Somethings are Just Out of Our Control

Two weeks ago, I received a couple positive comments about the memo sent that morning. A few people noticed it was dated September 18 and was the same content as the September 18 memo. So, I investigated.

For background, my process is:

  • Take a recent memo.
  • Delete the content.
  • Paste in the new content, link a different video, and change the date.
  • Send a test message to myself and edit if needed.
  • Schedule it.

First, I went in the Constant Contact system and yes, the memo dated October 9 was the one from three weeks prior. Second, I checked the test message I sent myself, and it was what was supposed to go out October 9. So sometime between the test and the scheduling the system reverted back, with me not having any way to know it.

Normally I would say these things happen because of human error (meaning I screwed up) but my test was correct and I also had my (almost) monthly newsletter scheduled to go out on October 11 and received an email from Constant Contact the next day saying technical issues prevented if from going out (with a lot of apologies in the message). Therefore, my assumption is, their system was at fault.

Things happen and some of them can’t be controlled. We have random acts of kindness and random glitches. You have to roll with the circumstances. The downside was I repeated a message. The upside is people noticed and I get to write this explanation. The old adage, control what you can control is true. Make sure you control enough to be effective.

“Control what you can, confront what you can’t.” (The band) Maine

Sometimes You Just Can’t Win

In the Seattle Times October 7, 2018 business section’s, “Speaking of Business” feature (a weekly roundup of quotes from the week’s most popular stories) were a couple examples of the above headline.

“We listened to our critics, thought hard about we wanted to do, and decided we want to lead.” Jeff Bezos on Amazon’s raising it’s starting wage to $15 an hour. Amazon got a lot of praise and then the Seattle City Councils admitted Socialist declared Mr. Bezos evil because he’s still rich. Others jumped on board because the wage increase came at the expense of stock grants, which were eliminated.

“It’s been a little like watching the air going out of a balloon.” Richard Lattanzi, steelworker and mayor of Clairton, PA on the unmet expectations of higher wages and better benefits due to tariffs on steel imports. The workers initially cheered because they felt the tariffs would raise all boats but now feel it’s only raising company profits not wages (correct based on other reports).

Everybody has an agenda. From the shop workers to middle-management to executives and especially the politicians. I don’t think this is different from past eras. One of my first jobs, in high school, was cleaning a warehouse a few evenings a week. I lost the job when the manager had a friend become unemployed and he got to take over the minimum wage, part-time job.

Every decision we make has repercussions, some good and some not so good. Being in business is often like raising kids. You better make sure you think through how others will perceive “what’s in it for me.”

“There are no easy answers, but there are simple answers.” Ronald Reagan

The Scan That Saved My Business’ Value

The title paraphrases a Wall Street Journal article from August 27, 2018 titled, “The Scan That Saved My Life.” The sub-title includes, “After years of exercise and healthy eating, a reporter’s blocked artery came as a shock.”

A health industry reporter, who exercised, ate healthy (a lot of salmon, oatmeal, and similar but with a passion for cheese), and paid attention to his health found out he had a almost completely blocked carotid artery. He had an ultrasound scan after a few “minor” symptoms of something being off. This resonated with me because a good friend had a stroke this past summer and found he had a 99% blocked artery.

Business Scan

Scans, tests, exams, and similar are common and necessary when health related. But when it comes to businesses, most owners don’t want anything close to a diagnostic exam of their company. Probably why the WSJ wrote only 10% of businesses are likely to sell for maximum value and Kiplinger’s wrote, “Most businesses will sell at a discount.”

Why won’t owners want an assessment of their business? Three reasons come to mind, for small, mid-sized, and lower middle market firms:

  1. Ego– the attitude of nobody knows my business better than me, it’s special, it’s unique, the standard rules, i.e. proven good business practices, don’t apply to my firm. I remember a client who, every time a strategy or tactic was discussed started out his reply with, “Yes, but….” and went on about how his firm was different.
  2. Time– yes, it takes time. Whomever is doing the assessment will interview the owner, management, key employees, customers, walk around observing, etc. It will take time away from the day-to-day, but it does give a fresh perspective. Here’s an example. A client had a very thorough assessment done and one of the observations was the shop employees have a quasi-union going on, meaning they set their own rules. Interesting.
  3. Money– money always plays a part in this, especially when the owner doesn’t think others will “get” his or her business.

Benefits

You can assess the financial systems, operations, management, marketing, and other areas. Here’s what you should get from it.

