Go With Your Gut Feel

I recently read an article in an industry newsletter about key factors in getting a buy-sell deal done and it struck me it was applicable to most, if not all, of our businesses.

The statement catching my attention was,

“If you ever get a knot in your stomach during the negotiations that is the time to throw in the towel….”

So true, so true. I have told (buy-sell) clients for years that if their gut tells them something’s wrong it’s time to get away, no matter how good a match the other appears to be on the surface.

Headline: THIS APPLIES TO ALL BUSINESS AND LIFE SITUATIONS

When you feel something isn’t clicking, you’re going off kilter, or there’s a basic uneasiness, then it’s time to get out. Doesn’t matter if it’s (on paper) a great business to buy, (on paper) a great buyer for your business, a seemingly great customer, or anything else – go with your gut feel.

A buyer client told me recently he didn’t trust a business broker/intermediary. I told him to forget it, move on and work with the other ones. I’ve not pursued clients because the feeling wasn’t right. As Alan Weiss says, “You can always make another dollar but you can’t make more time.” And a bad client or customer sucks time (and energy).

God gave us the intuition to sense what’s right and wrong. Don’t ignore it based on the superficial.

“Most human beings have an almost infinite capacity for taking things for granted.” Aldous Huxley

The personal touch wins

I recently had the pleasure of needing tech support a couple times. In my opinion, an online chat is the worst way to get help (for the customer). For the company, it may be the best because, it seems, each support person can handle multiple people at the same time, versus only one via telephone.

But I think it’s a waste of resources. I will bet the old, “Dollars to donuts” it takes more time to bounce between customers and their issues than to concentrate on one at a time. I now realize it’s best to call and talk to someone, especially since most firms allow you to enter your phone number for a call back while keeping your place in the queue. (I feel this way despite the fact that in our changing times many people prefer technology over the phone, a great example being recent studies showing 86% of millennials prefer to do job interviews by text.)

It’s why we must balance our client/customer load. One of my favorite questions to ask audiences is, “What’s worse, having the capacity to make one million widgets a year and only selling 250,000 (other than having the capacity to make two million)?” The answer is, selling one million and only having the capacity to make 250,000.

John Naisbett was right, the more we get high tech the more we’ll need high touch. At some point a sale has to be made, and we all can’t sell like Amazon because we don’t have simple products, we have value.

“If everybody is thinking alike, then somebody isn’t thinking.” George S. Patton

Complicated Doesn’t Get Customers

Computers get faster, more powerful, more streamlined, and at the same time the programs get more complicated, meaning they more and more become resource hogs. I can’t figure out why, after all these years, Microsoft Office has about one gigabyte of updates every couple weeks.

I guess it’s why Moore’s Law about how technology and its transistors double (in speed and capacity) every two years makes sense – it has to. Software programs keep gumming up the machines.

There’s a lesson here and that lesson is don’t fall into the complication trap. There’s a reason salespeople have been taught for decades (maybe a century or more?) to KISS, Keep It Simple Stupid.

I don’t care if you give advice, make, distribute, or retail a product, or provide a hands-on service, make it as simple and easy as possible for your customers. The easier it is for your customers or clients to understand the value you can provide the better.

We all have value propositions, or what marketing people call a USP, unique selling proposition. When you convey it in the fewest words you win. Don’t make your prospects have to think too much, or they (we) will find reasons not to buy.

Boring but Effective

We were relaxing on a Sunday night after a busy weekend and watching the end of Sunday Night Baseball. It was an exciting game, the visitors had a one run lead in the bottom of the ninth, runner on first, two outs, and the pitcher kept throwing over to first to keep the runner close, as he had previously attempted to steal on a pitch fouled off. Of course, the home town fans booed with every toss to first and the boos got louder with every throw.

Sure enough, the runner took off, the catcher fired a bullet to second, runner out, and game over. The announcers quickly pounced on the runner’s poor lead and jump, because of all the throws to first.

Throwing to first is a baseball basic when the runner is a threat to steal, and sometimes even when he’s not. Not popular when the opponent does it, very smart when your team does it.

The basics in running a business can get pretty boring and some employees may not like doing them, but they work.

  • Make enough calls and sales happen.
  • Put in the time to have accurate financial statements and management reports and you’ll know where you stand.
  • Put in the time on new products and you grow.
  • Delegate to your employees, they’ll grow and be more productive.

The basics of getting ready to exit can also seem boring, like repeated throws to first, but they pay off. It’s why I’ve made the process simple in If They Can Sell Pet Rocks Why Can’t You Sell Your Business (For What You Want)?)

If you’d like a complimentary copy for yourself or a client let me know.

“Education is what survives when what has been learned has been forgotten.” B.F. Skinner

 

Common Sense Isn’t All That Common

The Fourth of July is a day when seemingly normal people lose their common sense and blow off fingers, damage eyes, and do other mayhem to their bodies (and homes) for the thrill of setting off explosive devices.

