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Cost of Alcohol Abuse is Far Greater Than Drug Abuse in California, Says Study
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The misuse and abuse of alcohol and drugs can have various repercussions, not only on the individuals doing that and their families, but also on the society as a whole. One of its major consequences is financial burden. Besides causing health complications and raising concerns for public safety, alcohol and drugs cost the United States billions of dollars every year.

Like the impact, the economic cost of these substances varies immensely from one place to another. In fact, the cost of alcohol misuse is relatively far greater than the cost of drug misuse in most counties in the U.S. Since studies related to economic and social costs of alcohol and drug abuse are generally conducted at the state and national levels, this allows policymakers to better assess the problems within their jurisdiction and come up with countermeasures.

Similarly, a study, led by author Ted Miller and conducted at the Prevention Research Center of Pacific Institute for Research and Evaluation, sought to find out the consequences of alcohol and drug misuse in California and was published in the journal Alcoholism: Clinical and Experimental Research (ACER).

Alcohol abuse cost California $129 billion in 2010

The study highlighted the eye-opening economic burden of alcohol and drug related problems on the Californian taxpayer’s money across all 58 counties and 50 midsized cities. It was found that alcohol-related problems are more prevalent and costlier than drug-related problems in California. Moreover, both costs and repercussions varied greatly from one place to another. Some other findings are as follows:
- While alcohol-related problems cost $129 billion in 2010, which comes to $3,450 for every Californian, drug-related problems cost $44 billion in the same year.
- The highest per capita cost ($7,819) of alcohol problem was more than three times the lowest per capita cost ($2,588). Among the counties with drug-related problems the per capita cost varied between $608 and $3,786.
- The rates of alcohol and drug-related problems were found to be higher in the Californian cities. The highest per capita cost of alcohol-related problems in a city was $10,734, 11 times higher than the city with the lowest costs. Among the cities, the highest per capita cost of drug-related problems was $7,159, almost 19 times higher than the city with the lowest cost.
Correspondingly, the breakup of alcohol and drug-related costs are as follows:
- Crashes and accidents under the influence of alcohol cost $26 billion in 2010.
- Of the $10 billion cost borne due to violence associated to substance use, 73 percent was attributed to alcohol, while the remaining 27 percent was attributed to drugs.
- Of the $127 billion expenditure incurred due to other illnesses and injuries, 73 percent of the costs resulted from alcohol-related problems. Similarly, 82 percent of the $4 billion cost incurred due to nonviolent crimes were attributed to drug abuse.
- 74 percent of $2 billion incurred due to treatment expenditure was attributed to drug-related problems.
The study authors believe that the findings can assist policymakers and help the state in planning and allocating resources for substance abuse problems. In addition, this study provides a crucial tool for predicting and averting alcohol and drug-related problems, as well as a crucial means to plot localized cost estimates.

According to Dr. Miller, “Efficient funding of substance abuse prevention, enforcement and treatment hinges upon understanding the variation of alcohol and other drug problems from place to place. Because estimated costs combine data across many health and social issues, they provide an effective, comprehensible, and comprehensive measure for use in understanding how communities shape their distinctive social environments and for monitoring the effectiveness of our intervention strategies.”

Avoid the death trap

In 2010, problems related to alcohol and drugs in California led to 22,281 and 5,533 deaths, respectively. In addition, crimes related to alcohol and drugs were responsible for 350,000 and 164,000 deaths, respectively. These large and unsettling numbers are pertaining to only one of the 50 U.S. states, signaling a far greater magnitude of the problem.

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Source by Susan Navarez

Views: 0
July 28, 2022
How to Overcome MLM Challenges – Multi Level Marketing Tips For Success

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There are plenty of helpful tips available to help you overcome your MLM challenges. In my opinion most of the challenges we face in MLM are avoidable but only if you start off on the right path. When I am faced with a challenge in my primary opportunity its usually around developing new techniques for marketing, lack of customers, or lack of money. As business owners in the field of MLM we are faced with difficult challenges but they aren’t unlike those that any other business owner faces. We do face different challenges because of the nature of our business but if you plan for the unexpected and have a vision for the day-to-day operations of your company you’ll be able to thrive in your business.

Every day businesses are birthed around the world within a dynamic and formidable marketplace where only the toughest survive. If you are in the network marketing industry you know that our environment is particularly fickle and can be a tough training ground for the almost 25,000 people that join Multi-level marketing business everyday in the U.S. and the 95% that fail within their first year.