  • Confidence your numbers are true and correct or an understanding of what will make them better. Accurate financial statements will help with operations, the bank, and any eventual buyers.
  • Uncovering cultural issues or advantages. The quasi-union mentioned above is one example and on the other end of the spectrum is a client who says they have no problem finding employees because of their reputation. In fact, their vendors refer people to them because it’s a better place to work than others in their industry.
  • Better operations are often the result of this. It could be work flow, sales, supply chain, marketing, sales, or something else.
  • Growth will occur when bottlenecks and inefficiencies are corrected.

Overall, this means an owner will know more about their competitive advantage and how to exploit it.

Conclusion

The previous sentence is no doubt the most important item in this article. When you have a competitive advantage and use it your company has a much better chance of thriving. To be an owner, and especially a founder, means you are super confident. It shouldn’t mean you know it all or should refuse advice from experts. The owners who value outside advice, are in peer groups, and always strive for continuing education have a much greater chance of success whether it’s a few employees or hundreds.

 

Confirmation Not Blind Belief

As part of Jessica’s training we are reviewing one chapter a week from Russell Robb’s book, Selling Middle Market Companies (which is really about selling non-micro but still small to mid-sized businesses). Chapter four had a few topics near and dear to me.

  • It started with the topic of preparing a business for sale. He strongly said sellers should not take on any big, new projects or purchases (that will hurt short-term performance but has long-term potential). In my book, If They Can Sell Pet Rocks Why Can’t You Sell Your Business (For What You Want?), I say owners should run their business on a day-to-day basis as if a sale won’t happen. And, to discuss any big plans with their advisory team before just doing something.
  • Next was his explanation of how buyers will look at EBITDA and how smart ones will factor in upcoming capital expenditures. He calls it EBITDA-CAPX and discusses this to warn sellers they can’t skimp on replacing assets that need to be replaced. For example, if a company normally replaces two vehicles a year but stops getting new ones a year or two prior to selling the buyer will factor into their valuation the cost of more new vehicles than normal.
  • Finally, he warns sellers not to delay paying their bills (accounts payable) in order to pay off long-term debt. He states sharp buyers will peg a working capital amount that will stay in the company and therefore won’t be fooled by this tactic.

One of the pieces of good news from our weekly study is Jessica is always saying things like, “I’m familiar with this because it’s just like in your books.” Continuing education is necessary, especially in industries like mine where things are so different than they were in years past. It’s good to have multiple sources of information to get both different viewpoints and confirmation of the basics.

“You can only hold your stomach in for so many years.” Burt Reynolds

 

Competition Drives Prices

Every summer we take a road trip. I’ve noticed motel prices going down over the last few years and it seems obvious why they’re doing so – there’s a proliferation of franchise/chain motels everywhere.

In Bozeman, our dog-friendly place sits in the middle of five similar places. Across the highway are five or six “lower-level” motels and in back of our place there’s a development for a two-hotel convention center. The same seems to be true in other places along our route.

So, what’s going on here that we should pay attention to? Here are a few things.

  • Saturation – Too many similar businesses means price competition. Doesn’t matter if it’s motels, sandwich shops, oil change places, or something trendy like Curves used to be. Be unique.
  • Commodity – No differentiation. If you didn’t see the name you’d have a hard time telling one from another. Again, be unique.
  • Low barriers to entry – What’d it take to get into the motel business? Pay your franchise fee, build a building, and away you go. Whether it’s skills, a product, or something else, make it hard for others to duplicate.
  • Little competitive advantage – See above about being a commodity. Other than rewards programs what’s the reason to stay at any particular place? Oh, I got it, price is the reason. Make quality and service, i.e. value, your competitive advantage, not price.

Price shopping – Which brings us to how easy it is to compare prices these days with Expedia, Kayak, Hotels.com, etc. Position yourself so competitive pricing and shopping is not an issue.

Bottom line, if it’s easy to duplicate someone will duplicate it. Be unique.

“It’s better to prepare children than repair them.” Jim Zimmerman

Asking Why – A Great Question

I’m known in my family for constantly asking, “Why?” Others will say something about what they’re going to do, what they want to get, etc. and I’ll ask, Why?

Sometimes I get the answer, “Because.” And no, that’s not a reason why you want to do something.

  • A client told me if he had the money (at the time) he’d like to buy a larger machine. Why? It turns out because he likes big machines, not because the business needed it.
  • Years ago, one of my clients bought a business with way too much inventory. Why? Because the owner loved seeing full racks of stuff (and those full racks turned into cash with better management).
  • An owner had way too many employees. Why? Seems he didn’t want to work too hard, so he didn’t pay attention, and therefore made less money.

A client of mine, in a buy-sell deal, made it a (conscious) point of avoiding the why question by giving the answer in advance. For example, “This information is needed by Friday because (let’s say, to keep the bank on schedule).”

It’s a great simple one-word question to ask about marketing tactics, purchases, hiring, and much more.

