This week I’ve got a good example of how to improve the local awareness of your business.

Bunnings in Balcatta had an open day / weekend to celebrate the completion of their warehouse upgrade. My family and I went along and I would say they had around 500 people there around 8pm (see my photo below).

How you can use the Bunnings idea in your business

The open day marketing strategy doesn’t have to be limited to the first day your business was open to the public. You could use the same idea to celebrate any anniversary (of any year in business), or to launch new products or services, or to show off a store refurbishment (like Bunnings did) or even to celebrate a tie-in event like Easter, Father’s Day, Halloween, Melbourne Cup and so on.

The aim of the open day may not be to generate sales, but rather to improve the branding and awareness of your business in your area or to generate leads which you (or your sales team) could follow-up with later.

Above is the photo I took in the store during the Friday evening celebration party.

Above is a marketing flyer Bunnings used to promote the event.

Whereby, ‘Brand’ is the relationship between the business and the consumer’s values. For example, when a consumer looks to purchase a running shoe they may think of Nike because of it’s alignment with winning and achieving.

Image and branding has everything to do with identifying your target market, identifying the values that are important to your target market and then creating an image and a brand that relates to those values.

Trying to cover all demographics and values is not recommended because it would be very difficult to achieve effective branding economically. The consumer will be disappointed with the product and the business.

For example, promoting luxury airline tickets whilst actually hearding travellers into small seats and delivering poor customer service will upset those consumers and word will get out and damage the ‘Brand’. Conversely, entering the marketplace promoting high levels of service at a cheap price, will hurt margins for the business and will unsustainable in the long-term.

Typically a brand will consist of an unique mix of values, such as :

• Consumer benefits,
• Style,
• Reliability,
• Quality,
• Price,
• Consumer age target (e.g. children, young adults, mature adults, Generation X, etc),
• Image projection (athletic, adverture, wealth),
• Culture,
  and so on.

Branding can also be broken down into ‘external’ and ‘internal’. External branding is prodominately used to create new customers for the business via mass advertising, such as print, internet, radio and television.

Internal branding is reminding existing customers that you value their business of which the aim is to increase repeat sales from those customers. Internal branding will typically use such media as email, SMS, direct mail and the telephone.

Creating an image and a brand for a small to medium size business is not about flashy and slick advertisements. It’s about getting your key customers (target market) to recognise your business as their prefered choice for the products or service you provide.

I asked them how much research and due diligence had they conducted before buying the business. I was shocked by their response…

"We asked the solicitor who was performing the business settlement service if the business was a good buy."

Talk about throwing $$$ away. Needless to say, they no longer have any available capital to invest in marketing or anything else. The outcome will be to close up shop and accept the loss, and the lesson.

So how do you actually avoid this type of business disaster?

Ask yourself these questions…

1. What do I want from being in business?

• For lifestyle (to work fewer than 40 hours per week, with the freedom to go on holidays whenever you choose)?
• To make a profit by building the business up (increasing sales)?
• To generate more cash-flow than a 9-to-5 job?

If your reasons are not listed above – don’t buy the business. If you want to be involved in what the business does (manufacturing, retail, services, etc) out of personal interest, it’s much less stressful and safer to be an employee.

2. Why am I buying this particular business?

• It’s in a prime location.
• It has a massive customer database which is not being used to its full potential.
• You’ve created a specific plan to massively grow the sales revenue using knowledge you’ve accumulated from being an manager in a similar business, or from a previous business(es) owned.
• The business has ‘something’ (Intellectual property, branding, contracts, etc) that you cannot easily duplicate or purchase.
• You can buy the business at a price much lower than the market value. The vendor is highly motivated to sell.

3. What will be my exit strategy to get out of the business?

• Sell the business for a profit
• Sell the business to a major shareholder(s) and become a silent partner
• Pass the business down to a family member
• Franchise

4. What skills do I have that will make me successful in this business?

Please don’t think that all that is required to ‘improve’ the business is cosmetic – by changing some of the products, re-designing the store interior, etc. These ‘improvements’ won’t double sales.

Only very good marketing, a good sales team and good systems will increase sales significantly. Think MARKETING, SALES and DELIVERY of the product or service (using systems).

5. What skills will I have to "hire in"?

6. What cash flow do I need?

What’s my break-even cash-flow (to cover expenses, wages, etc)?

7. How much working capital do I have access to?

8. Will this business suit me i.e. hours, type of operation?

To ask the vendor who is selling the business…

9. How long has the business been operating?

10. How long have they had the business?

11. Why are they selling?

• Worn out from working long hours for little money?
• Couldn’t make the business work (perhaps in its current location)?
• Actual legitimate reasons such as retiring, moving to another state or country, or looking for another challenge in another business?

12. What is the Cash flow and Profit (Gross and Net) for the business?

13. What is the business owner paying him/herself?

14. What do the last 3 years of financial accounts show?

15. How has the business been valued?

Using the ROI method – based on ‘current’ profit of the business? Certainly not priced on what effort & money the current owner put into the business over the years. Only profit counts.

16. Who are the key customers, suppliers, staff?

17. What are the terms and length of any leases?

18. Will the current owner stay on and assist for a period of time?

Ask them to put this period in WRITING!

19. What areas of the business are systemised?

20. Is there a business plan?

21. How many hours a week does the current owner work in the business?

22. When was the last time the current owner took a holiday?

23. What are the marketing systems like? Do they make money for the business?

Review all advertising material, the customer database, the POS systems (if applicable), any loyalty programs, special promotional material, etc.

24. What facts support the "story" of the business?

25. How secure is future income i.e. contracts with customers and suppliers?

26. How dependent is the business on the current owner?

27. What will it take to grow the business so I can sell it for a profit?

Before you make an offer!

1. Get your accountant to check the financial accounts

Obtain actual lodged tax returns with the government, not the business owner’s printout or handwritten bookkeeping summary.

Your accountant will ensure that the business has cashflow and is not over-capitalised.

2. Hire a solicitor who is experienced in buying businesses like the one you are looking at.

Your solicitor will ensure that the contracts with suppliers, the landlord, etc don’t have any surprises.

3. If you are spending over $250,000 on the business, or even if you want to be extra careful, pay for a business valuation.

Pay a licenced valuer to come in and audit the business. Even if you have to spend $7,000 for the valuation, it’s still much better than paying $50,000, $100,000 or more than you should have to buy the business.

You may even be able to ‘use’ the valuation to negotiate a better price.

The lesson

Homework always pays off in business. Taking shortcuts and buying a business on emotion often lead to regrets. Don’t let this happen to you.