Most people join network marketing companies not recognizing the importance of having a vision for how their business will grow and function in its infancy. There is concept that many large corporations use to lead their work on a daily basis and I think that it can be particularly effective for network marketers. Its called Strategic Planning. Planning is not a new concept to business corporations but it might be to those that don’t know about its extreme effectiveness for providing a roadmap for any business for periods of 6-months, to 3 years, to 20 years.

By understanding the importance of this process and the questions that go into taking you through it, you can gain a better sense of preparedness for your company’s growth. As someone new to this industry you need as much structure in the beginning as possible to understand how to plan and set and meet your goals. By taking the first step in this process you will exhibit your commitment to your business and your leadership for your organization.

You have to believe in something yourself first, before you can get others to believe.– Ashraf Seddeck, Oracle Corporation.

What does your company do?

What product or service do you provide?

What is your mission statement?

What are your company’s values?

What is your plan for your first 30 days, 6 months, 1 year?

What are your weaknesses/strengths?

How will you market your business?

Who is your competition?

What might be challenges that prevent you from reaching your goal?

What is your plan to grow your business over the next 12 months?

What is your plan for recruiting for your business?

What resources do you have to build your business?

What is your budget for your business?

What does your organization look like and what types of people are your recruiting?

What actions are you taking on a daily basis to build your business?

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Source by Inger L McDowell

Views: 0

July 28, 2022
Direct Sales Team Vs Distributor – Which is Better For an International Market?
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If you’re looking to expand your sales to new markets, then there’s one big question you must ask: do I build a direct sales presence or use a distributor? Each method has its benefits and drawbacks, but we’re going to make a strong case to use one method over the other in almost every instance.

What’s the difference between direct sales and distributors?

A direct sales presence means that your company establishes, manages, and pays a sales team of one or more people in the target market.

An outside agent is any entity that will sell your product in exchange for a service fee. One example is a sales rep, who sells your product in exchange for a percent of the sale. A distributor is similar to a rep, except they would buy product from your company and sell it directly to the end customer.

Is Direct Sales Better?

For most businesses expanding into new markets, especially international markets, hiring a distributor is a better decision-at least until there is enough return from the market to justify building a direct sales presence.

Sure, there is one major advantage to having a direct sales presence-control. Control over the day to day activities of your sales personnel is appealing to most business owners. But this control comes at a heavy price. To start, you’ll need to spend the time to hire someone in that market, then train them, then equip them with sales material and management, if not office space and equipment. These costs are prohibitive for most small businesses looking to expand internationally.

And there are even more costs that we haven’t mentioned yet. Each market has it’s own unique laws, cultures and customs that are essential to master if your company wants to establish a successful sales presence. Japan is a classic example of a marketplace with unique legal structures and business customs that, if not followed, guarantee the failure of any sales efforts. It’s hard to pin down an exact monetary value to this learning, but ask yourself this: Can you afford to establish, manage, and pay a sales force in a foreign country for at least a year while they learn the ropes and generate no revenue?

What about a Distributor? Is a Distributor better for new markets?

Distributors are a cost effective means to enter a new marketplace successfully. Here are just a few of the reasons:
- No Overhead:
  Unlike running your own sales team, a distributor will take care of the hiring, managing, payment, and optimization of its channel. You’re just borrowing their distribution, while they handle the maintenance.
- Established Channel with Local Knowledge:
  A good distributor will already know all the laws and customs of the market you’re entering. You don’t need to reinvent the wheel-you can use someone who already has valuable local knowledge.
- Understand Pricing and Purchasing Power of Market:
  Along with knowledge of the laws and customs comes knowledge about the most successful ways to price and market your product locally.
- Cost Effective:
  Since you won’t be paying for the above items, distributor relationships are much more within reach of a small business trying to enter a new market.
Using a distributor has some downsides as well, but they can be minimized by building a good relationship with a distributor.
- Not your own people:
  You won’t be able to directly manage every step of the process. While it may make you nervous to lose some control over the sales process, you can manage the risk by building a transparent relationship with your distributor with constant updates and feedback from both ends.
- Distributor has many products to represent:
  You may not be the distributor’s top priority at any given time, and you want to be sure your product is not getting shuffled to the back of the line. Once again, a well-established relationship with constant contact will ensure that your product is getting the attention it deserves.
- Not a “turn key” solution:
  You can’t just give the distributor your products and expect success. You’ll have to manage the relationship. This takes time, but it’s still less costly than trying to install a direct sales team from scratch.
So what do I do next?

