Would You Buy a Business Sight Unseen

In June of 2017 the Wall Street Journal had an article titled, “Buying A House Sight Unseen Is Easier Than Ever.” The opening sentence is, “It takes a confident buyer—and a trusted real-estate agent—to purchase property without a first-hand visit. Agents are increasingly walking clients through properties via FaceTime, Skype or WhatsApp, or even making custom videos.”

I like the part about being a “confident buyer.” Well, you sure better be! I understand the concept of a blind date, but a blind house purchase? What about blinding doing the following?

Job – Would you hire someone “sight unseen?” Probably not, especially in these days of background checks, drug tests, and regulations making it harder than ever to get rid of someone. Plus, an employer wants to check out the applicants’ attitude. A job seeker wouldn’t, or shouldn’t, take a job under the same conditions. For three reasons:

  • The relationship with the boss needs to be established.
  • They’ll want to know the culture of the business or the department.
  • If they’re good, and confident, they’ll want to present themselves, in-person.

Customer/client securing – We’re not talking a retail environment here, we’re talking B2B, especially where there’s an ongoing relationship. It’s a lot easier to pre-screen out potential trouble than fire a customer or client later. Believe me, a bad prospect makes for an even worse client. If there’s no trust you don’t want them (and vice versa).

Business buy-sell – The last thing an owner (seller) wants is to have someone come in and destroy their business, ruin their employees lives, etc. If an owner doesn’t relate to the buyer she can’t expect him to relate to her customers, employees, and vendors.

A buyer not only wants to have a warm-fuzzy feeling when with the owner but he wants to meet the key employees and talk with the customers (at the proper time and in the proper way). He wants to get a feel for the company’s culture, see the operation, see how the facility is maintained (i.e. does it look like an inviting place to work or does the interior look like it needs to be pressure washed?).

Banks do a site visit before making an acquisition loan so why wouldn’t a buyer (and a seller)? In fact, why wouldn’t a job applicant and employer want a visit or an advisor want to establish a great relationship?

 

Protecting (Someone’s) Turf

While on a trip this summer I was listening to the radio and heard a feature story about a new firefighting plane. It seems a company in California has outfitted, and got FAA approval, for a 747 to carry and disburse fire retardant. And not just drop it but spray it so it doesn’t destroy trees, equipment, or people.

Only one hitch, the US Forest Service won’t let them use the 747s (to help fight fires). In an interview, the owner of the firm couldn’t understand why. He also said the Forest Service put out an RFP for new planes and put in specific size criteria so this firm couldn’t bid.

Last Friday at my Rotary meeting our speaker talked about teamwork, turf battles, and similar. It sure appears this is a good-sized turf battle (and I know there’s two sides to every story). It’s why there’s so many companies able to thrive because they know how to get people to work better together.

I see it not just between employees but between owners and employees. The all-controlling owner, i.e. the control-freak, micro-manager, creates a culture where people stay simply because they don’t want to go through the hassle of a job search (and because the devil you know may be better than devil you don’t know).

It’s why when someone buys a business they are often the, “Breath of fresh air” the company needs. And since at least half of the buyers I meet say they’re good at team building, it’s a great way to get some instant improvement.

The lesson for business owners is to not wait for a buyer but to create your own breath of fresh air, increase productivity, and see the value increase also.

“A jackass can kick down a barn, but it takes a carpenter to build one.” Sam Rayburn

 

Do What You Do Best

I recently met a business owner whose business was slammed by the Great Recession. It got to the point where family members had to lend the firm money. Their bank then pulled their line of credit so they’re now with a factor, at a very high interest rate.

I’ve been around long enough to know banks usually subordinate owner debt, meaning it’s considered equity, and well behind any bank loans when it comes to repayment. However, this owner said no, his bank doesn’t do that.

In the car after the meeting I called a banker friend with his bank, told her the story, and said, “I bet his banker is in a branch and isn’t a business banker.” Sure enough, that was it, and she said they subordinate debt all the time (so this was an opportunity for her).

This story brings up a good point – you can’t be everything to everyone. The branch banker should have brought in a business banker (and should be glad the client didn’t find this out from another bank). I don’t help startups, other than consulting practices. Business attorneys don’t do family and divorce law. You get the point.

Know what you do well and do more of it. A client of mine, in the market to grow by acquisition, gave me a tip for others (this will be in my upcoming book on growth by acquisition). He said it’s important to take stock of what you do and do well, and know what you offer the marketplace. Only then can you best serve your customers and know what kind of companies you should acquire, including what kind of operational issues you can target and improve.

A good tip for all of us is to know what we do well, i.e. our competitive advantage, don’t worry about what we don’t do, and grow by leveraging our competitive advantage.

“Any man more righteous than his neighbors constitutes a majority of one.” Henry David Thoreau

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