilliams

I had been the CFO of a public company. My idea was that I would start a business consulting practice serving several smaller companies by becoming their part-time CFO.

I documented all that I had accomplished as CFO and created my first marketing story and brochure. When I told my story to everyone I could get to listen, I got lots of compliments but no business. I had made two mistakes.

 The first mistake was that I assumed that the problems that smaller companies had were the same as my previous public company. They were similar, but not the same. I had to change my story of my business consulting practice so that it was clear that I understood and could solve the problems of the smaller companies.

The second mistake was that I focused too much on me, rather than my prospect. When I tweaked the marketing story from what I had accomplished to what my previous companies had accomplished with my help, my business consulting practice finally started to gain more traction.

For most us who have started a business consulting practice, our first client was actually the easiest one to get once we figured out where to look.

The reason is that most of us have a network of people who know and trust us. Even if you have not focused on networking in a while, you probably can come up with at least 10 people in the business world who know and trust you. If each of these people know at least 10 people, you have a working network of 100 business people. When you start your consulting practice, this is the group of people you should be focused on reaching.

Of course, if you what to jump start your consulting practice, start your networking fast and furious. It will pay big results.

The vast majority of people who start their own business consulting practice do so for the same reason I did. We got tired of the corporate rat race and wanted to have our own business where we could set our own hours and decide how much we wanted to work and earn.

If you want to save a lot of time and frustration, you should decide quickly what type of consultant you want to be. Generally, business consultants fall into one of three categories:

•  Independent Contractor – You are basically filling a role that would be filled by an employee, but are not on the payroll. This type of consultant is the easiest to migrate to from the corporate environment.
• Specialized Business Consultant – You have a particular skill set that makes you an expert in one specialized field. To be successful starting a specialized business consulting practice, you should have or develop tools and systems that would not be generally available and used by your clients.
• General Business Consultant- You have a broad business background that you want to use to help entrepreneurs. To be successful starting a general business consulting practice, you should have or develop tools and systems, such as MyBizPath, to help business owners achieve their goals by making changes across their business.

Becoming an independent business consultant is no different that starting any other business. Planning and thinking through the different possibilities shortens the time to success.

Some business owners forget to plan for their exit strategy, others recognize that the last part of their business ownership can have a major effect on what the financial reward their business can provide them and the legacy that they will leave with their employees, customers and the community when they leave their business.

Increase the Price You Get for Your Business – Businesses are usually run just how the owner wants. However, you can probably get make your business more salable and valuable in the marketplace by making it more appealing to a buyer. Many of these changes have bigger impact if they are done long before the business is put on sale. To get the most impact, these changes should be made at least one to two years before you are thinking of selling.

Here are just a few changes that can have a big impact on the price you get for your business:

• Key Employees – One of the biggest concerns buyers have when they look at your business is that when you walk out of the door, much of your business goes with you.
• Report Income – When it comes to reporting income, you, like most small business owners, want to pay as little in income taxes as possible.
• Customer Concentration – Customer concentration is a major issue when more than 10% of revenues come from one customer or when more than 25% of revenues come from the top five customers.

An individual owner may have been in the business for a long time and have a strong enough understanding of how the business is doing without any detailed financial reports. The buyer will not have that same information and ability.

Without adequate information, most qualified buyers will not complete a deal. If they do complete the deal, they will probably assume the worst case scenario and discount the price accordingly.

Sellers should work with their accountants to develop detailed reports that will help them and buyers to understand their businesses better and provide more assurance that the financial information is accurate.

A ton of material has been written about sales and marketing. Most of it is geared toward what works for big corporations.

Most “textbook” sales and marketing activities require a huge investment in time and money in order to be effective. Implementing almost any sales or marketing activity with less than a complete commitment to the program is throwing your money away. 

I have found for myself and my clients that spending money on “sales and marketing” seems like a good thing, so it is easy to get caught up spending money on activities that are not cost effective.

In my business, when I stopped talking about “sales and marketing activities” with “getting customer activities,” it became obvious that many our sales and marketing activities were not producing enough results to justify the cost.  The reason it became effective was that it changed the question I was asking. Instead of “is this a good sales and marketing program?” I asked “is this program getting us customers?

One activity I stopped was casual networking, such as chamber events. Over the last 12 years, almost all of our clients and customers have come from either previous clients or people we had relationships with. We have gotten almost no revenue from the casual networking and these events can consume a lot of time. That time is being spent much more effectively now strenghtening our relationships and finding new relationships through our existing customer and relationship base.

I do not mean to imply that casual networking will not work for you. But unless you have an unlimited budget of time and money, consider looking at each of your activities in terms of how much business you are or will get.

Social Media is all the hit these days. But the challenge is that most of the hype is about connect with lots of people and getting lots of people following you.

As usual, the hype misses the real point. The rules for being successful at Social Media are pretty much the same as they are with traditional networking. 

In my 12 years of consulting, I have met thousands of people and have several hundred business cards laying around my office closet. I do not remember who gave me the vast majority of those cards, let along exchanged any valuable referrals.

Instead, almost all of the referrals I have gotten over the years that have turned into real business came from a select number of strategic networking partners I have gotten to know well. I trust sending business to them and they trust sending business to me.

It might be good for my ego to have 20,000 people following me on Twitter, but it would be much better for my wallet to have 20 people on Twitter who thought enough about what I said to send me real business. I have discovered that most of the people who are successfully using the new Social Media are following the same rules they follow for traditional networking. Relationships and trust are built with time and quality communication.

When it comes to reporting income, you, like most small business owners, want to pay as little in income taxes as possible. Consequently, you and your accountant actively look for ways to delay reporting revenues and accelerate reporting expenses.

When it comes to selling your business, you have just the opposite objective. You want to show the business making a large profit for many years.

Buyers usually look at the tax returns for the previous two to three years. This is why it is so important to start the process long before you want to sell your business.

There are three ways that you and your accountant can accomplish these conflicting objectives:

• Identify and create an audit trail of those items that are expensed on the business tax returns but will not necessarily be incurred by a new owner, i.e., personal use of a business vehicle.
• Do not deduct items which are personal in nature for which you do not wish to create an easy-to- follow audit trail.
• Make sure that all income is being reported on the tax returns

The tax return is one of the key documents that buyers will use when they are deciding if the business is really earning enough money to justify buying the business and how much they should pay for the business.

Small businesses usually sell for between one to three times historical earnings from tax returns. Every dollar of income that is hidden in the tax returns can mean one to three fewer dollars in your pocket when you sell your business.