But it’s not restricted to fireworks, it’s common in all forms of life including business. Just look at the recent escapades at Uber. Smart people, a dynamic idea (which disrupted the heck out of the taxi and shuttle industries), and no common sense when it came to company culture.

Riding so high on their idea, I’m sure given all the money (investors money) they had in spite of consistent losses let many of their people feel they could do no wrong. But obviously, they did a lot wrong in the office, especially with their treatment of women.

As many smart people have proclaimed over the centuries, common sense isn’t all that common. The above are just two examples and good warnings about how we need to ask ourselves, “Does this make sense?” when faced with a decision on something new. It could be a growth strategy, buying a business, selling one, or something personal (look at all the homebuyers these days who waive inspections so they can outbid the 37 other buyers for a house).

If you’re a business owner or have clients who own a business some of the best common sense advice to those thinking of selling in the next few years is to do the things necessary to increase the company’s value and make it more attractive to buyers (hint, the best common sense advice is for them to read my book If They Can Sell Pet Rocks Why Can’t You Sell Your Business (For What You Want)?)

Above all, have common sense and keep all your fingers intact every July 4.

“That which distinguishes this day from all others is that then both orators and artillerymen shoot blank cartridges.” John Burroughs

 

 

 

If Only It Was So Easy

On May 25, 2017, the Wall Street Journal’s tech column was about how almost all of us have personal information exposed online, much more than we realize. The June 1 column had more on how to reduce information exposure.

It’s shocking how much of what we do on a daily basis, because of our use of technology, is available to so many companies and people within those companies. And how it’s used to bombard us with targeted messages, or, in worst case scenarios, how others can use it to terrorize people.

I mention these articles because it’s not nearly so easy for the rest of us. Here are three situations where it would be incredibly valuable to have more information than we normally get.

Job search – wouldn’t it be nice if prospective employees knew about the company’s culture before accepting the job? Yes, I know there are websites like Glass Door but just like Amazon reviews you don’t know if you’re getting phony reviews glorifying the company or product or if someone ripped something to shreds because one screw was missing, the color was slightly different than expected, etc.

A friend feels she recently dodged a bullet during an interview. Here’s what happened. When arriving at the company the first person she met said, “Oh, you’re here to interview for my job.” They talked for a while and the topics included why the person was leaving.

It appears the interviewer overheard at least some of the conversation, didn’t say anything, and then told the recruiter how she didn’t like that conversation. She didn’t get the job and feels relieved about it as it appears (not verified) there’s a culture of backstabbing. Being the fly on the wall before accepting the job would be like having all the online data others have on us.

Vendors and customers – we can do credit checks, background checks, etc. but just think if as (B2B) customers we knew in advance how vendors treat their customers, if their billing is timely and accurate, if delivery schedules are met, and more. Yes, we can do reference checks but, as with the abovementioned job interview, we’re really not seeing inside the company.

“What a great business this would be if it wasn’t for the customers” is an old saying that really means how great it would be without the bad customers. It’s why we should all screen customers and not just take the order (this refers to ongoing relationship business not transactional business like buying a sandwich, although retail sees enough bad customers also).

During a recent meeting, someone was talking about how they were firing a customer. The customer wanted discounts, complimentary work, and unreasonable timelines (as if the service providing firm doesn’t have other customers). My usual policy is at least two meetings before I’ll even propose how we can work together. And, there’s a lot of discussion about life so we can get to know each other (and it works as I only have clients who are nice people).

Business Buy-Sell – my initial disclaimer is it’s rare when there’s a major surprise post-sale. In fact, I’d say there are more good surprises (opportunities, meaning poor processes, unexploited markets, weak sales efforts, etc.) than bad surprises.

While a buyer can sense what the culture is as he or she gets to know the seller, what happens day-to-day can be different. Plus, culture can take many forms and here are three types buyers look out for:

  • The micro-manager owner who has a hard time giving others responsibility. The buyer worries the employees are so used to this they won’t accept delegation as they’re fearful of making a mistake.
  • The lean and mean culture with people working long and hard hours “getting the job done,” which doesn’t allow for innovation, creativity, or strategy changes. Often it’s as simple as one more employee that solves the issue but the problem is the seller expects to be paid based on the profits from a burn-out culture.
  • Coasting, aka lazy, being the name of the game can be a concern and I’ve had a few deals collapse as the buyer passed on the company because he figured it would be too tough to get the employee base to give up their easy job style and work harder to grow the company.

Conclusion

I used the term “fly on the wall” and it’s what technology has allowed companies to do to us, which is why there’s a market for ad-blocker programs and similar. As I mentioned, wouldn’t it be nice to have these insights in our daily lives. Since we don’t, it comes down to good old fashion research, investigation, and gut feel.

