Buying a second business is an appropriate topic in these tumultuous economic times. The savvy entrepreneur should view the economic downturn as an opportunity to go shopping for future prosperity.
Key components necessary when evaluating a second business play is the following:
* Key Personnel
* Key Customer relationships
* Competitive edge with suppliers / vendors
* Valuation of business ( purchase price in multiples of revenue)
One hot spot to pay attention to is whether the business is cash healthy, asset healthy or both. For example, the second biggest reason businesses fail (management being #1) is cash problems. If a company is cash strapped you shouldn’t run from the opportunity but sift for gold. A business in need of a cash infusion will leave it desperate to make a deal forcing existing management to give up an equity stake or a sale.
Below is an embedded interview from BizWise.tv (cisco sponsored site) with tips on buying a second business
If you haven’t had a chance to scour the resources of bizwise.tv it’s well worth your time in content.
The top ten traffic generation tips is one of the more popular requests from readers (actually traffic generation in general, I just chose to make it a top ten). I find this list can be about 10% subjective but will work for 90% of the blogging crowd who wish to drive more traffic. These are the top ten that have worked for me and I hope you can comment and add to this list so I can repost for the top 25 traffic generation tips…
1.Use Ping functionality. I use wordpress, so there is a simple built-in ping function for automaticly notifying sites like Google or Technorati that new content is ready to crawl. I know most of the other blogging software on the market has this function so investigate regardless of your blogging platform.
2.Quality content is king. YAWN! —-I know you have heard this a million times before, but seriously write content that means something at the end of the day. How tos, case studies, short lessons etc… You will be surprised at how little people actually write about content you’re passionate about.
3.Community. Be part of the community, you don’t have to be a hard core blogger or a prolific website owner, just some geninue comments on blogs, websites and social networks will be enough. Not only will you get inbound links to elevate your page rank, but you will make people aware of your brand. This includes leaving signatures on newsgroups, comments, forums and social groups.
4.BlogCatalog and Mybloglog. Most people will tell you Mybloglog is the way to go, but personally BlogCatalog has been a strong performer for me. Everyone is down to earth and generally cares about networking. There is a reason 73% of blogcatalog loves Startup Addict, it’s because we all support a growing community of blogs and websites that are relevant to our niche…after all that is the point.
5. Directories and linkback sources. There are so many to name here I don’t know where to start. Take a week you dedicate to the Internet and devote your time to finding nothing but directories that will give you valuable link backs and love. Consider all the heavy hitters like ezarticles, blogcarnival, squidoo, topix and many others. Just remember that web 2.0 and social media has added a whole other directory of link back sources (Facebook, Myspace). It’s better to be part of a long term del.ici.ous bookmark then an ephemeral StumbleUpon.
6. Press Releases. There are several. Mashables has a great collection to save you on research all the paid and free services available. A good PR piece is essential for any brand to survive on the Internet. I’m offering the link to Mashables because they used #2 in this list (quality content is king).
7.Organic SEO. Do it yourself or hire it out. But the bottom line is I have far outperformed my PPC (pay per click) results by going organic. Technically this could be #8….learn a little CSS and some SEO copy writing and let the traffic roll in.
8. Yahoo Answers and Wikis. These particaluar sites are prime search engine fodder. Keywords rise fast to the top of Google in these Q&A verticals, be sure to find your niche topic and comment until you are blue in the face. Just make sure your comments or answers are actually useful and the Search Engines will reward you for it.
9.Network. Link exchanges, reaching out to fellow bloggers and website owners in your niche is worth its’ salt. Much of my relationships in the web world have come from real world contacts….don’t be afraid to leave your keyboard behind for an hour or two to reach out and make contact.
10.Use your talent for FREE! If you want to make a buck, sometimes you have to give it away first. For example….if you’re a web designer, give away a free CSS design with a linkback to you. If you are a business writer, compile an ebook and distribute for free with a link back. This causes brand awareness, linkbacks and credibility in your niche.
The real economy might be in the doldrums, but the virtual economy is never better. Virtual products being bought and sold is nothing new to most of you, especially with the success of Second Life from Linden. Lets put into prospective how virtual products are actually becoming critical mass, Habbo Hotel sold more virtual furniture than Ikea did in real life!…over $60 million bucks! That is the claim off a statistic from Viximo site. The reality is Habbo was clearing over $77 million bucks in 2006 in products that do not exist anywhere except servers susceptible to crashes and viruses.
