What’s behind your curtain?

Our son-in-law is a big city police officer (not Seattle) and recently was involved in a situation that will never make the news. He was in the second wave of officers responding to a 911 from a mother whose bi-polar teenage son was off his meds and threatening the family. He entered the bedroom, observed two other officers standing there watching the boy with a knife, ordered them get out their Tasers (and guns I’m assuming), and then he disarmed the young man, with no injuries.

As mentioned, this will never make the news. It’s not what most people want to see or hear.

In the Wizard of Oz the wizard is behind the green curtain. So, combining this with the above story, what’s behind your curtain others don’t hear about? Here are five things making your business what it is, for better or worse. Whether you’re selling your business, buying one (analysis of your target), or simply wanting to grow and make more money, it’s the behind the curtain things that really add oomph.

  • The big one in 2016, if not always, is the employees. Help wanted signs are everywhere, news stories about how there’s a shortage of skilled workers are common, and schools are implored to send people into the job market with useful skills. Your employees can be your secret weapon, and it’s important to protect them from poaching. It’s not just money, often culture rules over money. With up to 70% of employees not happy with their jobs (numerous reports including the Gallup study) if you have happy people do all you can to keep them, and keep them happy.
  • The term “a well oiled machine” refers to an operation with maximum efficiency. If you’ve created or refined a process that improves margins you’ve got something to brag about. I have many clients who are process people. They’ve streamlined their business so everything flows. I do the same thing with my clients. For example, with clients looking to acquire a company I give them a proven system to use (of course it’s up to them to implement their part of it as we implement our part). Like any process or system, it works when you actually do it.
  • “Your reputation precedes you” is a term you should strive for. A lot of company’s get jobs/orders without bids or quotes (or be the only company quoting the job) because the customer knows it will be a quality product at a fair price. You want to be the go-to firm in your niche.
  • Location is the factor in retail, as we all know from the saying, “location, location, location” as it applies to the three most important factors to success in retail. But it can be just as important in manufacturing, distribution, and many service industries. It’s why banks generally won’t make an acquisition loan for a term longer than the term of the lease, with options. Besides layout, to improve your processes, a huge part of the location question is traffic. Traffic patterns your employees take and, more importantly, the traffic your employees will face if you have crews, delivery people, or salespeople on the road. I know I add more cushion between meetings than ever before given unpredictable and overwhelming traffic.
  • Your use of technology is important. I see businesses who are surrounded by technology (computer controlled machines for example) and still track sales, do budgets and projections in Excel. The companies who use tools like Salesforce, ERP systems, and similar effectively and to the highest level possible for their business get more sales per employee than they would otherwise. Use, but don’t become a slave to technology. If it saves you time or money use it. If you find yourself bogged down in its minutia it means you’re overusing it.

Conclusion

Five behind the curtains things that can increase your profits or the value of your business, or increase your free time. Pay attention to them. They aren’t in the headlines like name customers or a well known product but they can be just as important.

Individuals or Teams? It’s Both (Part two)

In my last post I wrote about how teams are critical to success in sports, business, and actually other activities, and how individuals determine the success of the teams.

Earlier this year the New York Times Magazine published an article titled, “What Google Learned From Its Quest to Build the Perfect Team.” They did a five-year study, titled Project Aristotle, to find out “why some work groups thrive and others falter.” The article’s author is Charles Duhigg, who is also the author of “The Power of Habit” (a great book) and he also drew on information from other studies.

It took the researchers a long time to make any headway. They struggled to find what exactly made a team successful. They couldn’t find patterns. And then they found too many patterns, which is just as bad, or worse, than no patterns.

A major conclusion was there are two behaviors all good teams share.

“On the good teams, members spoke in roughly the same proportion, a phenomenon the researchers referred to as ‘‘equality in distribution of conversational turn-taking.’’”

“The good teams all had high ‘‘average social sensitivity’’ — a fancy way of saying they were skilled at intuiting how others felt based on their tone of voice, their expressions and other nonverbal cues.”

As I write this I’m thinking of some focus groups I facilitated for a client earlier this year. One day I had two groups of employees, with a pre-selected mix of management, production people, and admin staff. One group had a couple dominant people and the other had multiple people who could have become dominant.

The first group was a lot less productive. It was tough to draw out comments from the non-dominant subset. The second group had numerous outspoken people but they engaged in dialogue not control and more ideas flowed from this group. There was more of a willingness to speak.

It’s easy to say we all know what happens when one or two people in a group take over. Others shrink and just want to get the meeting over. But it seems there’s a lot more to it. And understanding how to make people gel for the common good is a true skill.

