Small Business Retirement

From the Desk of John Kumpunen:

How much do you need to grow your business to make it a salable entity? Are You Building a Poor House or a Castle? What is the amount of marketing you would need to redesign your house and make it into a castle?

FACT #1:

Millions of entrepreneurs, doctors, lawyers, small-business owners, professionals, artists, writers work without a guaranteed pay check, without health and dental benefits, without any hope of retirement benefits and a pension. That’s what building your own castle is all about. We exchanged security for the adventure.

Yet many entrepreneurs have no exit strategy. No idea how they will live when they no longer want to run a business.

FACT #2:

95% of North Americans (including salarymen) will have to rely on government old-age pensions, and other handouts. Half of us will live past 85. Many will have to rely on the generosity of their children and relatives in their golden years.

As entrepreneurs, we chose to build our own castle, not someone else’s. But we need to make it happen — we gotta get those Harv Eker money jars filled — right or right?

You need to get the business to:

a) yield an ongoing residual income (self-managed operation, you don’t need to be there for day-to-day operations),

b) grow the business with the intent to become an attractive salable entity, then invest money from the proceeds of the business,

c) in addition to the two above, create online products or productized knowledge that can be sold to worldwide audiences starving for North-American know-how?

FACT #3:

Web-based businesses sell 3-10 times their gross sales. 61.8% of the surveyed* people realize there is a fantastic opportunity in global, online businesses, but they just don’t know how to get into the business. *ETR survey, 2007

You steal from yourself by doing a half-assed job

What your business is worth today depends on three factors:
1) how much cash it generates today;
2) expected growth in the foreseeable future; and
3) the ROI buyers require on their investment in your business.

FACT #4:

You steal from yourself by doing a half-assed job. The real problem with running an under-achieving business is: it robs you the exhilarating joy of achievement, you could inadvertently miss a fortune just by thinking small and responding to crisis-du-jour • it shortchanges your kids needs and wants, their education, their most memorable family vacations, etc. • and, it may even do a tremendous disservice to your customers and clients. • and at the end, it may not be worth much either as a source of residual income or as a salable entity.

Are you at full capacity? Could you handle more sales?

Could you hire more help? Could you outsource the excess to your new venture partner, formerly known as a “competitor”? Sure you could.

I love this story told by Dan Kennedy: A guy who built a 500-million dollar company from scratch in 36 months said, “Making a million dollars was the easiest thing I ever did. Believing it could happen to me was the hard part that took 37 years.”

A Born-Again Marketer with an End-Game Plan in mind

How much do you need to grow your business to make it a salable entity? What is the amount of sales and marketing you would need to get there? We can help.

FACT #5:

Revenue multiple model of business evaluation is a bit of a myth. Most small businesses appear to lose money on paper (that’s why we have such a tough time with “mouthbreather” bankers). Look, Pratt’s Stats gives an automotive parts business RM factor between 0.98 to 83. A $315K business could be $308,000 or $2.6 million. Pump up your sales and stage the business for a sale with an attractive ROI.

What’s your business worth depends on the industry and the current circumstances. What is comfort in your golden years worth to you? I agree, a lot. That’s where you gotta start. What do you need and how much do you need to grow to get there.

Why be an under-performing small business when there are 475,000 newly baked, good-smelling millionaires created every year?

Sure, any type of marketing creates leverage for your sales, but internet can create incredible leverage — if 1% conversion is worth $200K on your site, 2% conversion is worth $400,000. Incredible leverage!!! See what I mean.

And you don’t even have to be a millionaire to be rich — if you have residual income that’s twice your burn rate (all the money you have to pay out to live), you’re doing just fine.

Think about this: (in theory) small businesses can now reach over 1.2 billion internet users. By 2010, there will be 2 billion — each buying tens maybe hundreds of things. The marketplace is huge, it’s incredible, like never before.

Do you realize how big that is — If it takes you 8 days to count to million — it will take you 32 years to count to billion.

That’s a whole lot of new business even if you connect only with 3 out of a million. One out of a million? Do you think you could do that? Do you think you could sell something to one out of a million people? You bet.
One hour of clear thinking is better than 59 hours of confusion — ask yourself this: How many people out there would buy from you if they only knew about you? How many would connect with you? How many would start a dialog and eventually buy.

Let’s ask Puff. Meet Puff the Internet Magic Dragon

“We worked with one company selling through the usual small-business marketing tactics: trade shows, newspaper ads, referrals, and blah blah. We then put them on the internet and connected their business with Puff the Magic Dragon.”

Instead of the local market they now sell to a market that’s 85 TIMES BIGGER. Let me repeat this in red: They now sell to a marketplace that is 85 times bigger.

They now sell more in a day than they sold in a week. Their website sales increased by tenfold in 6 months. Little bit of Puff the Internet Magic Dragon and a whole lot of mathematics.

FACT #6:

Not only is it possible, it’s being done every day. Jay Abraham tells us: There are only three ways to increase your sales: More customers, bigger ticket, more frequently … increase in only one will boost your business … but having all three working for you will bring unbelievable results.

Not only is it possible, it’s being done every day.

A printing company went from $6 million to $90 million and now sells in 120 countries. A jewelry-bead company does $5.6 million, T-shirt company $6 million, home cleaning advice and products $6 million, batteries and flashlights $7.5 million. A Vancouver company operates 100+ web sites in 11 high-margin consumer and business sectors, their PPC budget alone is over a million dollars. Newegg went from ZERO to one billion in 4 years using the internet.

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