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Get Backed, Get Big, Get Bought: Plan your start-up with the end in mind

Book Description

Bebo sale to AOL nets founders a £290m fortune in 3 years. - March 2008

"Foxtons sale nets founder £370m." - May 2007

"L'Oréal buys Body Shop for £652m." - March 2006

For entrepreneurs and business owners alike, this is your ticket to serious money.

Fact 1: Business is all about making money.

Fact 2: Personal satisfaction is great, but it doesn't pay the bills.

If your main ambition is to make big money from your business, you're already on the right track. Over 4 million people start up businesses in the UK each year but only 1% become millionaires. Start with the end in mind and you could be one of them.

Colin Barrow, bestselling start-up author and business investment specialist, shows you how to shape up for a sale right from the world go:

Get Backed - secure big investment

Get Big - create real value and strong growth

Get Bought - dress the business and negotiate a killer deal

With practical advice, tools and stories from those who have done it, you'll find out how to guide your start-up business towards the payday of your dreams.

Table of Contents

  1. Copyright
  2. Introduction: Be careful what you wish for
    1. AIM HIGH
  3. I. GET BACKED
    1. 1. Problems over passion – the real characteristics of winning business ideas
      1. 1.1. WHAT MAKES AN ENTREPRENEUR?
        1. 1.1.1. MoneySupermarket.com – a high-tech company with a tried-and-tested business plan
      2. 1.2. THE BUILDING BLOCKS OF SUCCESS
      3. 1.3. THE MAGIC FORMULA
      4. 1.4. IDENTIFYING A PROBLEM
      5. 1.5. SCALE AND THE NEED FOR FINANCE
        1. 1.5.1. McDonald's – scaling up through duplication
      6. 1.6. WHY MONEY MATTERS
        1. 1.6.1. WHY THE INTERNET BOOKSHOP WAS ECLIPSED BY AMAZON
      7. 1.7. KEEPING THE COMPETITION AT BAY – BARRIERS TO ENTRY
      8. 1.8. COST VERSUS PRICE
      9. 1.9. A GOOD BEGINNING – GETTING IT RIGHT FROM THE START
      10. 1.10. IF AT FIRST YOU DON'T SUCCEED
      11. 1.11. THE FAILURE MYTH
    2. 2. The traits of the entrepreneur – it's all in the mindset
      1. 2.1. ENTREPRENEUR VS SMALL BUSINESS OWNER
      2. 2.2. VISIONARIES AND LEADERS
      3. 2.3. THE ENTREPRENEUR AS INNOVATOR AND CREATIVE DESTROYER
      4. 2.4. ACCEPTANCE OF UNCERTAINTY
      5. 2.5. OTHER TYPES OF ENTREPRENEUR
        1. 2.5.1. Social entrepreneurs
          1. 2.5.1.1. Oneworld Health (www.oneworldhealth.org) – an agent of positive change
        2. 2.5.2. Intrapreneurs
        3. 2.5.3. Buy-out Entrepreneurs
        4. 2.5.4. More than one way
    3. 3. Nothing new under the sun – the same old problems, some brand new solutions
      1. 3.1. KNOWING THE CUSTOMER
      2. 3.2. THE MARKETING MISSION AND WHY IT MATTERS
        1. 3.2.1. Missions Turn Business Ideas into Money-Generating Propositions
          1. 3.2.1.1. Blooming Marvellous – building on a mission statement
      3. 3.3. FULFILLING CUSTOMER NEED
      4. 3.4. BENEFIT CULTURE – WHAT'S IN IT FOR THE CUSTOMER?
      5. 3.5. GENERIC MARKETING STRATEGIES
        1. 3.5.1. Cost Leadership
          1. 3.5.1.1. EasyJet – success through cost leadership
        2. 3.5.2. Standing out – principles of differentiation
        3. 3.5.3. Focusing your business
      6. 3.6. THE FIVE FORCES THAT DRIVE COMPETITION
    4. 4. Research, research, research
      1. 4.1. THE EDGE – SHOWING INVESTORS YOU KNOW MORE THAN THEY DO
      2. 4.2. THE BASICS OF BUSINESS RESEARCH
      3. 4.3. THE SEVEN STEPS TO SUPERIOR BUSINESS KNOWLEDGE
      4. 4.4. DESK RESEARCH
      5. 4.5. USING THE INTERNET
      6. 4.6. GETTING OUT THERE – THE IMPORTANCE OF FIELD RESEARCH
      7. 4.7. TESTING THE MARKET
        1. 4.7.1. Bagel Express – piloting a US idea in the UK