“When the enemy is making a false movement, we must take good care not to interrupt him.” Napoleon

Individuals or Teams? It’s Both (Part one)

The NFL season started last Thursday and a quick review of multiple games synopsis along with seeing some highlights showed 11 of the 14 games played through Sunday were decided by one score or less. About half of those came down to a big play at the end including last minute touchdown passes, missed kicks, bad snaps, a defensive stop, field goals as time ran out, and a two-point conversion, to win not tie the game.

Football is definitely a team game. Much more than basketball where one hot player can carry a game or baseball where a dominant pitcher is sometimes all it takes. As good as any player is in football it takes others to block, tackle, throw, catch, run, etc.

But it is also a game dependent on individuals. In the Sunday night game, a last second field was missed because of a bad snap. In one game a player mistakenly ran the ball down the field instead of out of bounds, with no time outs, and the clock ran out before a field goal could be attempted. And there were other such incidents.

Teamwork is great in business. At least 80% of the business buyers I’ve met say one of their strengths is building teams. This is important because, not all but, many business owners (especially founders) are not good at teambuilding. Too many owners are:

  • Do-it-yourself types
  • Autocratic
  • Unknowledgeable about delegation (so they just don’t do it)

Every business has teams and those teams are a collection of individuals, many of whom go their own way at their own pace (sometimes it’s like herding cats). Getting individuals to seek the common good is a trait that leads to great businesses.

Changing the culture can make a good business better and struggling business successful. I think it’s great when buyers come in and get people focused on the same destination and on the same track. It’s not a skill to be taken lightly. It’s something sellers should work on to increase the value of their company.

More on teams and their effectiveness in my next post.

“Things turn out best for the people who make the best of the way things turn out.” John Wooden

Labor Day, our second “New Year’s” as schools are back in session, vacation season is over, summer is winding down, football season is starting, and people feel renewed.

I learned very early in my current business people will put off big decisions (buy a company, sell a company, implement major initiatives, etc.) during the summer and the holiday season. There’s too much other stuff going on, whether it’s your stuff or your employees stuff (meaning there’s more time off during the summer than the rest of the year).

Labor Day was originally to honor the working class. While unions still play up this fact, for most people it’s the last hurrah of summer. In business it can be, “Now we can get some things done!”

So what do you want to get done between now and the end of the year? In my world I see the following:

Business owners start seriously thinking about their next great adventure in life. (Hint, time to read my book, If They Can Sell Pet Rocks Why Can’t You Sell Your Business (For What You Want)?) An owner who wants to sell in 2017 should take the next six months and start doing all the things recommended in my book (versus just “putting it on the market” as-is).

Business buyers typically get active. Most erroneously believe they can start in September and close by December 31 but that’s okay. Optimism is always good. Being our second renewal of the year it’s when we take a little more time to plan and think through what we want. It’s time to take control, create independence, and create self-wealth versus shareholder wealth. Or, to buy another company to leapfrog the competition. (Another hint, read my book Buying a Business That Makes You Rich.)

Owners looking to grow will take the necessary steps. Judging by the number of people in my class on growing a consulting business 10 days ago there will be more people taking control of their life in this manner.

All in all, it’s a time of action.

“The future depends entirely on what each of us does every day. After all, a movement is only people moving.” Gloria Steinem

Selling Phone Services by Email

At least two to three times a week I get an email from some company telling me how their telephone outreach services can help me set appointments, generate clients, etc. I think you can figure out what’s wrong with this picture.

They are writing to tell me how great they are on the phone but they can’t pick up the phone and call me! If their callers are so dynamic they should be able to convince me, using their voices, right?

Another way to say this is, your actions speak louder than your (written) words.

I thought it would be interesting to look at the above (actions versus words) from the perspective of my clients.

Businesses need to generate revenues by finding new customers and, most importantly, keeping existing customers happy. I recently did some due diligence calls to customers of a company selling. All of the “reference check” customers described firm as a “partner.” Yet I see too many companies (the people in those companies) that only look at the next sale. They often aren’t true problem solvers for their customers.

When I’m coaching or mentoring owners and consultants we always get into the subject of providing value. Sometimes it’s ideas. Other times it’s actually giving advice (especially if you call yourself a trusted advisor). Not just discussing options, but advising the client. That’s where true value is derived.

[As I am writing this I get a call from Totally Free Conference Calls. Twenty minutes prior I sent them an email saying I was getting call reports from calls that aren’t mine – somebody was mistakenly using my code. Not a big deal but I don’t want to have having a call the same time I do. Immediately they took action, called me, and fixed the problem. That’s customer service.]