“Even the smallest act of service, the simplest act of kindness, is a way to honor those we lost, a way to reclaim that spirit of unity that followed 9/11.”President Barack Obama

 

If You Want To You Will

I caught a small amount of the NFL Hall of Fame ceremonies on TV and was particularly drawn to Jerry Kramer’s acceptance speech. He mentioned how his high school line coach, after noticing him struggle, told him, “You can, if you will.”

At first he was befuddled by it. Then he figured it out, got a scholarship to the University of Idaho, won five NFL championships, was on the NFL’s 50thanniversary team, and now the HOF.

We can all, “Figure it out.” Now I can’t be a surgeon, engineer, lawyer, etc. but I’ve figured out how I can help others, be successful, contribute to the good of the whole, and have an enjoyable life – if I will do what it takes. One of my favorite lines, to clients and others, is, “If you do the things you’re supposed to do good things will happen.”

It doesn’t matter what your vocation, the above applies. The same holds for what you do with your family, community, and elsewhere. But it does take effort, perseverance, and (especially these days in our ever-faster world) urgency.

Kramer ended with some motivation from his coach, Vince Lombardi, which is the quote below. Sports, business, family, etc. all will thrive if you’ll do what you’re supposed to do.

“After the game is over, the stadium lights are out, the parking lot’s empty, you’re back in the quiet of your room, the championship ring on the dresser, the only thing left at this time is to lead a life of quality and excellence, and to make this old world a little bit better place because you were in it.” Vince Lombardi

Don’t Forget to Have Fun

By Jessica, with a tad bit of help from John

Page one of “Buying a Business That Makes You Rich” lists the top nine reasons audiences have shared on why they want to own a business. The reason we think is the most important is, “to have fun”. But over 98% of the time it’s not mentioned.

According to a recent article in the Wall Street Journal, “An Ignored Skill in Aging: Having Fun,” seniors have experts on almost all age-related issues except on having fun. Yet, they are the ones with the most time to have fun, many say they have forgotten how since they have spent the last forty years plus going to work, raising children, and taking care of aging parents.

Seniors have fun and business buyers looking for something that will be fun have a lot in common.  Fun is in every aspect of our lives work, family, and friends, as it should be.

Dread getting up in the morning and going to work? How productive can you be if it’s not fun? FYI, the Gallup poll on the workplace shows about 70% of workers are not happy or engaged in their jobs, and it’s been that way for at least five years. And, if it’s the grind of a job you hate it will take a toll on other areas in your life.

When this happens, people start thinking about a career change to bring back the fun.  For some it is to own their own business. Sick of the corporate world, they want to call the shots and benefit from their actions and decisions.

If this is you, one question to ask yourself is “What are my reasons for wanting to own a business?” Chapter one goes into a bit more depth on how to answer and assess those questions. (And realize, it’s not for everyone.)

On the other side, there are the business owners that are ready to move to their next great adventure in life. Hopefully they have an exit plan for a smooth transition and to pave the way for the new owner’s success.

A Win-Win! Is when the buyer comes in and has fun and the seller leaves with style, and grace and more money.

When buying or selling a business, the two parties involved need to have a good relationship. One thing we often hear from business owners talking about selling is “take care of my employees, they’re family.” If a seller feels like her employees are not going to be taken care of, it could mean the difference between deal or no deal.

Employees are just one example, but the buyer needs to understand what is important to the seller, it is imperative they get along and have a great working relationship. They both need able to wake up and be excited for the day ahead.

Control Doesn’t Mean Controlling

“I like being in control. I don’t like to listen to anything from anybody.”

The above is from the owner of a struggling business on the TV show Restaurant Impossible. When my wife and I heard it we immediately hit rewind so we could play it again and transcribe it.

I’m sure there are all kinds of fancy names for this as it’s one of the most common traits of business owners, especially founders. Ironically, in my opinion, the strongest statements about being in control come from owners of business not firing on all cylinders. No wonder there are over 1,000 books on Amazon when searching by “delegation” and over 300,000 when searching by “management.”

The top “blemish” I see in the hundreds of companies I come in contact with every year is a controlling owner who:

  • Has his or her hands in everything
  • Thinks they’re the only person who can do it right
  • Believes delegating is a sign of weakness

I recently visited my friend and past client Keith Jackson, owner of Industrial Revolution. He told me his four-person management team pretty much runs the day-to-day. On a personal note, Jessica has been with me since January 1. I turned over some client-based office work and she’s doing things I don’t know how to do, getting it done faster than I could, and this allows us to grow the business.

Being in control doesn’t mean doing it all. It means making sure it gets done and done right, and that makes the business more valuable.

“Only the educated are free.” Epictetus