If you aren’t convinced that a distributor would be better for your organization than establishing a direct sales team, seek help from a consultant who has experience establishing a presence in new markets. A consultant can use his or her experience to analyze your opportunity and recommend the best course of action.

Before you choose a distributor, you need to know….

Choosing the wrong distributor will set you up for failure. The wrong distributor simply won’t generate sales, and you’ll have wasted at least a year finding and setting up an unprofitable relationship.

There are certain things to look for in a distributor, and they are different for every market. The best thing to do is to find a professional, one with experience in distributor relationships, and hire that professional to help you search for and identify the right distributor.

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Source by J. P. Williams

Views: 0
July 28, 2022
Trading and Profit and Loss Account

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Trading Account

As already discussed, first section of trading and profit and loss account is called trading account. The aim of preparing trading account is to find out gross profit or gross loss while that of second section is to find out net profit or net loss.

Preparation of Trading Account

Trading account is prepared mainly to know the profitability of the goods bought (or manufactured) sold by the businessman. The difference between selling price and cost of goods sold is the,5 earning of the businessman. Thus in order to calculate the gross earning, it is necessary to know:

(a) cost of goods sold.

(b) sales.

Total sales can be ascertained from the sales ledger. The cost of goods sold is, however, calculated. n order to calculate the cost of sales it is necessary to know its meaning. The ‘cost of goods’ includes the purchase price of the goods plus expenses relating to purchase of goods and brining the goods to the place of business. In order to calculate the cost of goods ” we should deduct from the total cost of goods purchased the cost of goods in hand. We can study this phenomenon with the help of following formula:

Opening stock + cost of purchases – closing stock = cost of sales

As already discussed that the purpose of preparing trading account is to calculate the gross profit of the business. It can be described as excess of amount of ‘Sales’ over ‘Cost of Sales’. This definition can be explained in terms of following equation:

Gross Profit = Sales-Cost of goods sold or (Sales + Closing Stock) -(Stock in the beginning + Purchases + Direct Expenses)

The opening stock and purchases along with buying and bringing expenses (direct exp.) are recorded the debit side whereas sales and closing stock is recorded on the credit side. If credit side is Jeater than the debit side the difference is written on the debit side as gross profit which is ultimately recorded on the credit side of profit and loss account. When the debit side exceeds the credit side, the difference is gross loss which is recorded at credit side and ultimately shown on the debit side of profit & loss account.

Usual Items in a Trading Account:

A) Debit Side

1. Opening Stock. It is the stock which remained unsold at the end of previous year. It must have been brought into books with the help of opening entry; so it always appears inside the trial balance. Generally, it is shown as first item at the debit side of trading account. Of course, in the first year of a business there will be no opening stock.

2. Purchases. It is normally second item on the debit side of trading account. ‘Purchases’ mean total purchases i.e. cash plus credit purchases. Any return outwards (purchases return) should be deducted out of purchases to find out the net purchases. Sometimes goods are received before the relevant invoice from the supplier. In such a situation, on the date of preparing final accounts an entry should be passed to debit the purchases account and to credit the suppliers’ account with the cost of goods.

3. Buying Expenses. All expenses relating to purchase of goods are also debited in the trading account. These include-wages, carriage inwards freight, duty, clearing charges, dock charges, excise duty, octroi and import duty etc.

4. Manufacturing Expenses. Such expenses are incurred by businessmen to manufacture or to render the goods in saleable condition viz., motive power, gas fuel, stores, royalties, factory expenses, foreman and supervisor’s salary etc.

Though manufacturing expenses are strictly to be taken in the manufacturing account since we are preparing only trading account, expenses of this type may also be included in the trading account.

(B) Credit Side

1. Sales. Sales mean total sales i.e. cash plus credit sales. If there are any sales returns, these should be deducted from sales. So net sales are credited to trading account. If an asset of the firm has been sold, it should not be included in the sales.

2. Closing Stock. It is the value of stock lying unsold in the godown or shop on the last date of accounting period. Normally closing stock is given outside the trial balance in that case it is shown on the credit side of trading account. But if it is given inside the trial balance, it is not to be shown on the credit side of trading account but appears only in the balance sheet as asset. Closing stock should be valued at cost or market price whichever is less.

Valuation of Closing Stock

The ascertain the value of closing stock it is necessary to make a complete inventory or list of all the items in the god own together with quantities. On the basis of physical observation the stock lists are prepared and the value of total stock is calculated on the basis of unit value. Thus, it is clear that stock-taking entails (i) inventorying, (ii) pricing. Each item is priced at cost, unless the market price is lower. Pricing an inventory at cost is easy if cost remains fixed. But prices remain fluctuating; so the valuation of stock is done on the basis of one of many valuation methods.

