Home Based Business Marketing – The Truth About Duplication

Recent conversations regarding the theory of replication and home based business marketing strategies sparked this article. I need to start by genuinely asking the argument of whether or not we should be chasing duplication at all. Moreover, what will we be duplicating?

For years in my business the idea of a duplicable home based business marketing strategy was shoved down my throat and infused within my thinking. I didn’t just accept this idea of using one system that anyone pursued, but I taught the notion to everyone I worked with. Then things changed for me that literally transformed how I understand home based business marketing.

Do not misunderstand, I definitely acknowledge that individuals and businesses crave systems. Succeeding is more challenging if you do not have a process to follow. Let’s face it, individuals need specific direction. New home business owners need a 1,2,3 kind of system. You have to ask yourself what your home based business marketing system is in fact yielding or replicating. Additionally, is your system really duplicating at all?

In order to answer this question, we initially have to describe duplication within the conditions of the home based business marketing field. The average home business owner views replication as the primary goal. Expressly, when we have enough individuals duplicating our business system, we may sit back, enjoy, and observe as the checks keep rolling in. This type of belief is actually buying into the myth of duplication. Allow me to demonstrate.

We start with the hope that one by one or two by two we will add others to our sales force who will follow and copy our home based business marketing strategy. We think that the majority of people will get comparable results to our own, before long momentum is achieved and we will be duplicating in masses. In due season though, real life slaps us in the face as the accomplishment of true replication isn’t as easy as we anticipated. This is where the light bulb was turned on for me and altered my rationale concerning duplication.

After 8 years of working my business persistently, I recognized that even though we had assembled a healthy business, we were still stuck in the same situation as when we began. Yes, I was making a lot more money than when I first started my business and had some pretty awesome perks; yet, I hadn’t secured the degree of viral duplication that everyone talks about. Hence I started studying home based business marketing programs.

I found that replication is a myth in the home business world. This might rattle your chain a bit; yet, I wish to rouse your beliefs. Fairly ask and assess what the statistics are in your business regarding overall duplication and real people seeing real results? For a fair assessment you need to examine more than the handful of individuals who may be having direct or singular results. The question is how many individuals are able to realize true reproduction in depth in your business?

Earnestly assess your business and ask:

Has your team grown apart from your personal contact? Fundamentally this indicates that you regularly have team members that you have never met who are generating ample numbers without you.

Would you be able to completely remove yourself and your personal resources (your closing calls, webinars, training, etc.) from the arrangement and have your team persist to multiply?
Is your team creating multiple legacy type businesses to the point where they could not be swayed to move to another company?

Could you walk away from your business and travel the world for an entire year without affecting your income?

Most people are answering these questions with a negative response. If you are answering yes to all of the above, either you are out of touch with reality OR you hold a superior home based business marketing formula that understands that true replication can’t be achieved with one limited home based business marketing system.

The reason so many people struggle to duplicate their home based business marketing lies in this answer. A simple system designed to be mass replicated does not exist. Why? Let’s get back to my light bulb moment.

After eight years of employing a duplicable home based business marketing plan, I was still doing the same things I was doing whenever I began working my career. Until I reprogrammed my beliefs and reprogrammed my strategies, I would continue doing the same things always. We are simply human. Each of us are different and bring to the table a different skill, talent, gift, personality, and perspective. Buying into an idea where a single home based business marketing plan will essentially clone your results is insanity.

I was executing the identical tasks repeatedly because I wasn’t offering options, strategies, and home based business marketing methods that would function for different individuals. I was wrongfully believing that anyone could be altered and adapted to fit the plan, rather than tailoring the system for dissimilarity. An eye opening lesson it was.

Duplication is a myth considering nobody may duplicate you. Nobody will do exactly what you do and get the exact same results. Until you discount the idea of mass duplication and adjust your home based business marketing system, you will make the same mistakes I made and continually reconstruct your team searching for team members just like you!