 

 

The Freedom to Fail and Succeed

Recently it was Memorial Day, a day to honor those who died defending our country (although many confuse it with Veterans Day, which is to honor all military veterans).

One of the things the United States is known for is freedom. Freedom of the press, freedom of ideas, and the freedom to succeed or fail. I’ve been involved with four startup businesses and two have failed (much better than the published numbers of 65-80% of startups fail). Two were before I was 25 years old and the one that failed got me a great job in the industry because I made my mark by showing I was competent.

The majority of people around the world don’t have opportunity to fail, or succeed. Think of Russia, the Middle East, Africa, and more. If you’re not in the upper class or close to the dictator you don’t stand a chance to do much of anything.

There is nothing wrong with taking a chance and failing. Some of our greatest inventions and companies came from people who failed. Remember Thomas Edison’s quote, “I have not failed. I’ve just found 10,000 ways that don’t work.” Steve Jobs was booted out of Apple at one point.

An old cliché is, if you don’t take a chance you can’t succeed. But you also can’t fail and learn the lessons associated with it, and those lessons can help you ultimately succeed.

Be thankful for those who have given us the chance to fail and succeed.

“Patriotism is supporting your country all the time, and your government when it deserves it.” Mark Twain 

Wouldn’t You Love to Raise Your Prices?

Not that it’s worth much, but I was an Econ major in undergraduate and grad school. I do remember Macro Economics 101 – supply, demand, and price elasticity (not sure how much more I remember). J

I mention this because of a recent Puget Sound Business Journal article that started with, Jody Hall has never cried more about work than she has since Seattle implemented the $15 minimum wage.”

It seems Ms. Hall, the owner of six Cupcake Royale stores, was in front of the Seattle City Council sharing her story of multiple, personally guaranteed leases, the rising costs of ingredients, and how the council’s raising of the minimum wage to $15 per hour would add $1 million to her costs, and ultimately mean less jobs.

The response from one council person was, “Just raise the price of your cupcakes.” FYI, this council person is supposedly an Econ major and taught Economics at the Community College level.

News flash: If it was that easy to raise the price of cupcakes she would have done it already (and make more profit).

Hall’s response to the raise your prices comment, “That reveals a basic lack of business knowledge, [I] can’t just raise prices. Cupcakes aren’t a necessity. People will go elsewhere or go without if prices rise too much.”

I am not against fair wages and at the same time I feel government officials, most of whom have never had to worry about making payroll, much less even had to think about it, shouldn’t be micro-managing businesses and treating them in a one-size-fits-all manner.

Look around at low-wage and entry level food service jobs as they disappear. Airport restaurants, Panera Bread, and others in their stores have kiosks to place your order. Many casual restaurants (including Homegrown and Starbucks) let you order and pay online, so you can simply walk in and pick up your order. Kiosks and the Internet don’t ask for wage increases, take sick days, etc.

Given the choice, many businesses are opting for more technology and fewer people, and not just in food. Amazon uses robots in their warehouses and most manufacturing business have for years used machines that do the job of multiple people.

I guess I’m saying be careful what you regulate because as we know from Newton’s Third Law, every action has a corresponding reaction.

Fake News is Not New

The new buzzwords of 2016-17 are “Fake News” and “Alternative Facts”. Hey, this is nothing new. Politicians, and others, have used an alternate reality of information for centuries. Let’s ignore the politicians and look at three common examples.

  • How did used car salespeople get a bad reputation? (I should say salesmen as when the reputation was earned it was almost all men.) From telling car buyers all kinds of things about the car they were trying to sell, ignoring the car’s actual condition. Technology, starting with Carfax (remember fax machines?) did a lot to level the playing field.
  • Look at the Gallup list of least respected professions and you’ll see insurance sales people just above car salespeople, third from the bottom, with members of Congress being in the cellar. Now, I know from previous reading people don’t like insurance people in general, but think their insurance agent is pretty good. Is this because it’s a product we know we need to pay for but hope to never use? Is it the horror stories some agents tell to “sell” us on more coverage? Tough to really know but I’m guessing a lot of people feel forced into paying a lot of money for insurance and wonder why.
  • Now let’s look at my primary industry, the buying and selling of businesses. Business buyers often focus on one blemish in a business and try to magnify it to make a good business look weak, and get a better price. On the other side, sellers tend to inflate their bottom line via every trick available. They try to tell buyer’s their salary, for their job as CEO, isn’t necessary and is therefore profit (and the business is therefore worth more). They’ll also do the same with the cost of their benefits, cell phone, and anything else they think a buyer will fall for. Yet, I’ve never seen a bank or a (legitimate) business appraiser fall for this. They all put back in a fair market salary for the job the owner does.

Bottom line, all industries, even those well respected like clergy, bankers, teachers, doctors, and others have used things we now call fake news or alternative facts for a long time.

“Is it the truth?” First item of Rotary Internationals Four-Way Test