The preparation of trading account helps the trade to know the relationship between the costs be incurred and the revenues earned and the level of efficiency with which operations have been conducted. The ratio of gross profit to sales is very significant: it is arrived at :

Gross Profit X 100 / Sales

With the help of G.P. ratio he can ascertain as to how efficiently he is running the business higher the ratio, better will be the efficiency.

Closing Entries pertaining to trading Account

For transferring various accounts relating to goods and buying expenses, following closing entries recorded:

(i) For opening Stock: Debit trading account and credit stock account

(ii) For purchases: Debit trading account and credit purchases account, the amount being the et amount after deducting purchases returns.

(iii) For purchases returns: Debit purchases return account and credit purchases account.

(iv) For returns inwards: Debit sales account and credit sales return account

(v) For direct expenses: Debit trading account and credit direct expenses accounts individually.

(vi) For sales: Debit sales account and credit trading account. We will find that all the accounts as mentioned above will be closed with the exception of trading account

(vii) For closing stock: Debit closing stock account and credit trading account After recording above entries the trading account will be balanced and difference of two sides ascertained. If credit side is more the result is gross profit for which following entry is recorded.

(viii) For gross profit: Debit trading account and credit profit and loss account If the result is gross loss the above entry is reversed.

Profit and Loss Account

The profit and loss account is opened by recording the gross profit (on credit side) or gross loss (debit side).

For earning net profit a businessman has to incur many more expenses in addition to the direct expenses. Those expenses are deducted from profit (or added to gross loss), the resultant figure will be net profit or net loss.

The expenses which are recorded in profit and loss account are ailed ‘indirect expenses’. These be classified as follows:

Selling and distribution expenses.

These comprise of following expenses:

(a) Salesmen’s salary and commission

(b) Commission to agents

(c) Freight & carriage on sales

(d) Sales tax

(e) Bad debts

(f) Advertising

(g) Packing expenses

(h) Export duty

Administrative Expenses.

These include:

(a) Office salaries & wages

(b) Insurance

(c) Legal expenses

(d) Trade expenses

(e) Rates & taxes

(f) Audit fees

(g) Insurance

(h) Rent

(i) Printing and stationery

(j) Postage and telegrams

(k) Bank charges

Financial Expenses

These comprise:

(a) Discount allowed

(b) Interest on Capital

(c) Interest on loan

(d) Discount Charges on bill discounted

Maintenance, depreciations and Provisions etc.

These include following expenses

(a) Repairs

(b) Depreciation on assets

(c) Provision or reserve for doubtful debts

(d) Reserve for discount on debtors.

Along with above indirect expenses the debit side of profit and loss account comprises of various business losses also.

On the credit side of profit and loss account the items recorded are:

(a) Discount received

(b) Commission received

(c) Rent received

(d) Interest received

(e) Income from investments

(f) Profit on sale of assets

(g) Bad debts recovered

(h) Dividend received

(i) Apprenticeship premium etc.

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Source by Anil Kumar Gupta

Views: 0

July 27, 2022
Entrepreneurship and Innovation: The Inconvenient Truth

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Entrepreneurship and innovation: The popular belief

Entrepreneurs are widely believed to be the agents behind economic growth and innovation. They are, we are told, the movers and shakers who create new industries, unseat current leaders from their thrones, and open new frontiers for everyone. Popular culture tirelessly propagates one success story after another – from Facebook's Mark Zuckerberg, who was glorified in "The Social Network" movie, to Tesla's Elon Musk, an immigrant who became a household name, to Google's Sergey Brin, whose internet search engine name has officially become a verb in English.

So persuasive is the narrative of the entrepreneurial technological prowess and success, that many countries – including developing countries that feel they are lagging behind – develop comprehensive policies to support and promote entrepreneurship and even set aside sizeable funds to invest in startups via government-run venture capital programs. But is this fascination with and belief in entrepreneurs justified? How likely are entrepreneurs to push the technological frontier and bring about the kind of change that governments want? Entrepreneurship Professor Sergey Anokhin from Kent State University says the hard evidence is far less convincing than the popular culture makes you believe.