Business sellers often wake up one day and decide it’s time to sell. Yet most businesses aren’t ready for sale. I recently was referred to an owner and based on our phone call and the firm’s website I know of three or four things this company (the owner) needs to do to make the company more salable. It’s why I came up with my ACTIONÔ to sell a business (as fully described in my book, If They Can Sell Pet Rocks Why Can’t You Sell Your Business (For What You Want)?)

An ACTION plan to sell a business is:

  • Arrange all the affairs of the company
  • Coach and counsel the company. Its people, process and systems
  • Transmit and teach all the good “things” about your firm, and those “things” are:
  • Intricacies that make your company special
  • Operations and management systems in place that will make a transition smooth
  • Numbers, all the financials in understandable form, straightforward with no “tricks”

Finally, business buyers too often don’t put their money where their mouth is. It’s why up to 90% of supposed buyers never buy. It’s great to talk about it, but when it comes time to do something…. Kicking tires is fun, when shopping for a new car. Of course this is why I follow a proven plan with my buyer clients. So they can stop talking and become a business owner.

Conclusion

No matter what your business or your objective, it pays to be prepared and to put your money where your mouth is. In other words, don’t send an email to solicit telephoning services.

Streamline or Clog the Growth Path

The European Union has a myriad of rules and regulations. One of the most “interesting” (substitute your term for interesting after reading the rule) is a requirement bananas sold in stores be free from “abnormal curvature.”

The point of this memo is not to discuss the EU’s bureaucracy, it’s to discuss streamlining the path to growth, which the EU is struggling with right now (so maybe there’s a connection).

  • When I coach business owners it’s all about growing revenues, making more profit, and doing so while working less.
  • Helping business owners work through the strategies in my book If They Can Sell Pet Rocks Why Can’t You Sell Your Business (For What You Want)? always gets us focused on growth. It’s because one of my top three tenets regarding preparing a business for sale is to show growth.
  • My work mentoring consultants always focuses on generating clients, i.e. making a sale to create revenue.

A streamlined path is always easier to traverse than one filled with obstacles, especially self-imposed obstacles. So ask yourself, whether you have 100 or more employees or are on your own, are you making it as easy as possible to generate more revenue? Or are you getting in your own way like the:

  • CPA firm wanting to sell but undercharging their clients, making it difficult for an acquirer to keep those clients (when they charge market rates).
  • Financial advisory firm charging twice the going rate, which scared off buyers for his firm as they (ethically) wouldn’t charge that much.
  • The business owner who was his main bottleneck because he refused to train anybody to do certain tasks. “I can do it in 20 minutes, it will take over an hour to teach somebody, so I’ll just do it.” Every day he did this, for years.

We get enough rules, guidelines, and regulations from government, large customers, etc. There’s no need to make your own.

“Beware of all enterprises that require new clothes.” Ralph Waldo Emerson

 

Tear Down or Build Up

Almost daily we take our dogs for a walk. Meandering through the woods and a mixture of neighborhoods, depending on the route we take, we see a mixture of old and new houses. Kirkland has many small, older homes now being surrounded by newer, larger homes.

A little game my wife and I play is, “Which will be the next teardown?” In a way home teardowns are a lot like the business bell curve.

  1. An innovator type will be the first person on the block to buy an old house, tear it down, and build a new one. He takes the risk others will do the same so he’s not stuck living amongst houses that bring down the value of his house. The same is true for people who take the risk of starting a business, especially one with a new product or service. Of course, the innovator will get his teardown for a reasonable, if not low, price while businessperson pays for the learning curve (developing a market, product refinement, etc.).
  2. Other homeowners in the area and buyers will see this and soon more and more older homes on the block will sell. The price for the older homes will increase, because the next new house will not be the only one. In business, others will see the new market and, depending on the severity of the barriers to entry, decide to start a similar business. Less perceived risk, product acceptance, etc.
  3. Finally, most if not all of the homes on the block will be newer homes. The late buyer will find she has to pay more but her value is there because of all the other new houses. The late seller will get more because there’s more demand. In this case, everybody wins to some degree. Not necessarily the same in business. If the barriers to entry are too low more and more people will enter the niche. One person, and then more, will franchise it and soon it’s a commodity.

When it comes to buying and selling a business most buyers and sellers will want to be in the middle example, with some barriers to entry and definitely with a competitive advantage they can leverage. This is what leads a solid market share and sustainable profits.

“These are my values. And if you don’t like them, I have others.” Grouch Marx

 

Who’s Your Judge and Jury?