    5. 5. Mastering the 'master plan' – business plans are templates, not straitjackets
      1. 5.1. Boden – without a plan and losing money
        1. 5.1.1. Boden – without a plan and losing money
      2. 5.2. SO WHY DON'T ENTREPRENEURS PLAN?
      3. 5.3. MANY ENTREPRENEURS PREFER ACTION TO WORDS – BUT YOU REALLY NEED BOTH
      4. 5.4. WHAT GOES INTO THE PLAN?
      5. 5.5. MAKING YOUR BUSINESS PLAN STAND OUT
      6. 5.6. TIPS ON COMMUNICATING THE PLAN
      7. 5.7. PRESENTATION TECHNIQUES
      8. 5.8. THE ELEVATOR PITCH – WHEN EVERY WORD COUNTS
        1. 5.8.1. Pacific Direct – a successful elevator pitch
      9. 5.9. USING A NON-DISCLOSURE AGREEMENT (NDA) – KEEPING YOUR IDEA SAFE
      10. 5.10. BUSINESS PLANNING SOFTWARE
    6. 6. The money – who has it and why you might just get your hands on some of it
      1. 6.1. EVERY SUCCESSFUL BUSINESS NEEDS OUTSIDE MONEY SOMETIME
        1. 6.1.1. Cobra Beer – raising cash to fund growth
      2. 6.2. WHAT DO INVESTORS WANT?
      3. 6.3. SOLE TRADERS AND PARTNERSHIPS
        1. 6.3.1. Partner pitfalls
      4. 6.4. LIMITED PARTNERSHIPS
      5. 6.5. LIMITED COMPANIES
        1. 6.5.1. Directors and their duties
        2. 6.5.2. Limited liability is a privilege, not a right
      6. 6.6. SHARING OUT THE SPOILS
      7. 6.7. FINDING YOUR INVESTOR
        1. 6.7.1. Business Angels
        2. 6.7.2. Venture Capital
        3. 6.7.3. Corporate Venturing
      8. 6.8. PRIVATE CAPITAL PRELIMINARIES
        1. 6.8.1. The Due Diligence Process
        2. 6.8.2. The term sheet and what it means
        3. 6.8.3. Hotmail – holding out for the best VC deal
      9. 6.9. AFTER THE INVESTMENT, WHAT WILL YOUR BACKERS EXPECT?
    7. 7. Another day over and deeper in debt – leveraging the investment
      1. 7.1. DEBT + EQUITY = GROWTH (POTENTIALLY)
        1. 7.1.1. Leveraging the deal
        2. 7.1.2. Miracle money
        3. 7.1.3. Are results from leveraging too good to be true?
      2. 7.2. THE UBIQUITOUS BANKS
        1. 7.2.1. What are bank lenders looking for?
        2. 7.2.2. Types of bank funding
      3. 7.3. ASSET-BACKED FINANCE
        1. 7.3.1. Leasing
        2. 7.3.2. Discounting and Factoring
      4. 7.4. BONDS, DEBENTURES AND MORTGAGES
        1. 7.4.1. Saga – a roller-coaster of finance deals
  4. II. GET BIG
    1. 8. You must be this high to go on the ride – why babies can't swim
      1. 8.1. VALUE ON EXIT
      2. 8.2. WHY SIZE MEANS SAFETY
      3. 8.3. BUILDING A TEAM AS THE BUSINESS GROWS
        1. 8.3.1. How Flowcrete built a team
    2. 9. The path to growth – and riches too
      1. 9.1. SEGMENTING YOUR MARKET
        1. 9.1.1. Types of market segments
        2. 9.1.2. Deciding how to segment your market
      2. 9.2. MASTERING THE MATRIX
        1. 9.2.1. How to milk your customer base
          1. 9.2.1.1. Generate referrals
          2. 9.2.1.2. Review lost orders
          3. 9.2.1.3. Retain more customers
          4. 9.2.1.4. Beat competitors
          5. 9.2.1.5. Convert non-users
        2. 9.2.2. Create new products and services for your present customers
      3. 9.3. LIVING WITH LIFE CYCLES
      4. 9.4. UNDERSTANDING ADOPTERS – WHO BUYS YOUR PRODUCTS AND WHEN
      5. 9.5. MIXING WITH THE MARKET – WHAT DOES YOUR COMPANY BRING TO THE PARTY?
        1. 9.5.1. Product/service
        2. 9.5.2. Price
        3. 9.5.3. Promotion and advertising
        4. 9.5.4. Place
      6. 9.6. GOING GLOBAL
        1. 9.6.1. Pacific Direct – Building a global market
        2. 9.6.2. Choosing your overseas markets
      7. 9.7. BUYING YOUR COMPETITORS – THE ACQUSITION TRAIL
        1. 9.7.1. Ikea – Growth by Acquisition
    3. 10. Selling fivers for a tenner – why margins matter most
      1. 10.1. UNDERSTANDING THE NUMBERS
      2. 10.2. RATIOS RULE
      3. 10.3. GROWING PROFITABLE