The dark side of entrepreneurship

In a study of 35 countries over a 7-year period, Professor Anokhin from Kent State and Professor Joakim Wincent from Sweden's Lulea University of Technology show that there is no universally positive relationship between entrepreneurship and innovation. While for the world's leading economies such as the United States the positive link between startup rates and innovation may be true, for the developing economies the relationship is actually negative. Such countries are more likely to see innovation championed by the existing companies, not startups. With few exceptions, entrepreneurs there pursue opportunities of a different kind that are based on imitation and dissemination of others' ideas, and are not equipped to produce truly advanced "grand" innovations. On average, startups are less efficient than existing firms. Accordingly, if local governments support entrepreneurship, economic effectiveness may suffer, and innovation is less likely to occur. In fact, successful technological development in emerging economies is often associated with an aggressive entrepreneurial behavior of large corporations, not individual entrepreneurs. Such is the case, for instance, of South Korea with its chaebols .

The figure below shows the vastly different impact of startup rates on innovation and technological development (as measured by patent applications) across countries. Only rich countries can expect more entrepreneurship to result in more innovation, says Dr. Anokhin. For the lesser developed countries, as the plot demonstrates, an increase in startup rates will only lead to less, not more innovative activities. The problem, according to Sergey Anokhin, is that developing countries often look up to the leading economies when trying to design their own policies. Moreover, quite naturally, the very textbooks that the students across the world use, are written by the scholars from the world's leading countries, and do not take developing economies' context into account. Taken together, it often locks policy makers in assuming the relationship between entrepreneurship and innovation that will not hold in their particular parts of the world. The pro-entrepreneurship policies will not bring about the effects expected, and the limited resources will be wasted to support activities that are largely detrimental.

What it all means

It is time to recognize that the relationship between entrepreneurship and innovation varies across countries, says Professor Anokhin. That is why World Economic Forum's Global Agenda Council for Fostering Entrepreneurship explicitly acknowledges that Silicon Valley success stories do not necessarily resonate in other parts of the world. Broad-strokes policies that aim at fostering entrepreneurship to boost country innovativeness may well be misguided. A contingency approach that takes regional specifics into account should be employed instead.

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Source by Sergey Ahmetov

Views: 0

July 27, 2022
Creating Your Affiliate Strategy To Produce Year-Round Results

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People generate millions from affiliate marketing and you can too if you decide to create a real business strategy to produce year-round results.

Niche Down More

Don’t try to spread yourself too thin regarding the products you’ll promote. Choose a handful of products to promote, throw in some surprises throughout the year, and you’ll do a lot better with your marketing. Choose the best products for your audience that solve problems for them and that you’ll work hard on promoting all year long.

Create Unparalleled Content

When you write content, take the extra time to ensure that it’s right. Choose the right images. Choose the right problems and solutions to focus on for your audience and speak directly to your audience of one. Instead of writing about the product directly, you can also write about how to buy the best whatever it is that you’re selling.

Add Value to Your Ideal Customer’s Life

Just because you’re selling someone else’s product doesn’t mean that you can’t and should not develop your own brand. Your brand is how your audience feels about you. What feelings do you bring to your audience when they think of you? Find ways to add value to everything you promote to them so that they want to come to you first.

Choose Memberships to Promote

Promoting affiliate products that have recurring income is a good way to ensure income all year long too. Memberships, subscriptions and the like are wonderful ways to build your residual income. Some companies don’t pay on repeat orders, so check with the products you want to promote. If they aren’t offering it, ask for it. Once you’re a known super affiliate, they’ll come around.

Determine Your Multiple Traffic Sources

In advance of marketing, you need to know all your traffic sources so that you can push traffic to your products. You may want to use social media, paid ads, and more to promote the affiliate products and build traffic to your page in which everything should first be promoted. So, don’t just share a link to the product. Share a link to your review instead.

Pay Attention to Technology

It’s imperative to pay attention to technology because there are always “killer technologies” that can come in and change everything. Imagine if you had built your entire business based on one platform and boom, it’s gone. It happens. Do not take for granted that any program you use right now will always be here. Be prepared with something like it to move to as soon as you realize you need to. If you are paying attention, you’ll know.

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Source by Jon Allo

Views: 0

July 27, 2022
Sweden – Utopia For Multi Level Marketing (MLM) Business

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The general thought and notion of the Swede is for them to be reserved, quiet and maybe stick to themselves more then other more outspoken and spontaneous populations.

Is this really a good environment for a multi level marketing business to thrive and for its representatives to earn not only additional income but considerable salaries?

Well, that is not the truth about the Swede, so Yes.

