SMB have opportunities to increase business valuations:Sage

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Dave Batt, senior vice president and general manager of Global CRM for Sage Software, said: "We believe SMBs have an opportunity to make the goodwill locked away in customer data a very tangible and accessible business asset. In particular, when considering any form of exit strategy customer data can provide insight into customer buying trends for buyers or investors. The ability to present customer data in a meaningful way not only helps negotiations, but provides future leaders of the business with visibility into the customer base. This ensures relationships are maintained and risks are reduced when exiting the business. In active markets like today, where businesses are consolidating to gain competitive strength, we urge SMBs to develop their exit strategy and ensure that CRM plays a central role in the planning process and as a negotiation tool."

 

A CRM system is often seen as a tool to improve marketing, customer service, segmentation and productivity/efficiency, but is often forgotten at the point of exit. Many SMBs have failed to plan their exit, which puts customer service and future opportunities at risk. Only 35 percent of respondents to the Sage survey have taken steps to plan their ultimate exit even though 64 percent want to exit within one to ten years. Sage is concerned that 47 percent of respondents said that they would like to find more time for business planning and that a further 21 percent were too busy to plan the business.

 

Planning the exit at the outset of the business will help organizations shape and mold the business to that objective. Furthermore, using customer data will further help to make decisions that will help fulfill the exit strategy, according to Sage. Today, the market is one of consolidation and heavy M&A activity, while IPOs have slowed down. According to the survey, selling to a third party (34%) was seen as the most popular exit strategy globally with Australia (53%), USA (42%) and UK (39%) making it their clear choice. In France, it was split evenly (29% each) for family succession, business partner takeover and dissolving the business, while businesses in Germany (34%) planned for a family succession. In today's consolidation and M&A market, it is not surprising that trade sales are high on the exit agenda but they should not be automatic choices.

 

Customer relationship management industry analyst, Denis Pombriant of Beagle Research Group, said: "It is no secret that customer data is crucial for SMBs that want to maximize their value at exit. A CRM system is a natural customer information repository and the best way of accessing and managing customer data. CRM is an important asset when seeking an exit."

 

"The Sage survey yielded further interesting results," continued Pombriant. "For example, the majority of SMBs recognize that CRM is a tangible business asset but few are using it as one. Customers are an important asset that many SMBs overlook when valuing a company. If organizations believe that customers are at the heart of business - which most undoubtedly will - then they should consider how to best manage customer data right through the business lifecycle to an exit."

 

The Sage research surveyed 800 SMBs of all revenue sizes and industries across six countries, ranging from zero to 1000 employees, by Web and telephone during July 2006. The UK and USA provided 200 respondents each, while Australia, France, Germany and Ireland each had 100 respondents.

 

ACT! by Sage, Sage CRM, SageCRM.com and Sage CRM SalesLogix comprise Sage CRM Solutions, the only family of CRM products designed specifically for the needs of small and mid-sized businesses. 

 

Sourced From: ConnectComm