        1. 10.3.1. Improve margins
        2. 10.3.2. Charge more
        3. 10.3.3. Use the 80/20 rule to focus on the customers that matter
        4. 10.3.4. Reduce the tax take
        5. 10.3.5. Zero-based budgets
        6. 10.3.6. Improve your buying
        7. 10.3.7. Squeeze your capital base
        8. 10.3.8. Work hard but smarter too
      4. 10.4. CONTROL YOUR WORKING CAPITAL
        1. 10.4.1. Debtor control
        2. 10.4.2. Control stock
        3. 10.4.3. Pay early, or take credit
      5. 10.5. GETTING EXTRA HELP
    4. 11. Taking charge – good management's a simple yet rare commodity
      1. 11.1. PEOPLE PAY
      2. 11.2. MAXIMISING EMPLOYEE PERFORMANCE
      3. 11.3. RECRUITMENT – FINDING THE RIGHT STAFF
        1. 11.3.1. Staffing problems can cost you business
      4. 11.4. THE IMPORTANCE OF TEAMWORK
      5. 11.5. MOTIVATING? JUST AVOID DEMOTIVATING
      6. 11.6. RELEVANT REWARDS
        1. 11.6.1. Different strokes – tailoring rewards
      7. 11.7. DELEGATE, DON'T DUMP
      8. 11.8. WELCOME CHANGE
        1. 11.8.1. Change is normal and a management process just like any other
        2. 11.8.2. Change works – motivating through consensual management
      9. 11.9. MOVING ON
  5. III. GET BOUGHT
    1. 12. What's it to you? Calculating value
      1. 12.1. PRICE/EARNINGS RATIO
      2. 12.2. DISCOUNTING FUTURE EARNINGS
      3. 12.3. INTERNAL RATE OF RETURN (IRR)
      4. 12.4. RULES OF THUMB
      5. 12.5. MULTIPLE MODELS
      6. 12.6. VALUING MINORITY SHAREHOLDINGS
      7. 12.7. EASY VALUE CALCULATIONS
      8. 12.8. BE PREPARED TO NEGOTIATE
    2. 13. Dressing to kill – preparing your business for sale and getting the timing right
      1. 13.1. CLEANING UP THE BOOKS
      2. 13.2. PRODUCING THE SALES MEMORANDUM
        1. 13.2.1. Goldsmith's – Working towards a sale
      3. 13.3. GETTING THE TIMING RIGHT
        1. 13.3.1. Thomas Goode – how the market affects the chances of a sale
      4. 13.4. WATCHING THE BUSINESS CYCLE
    3. 14. Pay day – selling up
      1. 14.1. TRADE SALE
        1. 14.1.1. Scientific instruments – selling to a larger group
      2. 14.2. MANAGEMENT BUY-IN (MBI)
        1. 14.2.1. Amtrak – anatomy of a management buy-in
      3. 14.3. MANAGEMENT BUY-OUT (MBO)
        1. 14.3.1. Glass's Guide – moving forward through an MBO
      4. 14.4. BIMBOS
      5. 14.5. FAMILY TAKEOVER
        1. 14.5.1. Reed Personnel – keeping it in the family
      6. 14.6. EMPLOYEE BUY-OUT
        1. 14.6.1. Loch Fyne Oysters – selling out to employees
      7. 14.7. GETTING ADVICE
      8. 14.8. NEGOTIATING STRATEGIES
        1. 14.8.1. Agreeing on terms
        2. 14.8.2. Scrutinise legal and other obligations
      9. 14.9. PASSING THE DUE DILIGENCE PROCESS
      10. 14.10. CHECK OUT THE ALTERNATIVES
    4. 15. Floating off
      1. 15.1. Why Float?
      2. 15.2. GOING TO MARKET
      3. 15.3. THE RULES OF THE GAME
      4. 15.4. FLOTATION OPTIONS
        1. 15.4.1. Main stock markets
        2. 15.4.2. Junior markets
        3. 15.4.3. More junior markets
      5. 15.5. TIMETABLE TO A FLOAT
        1. 15.5.1. Week 1
        2. 15.5.2. Week 2
        3. 15.5.3. Week 3
        4. 15.5.4. Week 4
        5. 15.5.5. Weeks 5–8
        6. 15.5.6. Week 9
        7. 15.5.7. Week 10
        8. 15.5.8. Weeks 11–12
        9. 15.5.9. Week 13
        10. 15.5.10. NCC Group – the road to a flotation
      6. 15.6. ACCOUNTING RULES
      7. 15.7. WHY FLOAT?
    5. 16. Getting a second life
      1. 16.1. LIVING WITH AN EARN-OUT
        1. 16.1.1. Life after the Big Cheese Company – a second start
      2. 16.2. BECOMING AN ANGEL
      3. 16.3. STARTING OVER – THE PATH OF THE SERIAL ENTREPRENEUR
      4. 16.4. VOLUNTEERING YOUR SKILLS
  6. References
  7. Resource list
  8. About the Author
  9. PUBLISHER'S ACKNOWLEDGEMENTS