Business Must Advertise Where New Clients Search

Today, people are “on the move”, searching on their phones while walking, while in conversation – watching TV. They are looking up, where to go for what is something which has become second nature.

Now it is up to a business to advertise where people are searching or they will loose out on new business. Can they exist off just word of mouth, or existing business? Perhaps – at least for a little while. There is however a strong doubt.

Small businesses which are advertising where people are searching will establish relationship with their new clients, who in turn will go to the business on line pages and leave recommendations and comments, which other searchers will see.

Business which is not advertising online will loose out altogether. It is difficult for some business owners to understand the changes in the market and the special urgency to change, and how important these changes are to their business. The new way of marketing, deriving from continually new electronic gadgets, are as powerful and fast as an oncoming freight train.

Here are some of the easy to understand rules for small business: Starting with the business domain name, especially for their online advertising and on their service vehicles.

When people use their names in a dot com address they must first assume that their name is not known. It also may be important to them, but not to a prospective client who searches..not for Michael Brown, but a painter, or a dentist. If small business wants to be found by NEW clients, they have to learn very quickly, that they need to buy a new keyword domain for a few dollars so they are found by Google’s, Bing’s or Yahoo’s search engines.

A prospective client goes online, to find a business, they will search (as in my example) for a dentist (and so they won’t find dentist from all across the country or world, they most likely look for dentists in their home town).

The best domain name for advertising might even be:.Dentist John Smith dot com, as a simple example. What their business is or does should come first, because it is what people use as a search term. Their name is secondary and can be somewhere else on the business page. People who do not know the name certainly won’t be able to enter it in the search, neither will people who know the name already – go online and look for them, they have no need..

In addition, advertisements such as: “I am the number one dentist in hometown USA” also no longer impresses. Searchers finding a business see previous clients who used the business before, often will leave feedback. These feedback can be devastating to any business, if they are negative. For a business, especially a ‘service’ business, such as a Physician, Dentist, Cosmetic Surgeon etc…to ignore the power of a feedback, may it be positive or negative..is extremely important.

Astonishingly enough, I have rarely found serious abuse of feedback by a consumer. As anything, one has to take feedbacks, both the positive and negative lightly, and speak to the business owner, if you have any questions.

When someone moves from one State to another, they immediately go online, looking up resources in their new home via Google and the feedbacks of people who have used a particular business. If they find a negative comment, they continue searching for others, not wasting time. So – you see how incredibly important your online visibility is for your business.

Another difficulty for businesses seems to be the choosing of domain names. Most take the word “name” to mean – their personal name – not a name that someone not knowing them personally – would connect with their business.

It is utmost important to get a domain name which describes the kind of business they have. A domain name which helps searchers find their business.

Let’s say you really are the best dentist in hometown USA, wouldn’t you want to be recommended online – Google places or yelp (and many other sites) for all the world to see?

Of most importance, right this moment, NOW – is to thoroughly understand the unprecedented pace at which technology is moving forward – cloud computing will help make all searches and everything else online even faster – more instant, businesses who are ignoring the changes or are not taking them dead serious, will undoubtedly be left behind in the dust their business competition who heeded the warning, is leaving behind..

Businesses have to make changes and they have to make changes now, if the business is to survive. As a business owner you must understand the principles of online searches, also called SEO. (Search Engine Optimization)

AGAIN – Your name is not of great importance to a new client, but what your business does- is of utmost importance. It is “sink or swim” for the survival of your business.

How to Value a Business – The Free Business Valuation Calculator

Every business owner should have a good idea of what their business is currently worth even if they don’t intend on selling the business soon or at all. But you may also need to know what a business is worth in the following non-exhaustive list of circumstances. How many reasons do you have to find out what a business is worth?