Sweden is a great market for networking and MLM business.

The facts paints a completely different picture.

• Sweden is in the 6th nation in Europe in direct selling.

• Usually make-up, juices, cleaning supplies, nutrition etc

Federation of European Direct Selling Associations,

“European Direct Selling Statistics – 2010 Retail Sales”. 2010. Accessed Jan 28 2011.

Key Indicators

• Direct selling has increased with an average 10% per year over the last 5 years

• 95% is part time and 5% is full time within direct selling

• 95% is part time and 5% is full time with direct selling

• 75% women and 25% are men

Some of the products that through time have been most prominent in the Swedish market are:

• Cosmetic, Skin- and Body products

• Laundry – Cleaning Supplies and House-ware

• Groceries, Nutritional Products

• Books

• Child Clothes

Sweden is THE place to be for any multi-level marketing, direct selling or network marketing business that wants to go for the masses. To add on to the already existing growing population of marketers in Sweden, there is now an explosive demand for home based Internet companies with a low initial start up cost. For any Swede who wants to get serious and wants to get into the business, find yourself a good solid business, which fits your interest and market. Find a team within that business that you would like to work with, get excited, get going and never quit!

The general conception is that this type of business is only for the young and technology savvy individuals… The largest growing age segment on Facebook is the 60+. That means that all these baby-boomers, who are set to control the global markets over the next 20 years, are now connecting on Facebook. The marketers and companies who tap into that “network” will have a large potential lead pool.

With the changing population of participants in the online communities and with the statistics above, we show Sweden to be a fruitful direct selling market. If you know someone or have connections on the Swedish market. Go for it!

“European Direct Selling Statistics – 2010 Retail Sales”

http://www.fedsa.eu/index.php?option=com_content&view=article&id=14&Itemid=8

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Source by Jonas Carlsward

Views: 0

July 26, 2022
Why Sales Doesn’t Have to Be a Numbers Game

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Telling stories is a great teaching tool to use in many fields, especially sales. At one of our recent workshops on pain, a participant from a technology company shared a story about an experience he had at a big-box TV store. This person went in to the store to learn more about flat screen TVs, with no intention of buying. He just wanted more information so he could make an educated decision when it came time to buy a TV, and get the best deal online, not at a store.

When our participant entered the store, he was greeted right away by a sales person, and before he knew it, the sales person was telling him all about the great features and benefits of each widescreen TV. The sales person never asked a single question about why he was visiting the store, or if he’d even been there before. The sales person was nice but never uncovered any pain. All he did was say, “Can I help you?”, and then proceeded to “spill his candy all over the lobby”, and give our participant all the ammunition he needed to go get his best deal online. The sales person never had a chance to close the deal.

Far too often, salespeople try to spill their candy in the lobby for a living. They throw information and free advice and their own time and money and resources against a wall hoping some of it will stick. “If I go to enough networking events, if I make enough new prospecting calls, if I talk about my product enough, if I ask enough people if they need this for their business, and if I make enough cold calls, then I’ll be successful.”

The numbers game is one way you can approach your career, but it requires a lot of work, and it often wastes a lot of time. On the other hand, the Sandler System is all about working smarter, not harder. Furthermore, if you combine the same tenacity and work smartly to uncover a prospect’s pain, you will become a Robo-Salesperson. Armed with new, effective questioning strategies and proven sales techniques, you will discover the prospects’ problems and deep-seated emotional needs, pains, and desires to find solutions (ones that you can provide). This will result in dramatically increasing your sales and reducing your work time and stress that goes with it.

Another participant in our Sandler Sales program sells gauges to machine shops and other companies. This guy is very meticulous and had a phone prospecting system he followed diligently, but when he left messages, very few returned his calls. Sound familiar? Well, this guy enrolled in our advanced training program and he carefully tracked all his results. Here’s what he found:

After the first year of learning the Sandler Sales System, his market of selling to machine shops experienced a 5% decline, however, his personal sales went up 28.6%. Since he worked on a straight commission, his personal income went up an equal amount. So, his income went from $93,000 up to $119,598. Our sales guy attributed this to learning how to leave an effective voicemail message, encouraging his prospects to call back, and it worked. After his second year in the Sandler course, his sales went up another 32.3% and his income increased to $158,228. Why? He became more effective at closing deals. In the first two years in the training program, he had boosted his commissions by 70%. The bottom line, none of his success would have happened without learning to uncover his prospects’ pain.

