Increase Profits to Sell Your Business
Lynn and Ted Increase Profits to Sell the Business
Lynn and Ted had a philosophy class together in college. She was majoring in psychology, and he was majoring in engineering. Ted sat in the back of the class. Lynn sat on the first row. When the professor asked questions she was usually the first one to raise her hand. She was very positive. Curious. Enthusiastic. Generous in how she viewed human nature. And beautiful. He followed her out and invited her to go to coffee.
Ted got a job with an engineering and construction firm, Lynn went into human resources, and they married. They have two girls and a boy.
What each of us values determines what we do with our money. Let’s see what Lynn’s and Ted’s values are. Both are high in Economic Value (rank higher than 97% and 77% of us), so they want to have a significant amount of money to fund their lifestyle. Since both also rank high in Theoretical Value (at 75% and 85%), they also want to be sure that they have considered all of the possible options and the advantages and disadvantages of each option before they make plans.
Ted’s old firm designs the structure that the client wants to build, builds it, and leases equipment from equipment companies to build the structure. His firm paid a lot of money to lease equipment to do construction.
Ted worked at the company for 5 years. He did his homework and figured out how to lease equipment to his firm at a lower cost than they were paying and still make a nice profit. He made a proposal to the firm to lease them equipment on a job they had been awarded but would not start immediately. In his proposal his cost for leasing the equipment was less than the cost they had in their contract to build the project. His firm liked that if they leased equipment from Ted they would increase the profit margin on that job. They gave Ted the contract to lease equipment for that job.
Before he made this proposal to his firm, he had researched equipment companies that were for sale. How did he do that? At the Small Business Administration Ted found a list of business brokers and a retired business owner who had sold an equipment leasing company who volunteers to help young business owners. They selected a company for him to buy that had a loyal client base – and he bought it.
Ted is a design engineer. So, he leases equipment for others to build jobs, and he still designs and builds structures for clients. And builds them with his equipment, of course.
Ted has a Master Plan.
1. He hires a sales management consultant that gives an objective eye about to how to increase the number of jobs that his VP of Marketing and his sales team produces.
2. He institutes a Lean Engineering and Construction System that cuts costs and, therefore, increases his profit margin.
3. He sets up a Desk Manual System© that documents the changes from Lean Engineering and explains exactly how each job in the company is done now.
4. Then he looks at what year he wants to sell the company. With 1. – 3. in place he has a record on the computer of more sales across the years, cuts in costs, and what each employee does in each job. So when he sells the business, these will have been in place for years before he puts the business on the market – at exactly the right time for him and Lynn.
Print out the test results below so that you can look at these test results while you read more about Ted and Lynn on this test site.
Now open this Chart and ask…
How do Ted and Lynn Use Their Personality Strengths to Increase Profits to Sell the Business? Read 1.–10.
Sales Management System
His Sales Management Consultant gives an objective eye about to how to increase the number of jobs that his VP of Marketing and his sales team produce.
He creates a Sales Management System that adds or refines the sales process in
1. Cold calls
2. Long term clients
3. Business to business marketing
4. Professional association marketing
5. Internet marketing
Lean Engineering and Construction System:
Reduces Seven Wastes in Engineering and Construction
Lean Engineering and Construction cuts these seven wastes in the engineering and construction process
2. A Surplus of Inventory
3. Unnecessary Transportation Costs
4. Unnecessary Movement of Materials and Supplies
5. Waiting, Delay and Scheduling Problems
6. Defective Output
Desk Manual Workshop©: Creates a Desk Manual for Each Job
Ted hires a management consultant to do Desk Manual Workshops© to teach each employee to write his job down in a Desk Manual. A Desk Manual is a job map of how a person does his/her job – written in step-by-step how to terms. What kinds of advantages does this create for the firm? When a person leaves a job his information about how to do that job stays in his Desk Manual – on the computer. A new person in the job updates changes.