In his book, “Originals,” (Penguin Random House, 2016) Adam Grant’s Chapter Two, Blind Inventors and One-Eyed Investors, discusses how misguided certain opinions can be. Two of his examples are the invention of the Segway and the creation of Seinfeld.

Steve Jobs, Jeff Bezos, and other innovators absolutely, positively loved the Segway. They thought it would revolutionize the world the way computers and Amazon.com (and other recent inventions) did. Almost everybody at NBC panned Seinfeld and it took one person’s lobbying to, barely, get past it’s pilot episode.

We know how the above two things ended. The Segway was and is a novelty, another way to say a flop. Seinfeld was one of the most successful television shows ever and I’ll bet you can find an episode on your TV now and almost anytime day and night.

Grant’s point (simplified here) is certain people should not be the deciders. Jobs, Bezos, and the others saw innovation for innovations sake but didn’t address the market need or want. The management people at NBC saw something different than the typical sitcom and couldn’t understand the concept.

One comedian interviewed in the book said he didn’t care what 20 people in a test audience or what some management person thought. They aren’t his indicator of success. His indicator of success is if he can make other comedians laugh  because then he knows he has a winner.

My point here is, if you have a new idea for your business be careful with certain feedback.

  • Management will probably be cool to the idea, as it’s different.
  • Customers set in their ways will be hesitant to try something new.
  • Your salespeople may find it outside their comfort zone, and want to sell the same old product (solution).

Find your comedian (user) to test your new jokes (product or service) and be careful when people are too excited or too down on something.

“If voting changed anything, they’d make it illegal.” Emma Goodman

 

It’s Always the People; Whether Operating, Buying, or Selling a Business

On Tuesday, August 16, 2016 the Wall Street Journal had a major article titled, “The Company Town That Chocolate Built.” It’s all about Hershey, PA at 14,500 population town where the Hershey companies employ about 12,500 people (many don’t live in Hershey).
Mondelez (formally Kraft Foods) made an unsolicited offer for Hershey and the locals are upset. They fear big changes, the loss of jobs, plants closing, etc. Especially because when Mondelez bought Cadbury they promised not to close a local (British) factory but then closed it after the acquisition.
On August 15 the WSJ had another article in which one of the subjects said he left his job after his boss downplayed his angst over firing people by saying, “It’s no big deal.” Big companies have a reputation for not caring about people but actually it’s the employees of big companies who care more about their career who make lousy decisions and say stupid things, like in this paragraph.
So now we get to small businesses. In the last week I’ve talked with three people about how business sellers almost always want to sell to someone who will take care of their people. The employees first and then the customers. Almost everybody in my industry has a story or two about how a business seller sold to someone for less money because of the relationship. It’s why I stress the relationship to both buyers and sellers.
Most owners value their people. All buyers value their people. Good employers want to enable their people and help them grow.
No matter what type of business, the people are the primary asset. Even robotic and computer controlled machines need a person to program them. As one business buyer said to his seller, “You may think I’m buying your company but I’m really buying your people.”
“I would never buy from or sell to someone I don’t like.” [Former client, business buyer and seller] Jim Bernard

Surprise! Not Always Good

During our annual summer visit to Bozeman, Montana we had just hiked a canyon, and were relaxing with a beer and dinner on a brewery’s patio. Across the street was the fairgrounds, where it was the “Bozeman Stampede” Rodeo.
We weren’t there long when a helicopter flew overhead hauling a huge American flag. As it finished its circle of the fairgrounds all of a sudden there were half a dozen loud, explosions. Fireworks with nothing decorative, just noise.
Everybody on the patio jumped and our dogs, and the other dogs, freaked out. They were scared and needed to go to the car for five minutes to settle down from the shock of the surprise noise.
Most people don’t like surprises either, unless it’s something like a surprise party. Just like most people don’t like change. They’ll keep doing a job they hate, keep an unproductive or disruptive employee too long, etc.
Nobody likes the change of business ownership, especially when it’s a complete surprise. It’s one of the touchy subjects in any transaction. What’s the buyer like? Will things change (for the worse)? Will my pay go down?
The issue always is, when does the seller tell the employees? I’ve seen them do it too early, and the employees react like my dogs – freak out (and look for another job). I’ve seen it done after the deal closed and the employees get upset with the seller because he didn’t trust them to tell them prior to closing (and now the buyer has to deal with the culture change from this).
A few hints, a little forewarning, and bringing key people into the loop early go a long way to helping keep people happy, maintaining the culture, and reducing the shock of a surprise.
“To learn who rules over you, simply find out who you are not allowed to criticize.” Voltaire