By the way, if you’re one of those people who believe “you can’t teach on old dog new tricks,” check this out. This guy wasn’t a kid. He was about 50 years old when he started learning the Sandler way, and still made those drastic improvements. I’m happy to say that 14 years later, he continues to attend and take advantage of our President’s Club classes. This sales leader is committed to being at the forefront of his industry’s selling knowledge curve and providing for his family, himself, and his own retirement.

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Source by Greg Nanigian

Views: 0

July 26, 2022
Why Customer Concentration Impacts a Business Sale Transaction
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Few owners recognize the major impact that customer concentration has on the sale of their business. Customer concentration represents a significant obstacle and will affect the salability, valuation, and deal structure of a business-for-sale transaction. Not only will it create problems in qualifying buyers but it will impact the ability for any prospective purchaser to obtain third party financing to complete the acquisition. Determining if customer concentration is present in an enterprise is a critical element of the succession planning process.

Customer concentration is a situation when one customer represents a significant portion of revenues or when the business has a very small customer base. Based upon the expert one consults, the exact percentage for a concentration to exist varies. In most cases it is recognized when one customer represents more than 10% of sales or when the top five customers comprise greater than 25% of a company’s revenue. In either situation, a huge risk is created from the lack of diversification and steps to mitigate it should be taken years in advance of a planned business exit.

When evaluating a business sale it is important for an owner to recognize that their client base has a significant impact on the enterprise value of the company. A broad and diverse base of customers where there are a large number of clients contributing to the business’ revenue will achieve a higher transaction value as it reduces the risk that a sizable decrease in earnings will occur if any one customer is lost or a particular industry segment that the business serves encounters economic distress.

In addition to a lower sales price, businesses with customer concentration issues are more difficult to market for sale. For main street business transactions (those with adjusted earnings of less than $2mm) third party financing is used in the majority of cases. Businesses with high levels of customer concentration are very difficult to get financed. Lenders may provide only partial financing, offer sub-optimal terms, or decline the loan altogether. In situations where third party financing is not available, the pool of available buyers is significantly restricted and the terms of a deal could be heavily weighted on a contingent earn-out based on retaining the revenues derived by the largest customers. “Typically we want no customer concentration over a 10% level when considering financing an acquisition. Higher levels are possible with much more explanation and supporting documentation but remain a major concern” states Steve Mariani, President of Diamond Financial Services.

Lastly, customer concentration will have a direct impact on the deal structure for the business sale transaction. Buyers will strive to bridge the customer concentration risk through a variety of delayed ‘performance based’ financing methods. For example: Assume both parties agree on a transaction price of $900,000 based upon $300,000 of adjusted earnings (a 3x multiple). If the key account in question represents $75,000 of the $300,000 this would represent $225,000 of the transaction price. A buyer will strive to isolate the $225,000 component to ensure that revenue is maintained post sale. After a period of 12 months, if the customer and income are still in place the seller would receive the funds. If the identified client and corresponding revenue was lost during this period, a pricing adjustment would be made.

In situations where the buyer is unable to obtain transaction financing due to customer concentration issues, the seller might have to accept a “contingent earn-out” for the revenues derived from the largest customers, or worse, they may also have to finance a major portion of the “non-contingent purchase price” negotiated with buyers.

Contingent payouts could be structured in a variety of methods:

Earn-Out:

Earmark part of the purchase price with payments made over a period of time contingent upon the retention of specific customers or achieving specific revenue targets.

Escrow:

A percentage of the acquisition price will be held in an escrow account for a specified time.

Seller-Financing:

The seller would be responsible for financing a major portion of the purchase price through a seller note. The seller note could be structured with contingencies for revenues derived from the largest customers.

With any of these deal structuring techniques, the seller cannot be expected to guarantee the revenue in perpetuity and if the transaction price is based upon retaining one or more key customers, the seller may require more active involvement in maintaining the client relationship during the term of the agreement. Obviously, this brings an additional complexity to the transaction.

In most cases, buyers will look to discount the amount they are willing to pay for a business (with high customer concentration) unless they receive assurances that the risk is low. While the obvious strategy to reduce customer concentration risk is to diversify and increase the business customer base, there are a number of situations where customer concentration either does not pose a significant risk or could be mitigated.

Customer Contracts:

Having a contract in place will not eliminate all of the risk of losing a key customer, but it will provide the buyer with security that the revenue and profits will continue after a change in ownership takes place. When customer contracts are involved, the ability to assign or transfer will be important to understand. In many cases, a stock sale vs. asset sale is elected to preserve these contracts.

