Position a Small Biz for Stimulus Loan: Q&A with Wall Street Journal bestselling author Steve Kaplan

As we’ve reported previously, the government is concentrating on securing loans for small business. Steve Kaplan—an entrepreneur and Wall Street Journal bestselling author—presents all of the steps necessary to get a small business loan in his upcoming book Sell Your Business For the Max. The book is a guide for small business owners, who need it in order to be first to the limited funds.

The cover of Sell Your Business For the Max

Below is a list of some action items necessary for all business owners, pulled directly from the book.

• Keep your customers. Even if your customers are buying less, they should still be buying some. Your ability to show customer retention will go far in completing an acquisition. Remind the buyer that when the market comes back, business recovery is quicker if your customers are still in place.
• Position yourself for growth. Detail how you are positioning your business for growth. Perhaps the economy afforded you the opportunity to get a piece of equipment for a 50% discount. Sure, this hit your cash flow, but the upside is great: You are better positioned for growth. Another example: Maybe you were forced to lay off some employees, but you then restructured or streamlined your business process flow (the way you do things) to be more efficient. You are now positioned for greater profitability in the future, because you now have a company that’s doing more with fewer people.
• Turn operational tasks into profit centers. Look at each step in your operational flow to determine if any step can be turned into a profit center. This will demonstrate the true potential of your business by allowing you to grow horizontally. This is every buyer’s dream.
• Be visual. Prepare simple but visually appealing charts, graphs, and diagrams that will communicate all the positive attributes of your business in simple terms. For example, prepare bar graphs showing year over year increases in customers, profit, locations, or database size to help the buyer quickly digest the good assets.
• Brand, brand, and brand. Write down all your processes, products, and services—which are most likely proprietary as they have evolved over the years—and come up with a name or acronym for each. Naming or branding these allows you to better communicate their value.
• Present a solid business model. A business model demonstrates specifically how—and in how many ways—your business makes money and maximizes profits.

We contacted Steve to ask him a few questions those action items and his upcoming book.

IdeaCafe: The promo for your book says that the steps to preparing a business for sale are the same as those to prepare a business for fundraising. Can you explain this in more detail?
Steve Kaplan: Sure. The cornerstone to successful fundraising be it through foundations, 501C-3 not-for-profits or any other entity relies on the ability of the entity to communicate several critical issues including: the credibility of the organization to deliver on its promises, the value the investment will bring to the investor or donator, its growth potential and the quality of its management team. Just as the sale of a business, the preparation stage is where this communication is developed. Documents such as management bios, execution or sources and uses plans should be created upfront so that they are available during the initial phase between the fundraiser and the donator or the seller and the buyer.

Which of the action items, listed above, are especially important in order to secure stimulus money? With which of them the typical entrepreneur would need external help?
My belief is that the most important aspect of attaining stimulus money is to demonstrate growth. I’m not just talking about business profit rather your ability to grow so that you can provide more jobs to more people. Your best way to communicate this is to create a solid business model and growth plan complete with a hiring plan consisting of the positions needed and the dates you might be hiring. As we’ve mentioned this is also necessary as part of your preparation for a company sale. You’re also going to have to show that your business can sustain itself over time and that’s where the other items such as your management team come into play. Instead of going outside for help I prefer to utilize the skills residing within my business. Ask your employees to take part in the growth plan. Make it a formal process and push them to come up with solid ways to grow their part of the business. This will result in there buying into the plan to a greater level because they were part of its development.

What other related advice would you give to our audience?
I have a few bits of advice…. 1) The preparation steps necessary to sell your business for the max are the same things that are necessary for your business to be successful. Take the time to develop a sound growth strategy, identify all of the value in your business by branding processes that are unique to your business and focus on building a solid organization so that once you have the revenue you have a plan in place to execute against the revenue. 2) During these economically challenging times consider positioning your business for those customers and industries that are buying. Seek business in sectors such as clean energy, and healthcare. Even if you have a print shop you can focus on prospective customers in the above industries. They need your service and have the money to spend. 3) Also pay increased attention to your current customers. Not only are they your bread and butter but in these times of uncertainty customers aren’t incline to take on more risk so secure your customer relationships. 4) Use this time to set the table for the future. Prospects might not be buying now but they are taking meetings. Use this time to educate them on your abilities and start building those relationships as well.

What, in your opinion, are the hottest trends right now in small business, in terms of business approaches and industry fields?
I recently gave a full day workshop for small business owners and sales persons. I was really glad to see just how effective many businesses have become at leveraging relationships through networking and have taken this to a new level. Products such as facebook, Linkedin, and others certainly have been around for a while but are now being taken to a new level. Businesses are pre-pitching within their own businesses as well as outside to find some connection with a future customer. This provides them with a valuable entree or reconnaissance, which often times results in a foot-in-the door at new customers.

What other topics are included in your book?
Some of the issues I also cover in the book include: How to start a bidding war for your company by getting multiple parties interested, where to find potential buyers for your business, and critical mistakes to avoid during the selling process including how to communicate effectively to your employees and customers, how to avoid not getting too focused on the sale that you let the business slide, whether or not to hire an outside representative and what the actual closing process is like. These are important issues that will make the process run much smoother for the seller. They are also things that I wish that I had known these during my first sale.