  • Buying a business or division externally or internally
  • Selling a business or division externally or internally
  • Shareholder/partner agreements and buy/sells
  • Estate and superannuation planning
  • Family law – separation and prenuptial
  • Business insurance policy structuring
  • Personal insurance policy structuring
  • Actual death or disability of the owner/(s)
  • Litigation as plaintiff or defendant

The problem is that business valuations are a complex mixture of science and art that are further confused by ‘listing prices’ displayed by business brokers and their often flawed ‘rule of thumb’ methods that make no commercial sense. The steps to value a business are fairly straightforward but need to be followed diligently.

The valuation method

The transfer price of any business (or any asset for that matter) will almost always come down to the agreed price between a knowledgeable and willing but not anxious seller and a knowledgeable and willing but not anxious buyer. The purpose of a valuation therefore is to indicate to the seller and/or the buyer what price would represent a favourable financial outcome to them based on their required rates of return. The purest method of valuation is the discounted cashflow (or net present value) approach however this method requires precise knowledge of all cash inflows and outflows between now and infinity for the business. Whilst this method is great for some financial assets with guaranteed cashflows it is impossible to apply to a business with variable cashflows.

The next best alternative used by most business valuers is a modification of the above method called the capitalisation of future maintainable earnings method. This method requires the valuer to forecast the most likely annual earnings figure (earnings before interest and tax) that will then be used as an annual recurring amount in the calculation. The valuer then applies a capitalisation rate to those earnings based on a required rate of return to give the business a value.

Future maintainable earnings (profits)

The earnings will usually be calculated based on the past performance of the business as well taking into account estimated projections. The net profit from the financial statements is adjusted to take into account various factors that are artificial or non-commercial amounts in the financial statements.

The adjusted earnings before interest and taxes (EBIT) for each historical and projected year are then weighted based on some assumptions to formulate a weighted average EBIT or future maintainable earnings, which is considered to be the likely annually recurring earnings amount going forward based on the methods and assumptions used.

Capitalisation rate

The capitalisation rate is inversely proportional to the required rate of return on the investment in the business. The higher the required rate of return, the lower the capitalisation rate and hence the lower the business value. Conversely, if there was no risk investing in a business the required rate of return may be as low as 5% and the business would be valued at 20 times the future maintainable earnings. This is almost never the case though as there are many inherent risks associated with running businesses. It is more likely that the required rate of return would be between 15% and 100% with corresponding capitalisation rates between 7 and 1 times respectively. The more risk, the higher return an investor would need compared to the investment outlay to make the investment.

As the future maintainable earnings has already been calculated the only way to change the value of the business is to change the required rate of return. The higher the required rate of return, the less that the business is valued for the same level of future maintainable earnings.

In the free business valuation calculator that I created on my website there are only 7 factors that influence the required rate of return. Bear in mind this is an oversimplified example as in practice the factors could total over 100. The responses to these factors have a significant impact on the indicative value of the business and are all related to business risks.

Assumptions relied upon

Valuing a business is a complex science that requires an enormous amount of information gathering, due diligence and industry knowledge to give an accurate opinion of value. Due to the limited scope of any basic business valuation calculator the following assumptions or similar are usually made. These assumptions may or may not be accurate and will depend on the specifics of each business.

  1. The information provided by the business is materially correct;
  2. The past is a good indicator of future performance of the business;
  3. The economic, industry and geographic factors are stable;
  4. Key customers, suppliers and employees are supportive of the transaction;
  5. All related party transactions are at fair value except for those specifically identified in the adjustments;
  6. All inventory, plant, equipment, fittings and fixtures necessary for the operation of the business are included;
  7. All depreciation amounts are book entries only and no significant upgrades of assets are required in the near future; and
  8. All necessary intangibles and regulatory permits are transferable.

How to calculate goodwill

Goodwill is simply the difference between the value of the business and the values of the identifiable net tangible assets (excluding bank loans and other loans). Should the indicative value be greater than the net tangible assets you have that much goodwill but alternatively, should the indicative value be less than the net tangible assets of the business, then the business would have negative goodwill and the assets would hold the only salable value.

Get a complete 7-page valuation report in less than 15 minutes from theĀ Free Business Valuation Calculator. A short instructional video on business valuations is included.