Barriers to Entry or Exit:

Businesses could have intellectual property, product expertise, or patents that create competitive advantages barring competition. Others are located in geographically remote areas where the supply benefits discourage customers from changing the relationship. Lastly, there could be significant capital requirements for manufacturing and tooling or agency approvals (pharmaceutical or government contracting industry) that creates a barrier to entry from potential competitors.

Providing a Variety of Products and/or Services:

Having a broad relationship with a key customer where the relationship is not based solely on one product, one location, and one individual decreases the risk that a singular change will fundamentally impact the future revenue stream and continuity of the account.

Economies of Scale or Synergies:

The acquisition may be pursued by a strategic buyer where they are bringing new products/services to the enterprise, a broader geographic distribution footprint, or economies of scale in production. Any of these elements would assist in reducing the concentration of revenue risk that an identified key client would represent to the future organization.

Summary

Businesses which have high levels of customer concentration are inherently risky and it is important for the owner to appreciate this concern from the perspective of a potential acquirer. Ultimately, the buyer seeks only to retain the customers which have contributed to the success of the business and are factored in the valuation and transaction price. From the position of a buyer a few logical questions and concerns would be:
1. How does the value of the company change if a customer representing 10% or more of revenue and/or profits is lost in the first year?
2. How easy would it be for the client representing the customer concentration concern to leave the business?
3. What unique situations exist within the business to preserve the customer relationship in the years ahead?
4. What are the logical steps and corresponding costs to mitigate the customer concentration risk?
5. How do I achieve a win-win transaction? Protecting me, the buyer, against the risk of a near term revenue loss while providing the seller with the proper remuneration for the fair market value of their business?
While the risk may not be able to be totally eliminated, there are a number of situations where customer concentration is more palatable and a proper explanation should be provided to the buyer at the earliest opportunity. Getting out in front of this potential challenge is critical to achieve a win-win deal. When good communication exists, and two fair and reasonable parties are at the table, there are a number of structuring options available, when necessary, to mitigate the risk and negotiate a fair and reasonable transaction price. Obviously, the best approach for a prospective business seller would be to develop and implement plans to reduce any customer concentration elements years in advance of a business exit. Eliminating this type of risk is just sound advice for any small business owner regardless of whether a sale is contemplated.

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Source by Michael Fekkes

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July 25, 2022
The Year Our Marriage Grew

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AT around our tenth wedding anniversary, we had a realisation.

The realisation we had was this: despite all the quality marriage counselling we had received from our wonderfully gifted and skilled marriage counsellor early on, we were, at that time, still not enjoying satisfaction.

We now knew the principles, but now we had to apply them. Knowledge of principles provides no satisfaction, only application provides satisfaction.

The year our marriage grew coincided with application. Instead of believing in concepts and talking about them, we decided to commit to working the concepts out in our marriage. This inevitably meant adapting the marital wisdom we had learned so it worked for our unique coupling, for our inimitable family structure.

We had had twenty counselling sessions, and I think our counsellor was at pains to say, ‘Go and do what we’ve been talking about; what I’ve been showing you’… initially it even got worse. It had nothing to do with the standard of our counsel – it was like growing pains in our marriage. Things tend to get worse before they get better.

Inevitably, we as partners had to learn to commit to each other in ways we had never thought we would need to. Our covenant to each other was solid, but we now had to commit to love this other person in ways that worked for them, not simply ourselves. Without even recognising it at the time, we began to accept each other like we had never done before. That is true love: unconditional acceptance at the deepest level. And it takes time.

The year our marriage grew was Year 4. Indeed, the previous three simply proved our commitment to each other. We hadn’t torn each other apart. But there were some horrible experiences. Whilst those first three years were unbelievably tough, they set us up as we pressed on into the hard work required in finding our way into the space of marital peace (which is punctuated with conflict that is managed well in the main).

My wife and I are believers in marriage; that marriage is not only wonderful but hard work. We believe, as we experienced, that counselling works; but not only that, there’s a limit to what counselling can do. I say that as someone who gives marital counsel.

It must be applied. There needs to be a time where a couple weighs anchor and begins the work of reconciling the problems on the high seas of their marriage. It can take years, but don’t be despondent. You learn to survive when it’s just you and your spouse. Sure, we all need tune-ups, prayer and support, but others’ help is limited.

This is what we learned: marriage seems best when the foibles of one are acceptable to the other. What seems like an easy concept can demand years of work to arrive at.

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Source by Steve Wickham

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July 25, 2022