Remember when Disney plunked down $700M for Club Penguin in 2007. At the Habbo numbers that would be 10x earnings. Not a bad investment in a high growth sector where the business models align. That will probably become more potent like 5x by 2010 (only $350 million was cash purchase anyway). But I digress, let’s get back to why you care about this.
How the heck can an everyday Startup Addict or entrepreneur jump in on this?
Viximo is the answer and will help you monetize your brand in this arena. Rather than sound like a parrot here is the quote from Viximo in their words:
Viximo is the only digital goods platform that connects content creators, brands and publishers across the Internet. Viximo enables content creators like you to create compelling digital goods and upload them for distribution across Viximo’s network of online and mobile communities. It basically works like this: You upload and track your good in Viximo’s Creator Community. People buy and send your items to their friends via Facebook apps, social networks, gaming sites and more. And you rake in the royalties! Yep, you get 20% of every sale of your items. Maybe not enough to buy an island but it might just support your coffee addiction.
Question is can they really do it?
The company claims to offer the following:
* Capture imagination and build loyalty with viral digital goods. * Work with you to create a cross-platform campaign with multiple points of distribution online, including Facebook and the iPhone®. * Leverage our world-class creator community, hand-selected to compete in this marketplace. * Provide in-depth data and analytics to measure your success.
The fourth bullet point should probably be the first….giving solid metrics in a new or unknown space for brands is worth its weight in Gold and everyone will start to drink the Kool aid if done properly. More importanly, if the 20% royalties start to add up….that’s all the metrics you need!
Selling continues as the market starts to feel more like 1929 than 1987 with the wide spread panic instilled across the global markets. Although the loss of confidence in the financial markets is a component of the sell-off the real culprit may be the financial titans known as hedge funds. Trillions of dollars tied up in hedge funds are the 800lb gorilla that is probably driving this market sell-off. Interest rate cuts and federal liquidity injection has little effect when Hedge funds are covering their losses from margin calls as well as shorting the market on the way down. Usually blood baths (or bull runs) such as these are of institutional origins from the big money.
First there was the housing crisis, which was not unlike the dot com blow-out. Over indulgence eventually will take its toll. Then we experienced the credit crisis and now we are all in a full blown financial crisis. Will the stock market ever stop dropping? Will the Federal government ever give us back the $700 Billion with interest or appreciation, if so when? So that’s where we are today…but lets back up to the credit crisis phase…why did that happen?
The big institutions like Bear Stearns and Lehman brothers (and others) starting buying up all the risky loans made during the housing boom and packaged everything up into mortgage backed securities. These were sold on the open market with high return (and high risk). In order to hedge the risk and make the securities more palatable to the buyers an insurance policy was sold along with it called a credit-default swap. There was only one catch, it was called a “swap” and not an “insurance policy” for one for important reason…regulation. A swap is not regulated and insurance is. Insurance is not only regulated but requires ample and provable capital reserve in place to cover the default, no matter how great or how many. So this loop hole was exploited with a finacial instrument called swaps and unfortunately had inadequate reserves to cover defaults in large numbers.
Again, you still ask the question how did this happen? People who are smarter than the rest of us…crazy formulas and algorithms from the brightest minds in the world came up with formulas to predict a certain amount of defaults and balance risk and reward. The one catastrophic flaw was you can NEVER model human behavior. As a result here we all are, wallowing in a bowl of our own financial piss. Capitalism that attempted to be to capitalistic. I remember asking myself about 7 years ago when I jumped head first in real estate development and eventually into brokerage “how real estate prices continue to escalate at these prices when salaries are not keeping pace?, something is eventually gonna give.” While I was fortunate to be part of the biggest real estate run in history I am now witnessing the monumental blow-out.
I do have strong faith is this country, I’m an entrepreneur, I’m a proud citizen and as always I think we small business owners and innovators will be the phoenix from the ashes of a conglomerate corporate America that got too fat and too greedy. Rome fell in 800 plus years, I hope America can make it more than 250 years. Serious changes need to take place in this country in terms of credit, spending, debt and energy independence.
I’m not trying to come off as a know it all or a Monday morning Quarterback, hindsight has 20/20 vision or any other platitude you can think of. However, I am trying to insert my voice of short-term reason to a long-term problem.