1. When a senior engineer, for example, leaves the company or retires, the junior engineers have the job information that this senior engineer wrote in the Desk Manual and entered into the company computer.
2. When any employee is promoted, the information about how s/he did the job stays in the Desk Manual on the computer.
3. Training time whenever an employee takes a new position is cut substantially.
4. Cross training is easy.
5. All Desk Manuals are linked by how each job follows a previous job. The linked Desk Manuals create a company work flow process. Dr. Knolle does Desk Manual Workshops©.
A Prospective Owner Sees that He Gets…
A Sales Management System, a Lean Engineering and Construction System and a Desk Manual System operated and refined for years – and documented and updated on the computer.
He can buy a really profitable business without having to go to the trouble of learning how to set it up, work the bugs out, and put it in working order to get maximum profits.
Which of Ted’s personality strengths help him avoid costly mistakes?
His high scores in Restraint/Seriousness, Ability to Ask for Help, Theoretical Value, and Change. How do these work together? For example: Ted hears that a long term client Roger has been awarded a construction job. Roger did not contact him to give an equipment number for his RFQ (Request for Quote) to bid the job. Usually he does. Ted uses Restraint/Seriousness to decide how to approach his long term client. Here is what he does:
He asks Roger (Ability to Ask for Help), “What did we do that kept you from calling us to give you an equipment quote?” Roger tells him. “I am buying some equipment that I use over and over again so that I can reduce my equipment leasing costs. When I called your guy Blake to get a quote for the other equipment he told me that he doesn’t lease equipment for part of the job – only for all of the job. So I went to a company that will lease equipment for part of the job.” Ted never told Blake to tell anyone that. Why did Blake say that? Back to Blake later.
Ted uses his Theoretical Value to generate options to take the partial equipment leasing business away from the company that Roger got the RFQ prices from. The option Roger selected is a 10% discount as a Frequent Customer Discount – from the price that Roger got from the competition. So Ted made a Change that kept Roger as a client.
Ted made other Changes. Blake told Roger they did not do partial equipment rental for just part of a job because he was just too lazy to figure it out. Blake figured that Ted would never find out. Ted did some checking. Blake has been sluffing off. He has been put on probation.
Here’s another Change that Ted made: The VP of Sales designated the best sales person Marcie to meet with each long term client just to be sure the client is still happy, keep in touch, and streamline the process of giving equipment leasing bids for the client’s RFQs. If Ted hears about another client not requesting an RFQ for a job he was just awarded then he asks Marcie to talk with this client.
Consultants that You Might Want to Consider Using to Increase Profits and Position Your Business to Sell
1. Jim Mc Caskill: www.ulcomm. Jim asks, “How many years do you want to grow the business before you sell?” “What gross annual revenue do you want to have when you do sell?” You might want to discuss your Marketing Plan with Jim. 713-874-8243
2. Mark Graber: email@example.com. Mark will do a free needs assessment for you. His company has saved client companies up to 20% in administrative and other business costs. 713-851-6606.
3. Jim C. Sorenson: firstname.lastname@example.org. Jim is a business broker. Talk with him several years before you want to sell. 713-468-9933.
Can my spouse and I use our PSAs© solve business owner issues and prepare the business to sell it?
Sure. Use your PSA© to make a chart like this.
You already learned a lot about how a couple can use a PSA© to about Ted and Lynn. You know a lot about your current situation.
1. If you haven’t already done so: Print out Ted’s and Lynn’s PSAs©. You can print out this case study, too. Scan them and save them as a document in a folder named “Our PSAs© and Our Business.” After you get your PSAs©: Use them to help you understand how to use your PSAs© in your business.
2. To order your PSA©: Go back to the Home Page. When you take your tests: Think of yourself as you are when you are at your very best.
3. After you get your PSAs©: Use them to help you understand how to use your PSAs© to see how to increase profitability and prepare the business to sell it..
4. The more you think about your strengths the more you will see how to make them work together…and you get to see how they build together for all of your life.
You can do this!