Customer Profile Can Enhance Business
Q: My partner and I have worked in the flooring business for 12 years, and we are licensed. We have four employees. How can we attract new customers and enhance our business?
--Yamil R. Torrez, North Hollywood
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A: First, undertake a customer profile. That means taking a look at how your customers have found you over the last 12 years and who they were. This type of analysis often will yield surprising results and is an excellent indication of how you should seek customers. If you don’t have this type of information now, start getting it, so that 12 years from now you’ll have a great database.
Second, seek out sources who can refer customers throughout the year. It is always easier to cultivate one person, who can refer many customers, than it is to market to one end user.
Third, keep in touch with previous customers. Word of mouth is always a good way to generate new customers.
Fourth, try to develop an ancillary product or service that you can sell to your previous customers.
Sometimes determining what works for your specific business is a matter of trial and error. These suggestions are based on the assumption that you’re in a growing or stable industry.
--Barbara Lewis
Centurion Consulting Group, West Los Angeles
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Q I am interested in purchasing a small business that is both profitable and established. I have seen numerous brokers who are looking to sell nonprofitable businesses for outrageous prices. I need about $8,500 per month to live on before taxes. Have you any good advice that could assist me?
--Geoffrey Lipman
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A: When you are looking for a business, money is just one piece of the puzzle. You need a business that relates to your skills, interests and talents. Ask yourself if you can really add value to the company with your background and your input.
Buyers run into problems when they do not have the information they need, become disillusioned and then seem like looky-loos. Because they are not in control of the deal, they react by making an offer based on what the seller is asking. But the seller has probably set his price based on talking to a few friends or looking at advertisements for similar businesses. His price may have nothing to do with how much money his business is worth.
I tell buyers to take a more active role. Spend a couple hundred bucks and hire a knowledgeable business appraiser/broker to evaluate the business you are interested in and tell you its true value.
A broker can help you package yourself properly, with a resume, credit report and financial information that you can present to a seller to let him know you are serious, intend to do due diligence and make an intelligent offer.
A broker will also show you how to structure your offer, arrange financing and help you ensure that the deal will go through.
Find a broker with broad experience in small businesses. Talk to people who have sold businesses and get some referrals, then look for a broker who will sit down with you, listen to your needs, goals and aspirations and have a vested interest in who you are.
Remember, buying a business is a big deal--you can’t afford to be cavalier about it. If you buy a home and then decide you don’t like it, you can turn around and rent it and make your mortgage payments. But you can spend $150,000 on a business and lose it all in the first three months.
--Bob Singh
President/owner, Rent A Business Broker, Glendale
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Q: I am currently employed full time and am not very interested in operating my own business. The thing is, I always seem to come up with lots of ideas for new businesses or new products. My wife doesn’t even want to listen to them anymore. Is there a place or organization that would buy my ideas?
--Tim Bulone, Yucca Valley
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A: Raw ideas, with no evaluation of their marketability, are not worth much to anybody. Of all the patents that are filed, only about 1% actually result in something that makes money.
If you believe in your ideas and think they are truly viable, put some work into developing them. First, take a good look around and make sure no one has beat you to the punch. Then talk to some engineers and do a reality check: Can your idea or product actually be produced? At what cost?
If you are still convinced that the idea or product is worthwhile, protect it legally, then take it to companies that produce similar products and present it to them. If they are interested and feel they can make money from your product or idea, they may purchase it from you.
Check out Inc. magazine’s February 1997 edition, which features a cover story on idea guru Bill Gross. His start-up “factory,” called Idealab (https://www.idealab.com), has spawned 19 independent Internet-related companies.
--Barry Allen, Consumer Business Network
