Walk Like a New Yorker

While in New York City earlier this year we had dinner with one of our former exchange students. Alex recently moved to the New York area from Ecuador and we talked about his adapting to the city, which he’s been to before but not to live.

We talked about the crowds and the pace and I said, “You have to learn to walk like a New Yorker.”

This is a metaphor for adapting to any circumstance in life or business. In my business, relationships are key to success for my clients and me. I like to say, “While cash is king, the queen is relationships and like in chess, the queen is the most powerful piece on the board.”

You don’t get the job you want if you can’t relate to the boss or hiring manager. I can’t get a client if we don’t relate and my clients can’t buy or sell a business if they can’t relate to people on the other side.

I recently heard from two owners who told me how important it was to sell their business to the right person. One specifically mentioned his loyal employees and how he wanted them to keep their jobs.

Everybody reading this relies on relationships to be successful so I’m preaching to the choir. So just in case you forgot….

“Sincerity is the key to success. Once you can fake that, you’ve got it made.” Groucho Marx

What Drives Business Sellers

I was recently asked if money was the top issue for business sellers (once they’re motivated to sell). My answer was it’s one of the top three, which are (in alphabetical order):

  • Employees
  • Legacy (including taking care of customers)
  • Money

Every owner/seller has different priorities, like we all do when it comes to business and life. There are reasons we stay at our job, leave our job (usually it’s the boss not the company), start, keep, buy, or sell a company.

It’s a rare business owner who doesn’t mention how important the employees keeping their jobs is to the deal. It’s why in all my books (including the upcoming, Company Growth by Acquisition Makes Dollars & Sense) have a diagram of the three-legged stool demonstrating how the buyer, seller, and the employees all want job retention but fear one of the other parties will kick a stool leg out.

Customers are almost as key. I’ve had owners tell me how they don’t want their competitors serving “my customers.” This is legacy. The business grows, the customers are happy, and the employees are happy.

Money is obviously important and at the same time I’ve worked on numerous deals where the seller sells for less (than they could have or less than other offers) because it’s the right buyer. The flip side also happens, buyers pay a little more because they know what they can do with the business and don’t want to lose the deal over money. As a private equity person told me years ago, “If we pay four times EBITDA and it doesn’t grow it’s a bad deal. If we pay seven times and it grows like we want it to, it’s a great deal.”

If you have any other important priorities for sellers let me know.

“If your dreams do not scare you, they are not big enough.” Ellen Johnson Sirleaf

 

It’s Not About Perfection

I was speaking with a business owner who told me he recently talked to a business buyer. The buyer had a list of questions and if the answers weren’t what he wanted the conversation was over. This before meeting the owner, impressing the owner with his skills, or seeing the business.

The owner “missed” on one question, the conversation was immediately over, and my comment was, “If that’s one of his criteria he’ll be searching for a long time.” I went on to ask if the buyer was Mr. X, it was, and I told the owner this buyer’s been out there for a couple years.

No wonder it’s taking so long. He has rigid criteria and he’s not concerned with building a relationship. I’ve been in the buy-sell world for 25 years and I can say with extreme confidence, the tighter the (individual not corporate) buyer’s criteria the less chance of a deal and the less emphasis on the relationship the less chance of a deal.

There are no perfect businesses and no perfect deals. What the above buyer wants is perfection when he should be looking for opportunity.

It’s All About Perspective

A friend told me how he visited Bozeman, MT and his brother-in-law complained about how (fast growing) Bozeman is becoming “too crowded.” One of my sons went to school in Bozeman, we’ve been there each of the last 8-10 summers, and, believe me, Bozeman is not at all that “crowded.”

It’s a matter of perspective, isn’t it? If you’re used to it taking five minutes to go across town and now it takes seven or eight you’re frustrated.

I find myself wondering about how some things that seem to change faster than we’re used to as we live in a time where change happens with more velocity than ever before. Social media is one area where it’s snuck up on traditional businesses.

Two years ago, I did a little here and a little there. Now, on the advice of PR and marketing friends, I have something going out daily (not all via the same mediums). People tell me about things they saw on LinkedIn, and posting good, solid content there is extremely important (which is why I ignore any posts with a picture of a motivated saying or similar; come on, show your expertise via content not your copy and paste abilities).

It’s unusual for me to meet someone who hasn’t seen my blog, videos, LinkedIn articles, Twitter feeds as well as the usual and customary, my website. I see a lot of other non-tech (traditional) small businesses emphasizing this also, because that’s where the customers and referral sources are.

On the flip side, my recent Getting the Deal Done Breakfast Conference had record attendance of about 180 people (high touch). Of course, all the marketing was electronic (high tech).

What Scares You?

On Halloween I asked: What’s scary to you? Only you can answer it but we’re not talking about eating too much candy tonight, ISIS, North Korea, Trump, Hillary, or anything similar.

What’s scary to a lot a people?

Business buyers: It’s the leap of faith they need to take to be in business. It’s understandable because business ownership is not for everybody. As I say in my book, Buying A Business That Makes You Rich, some people are like my mother, who taught college math and couldn’t imagine anything riskier than a school paycheck every month. Others groom themselves to take the plunge, and they love it.

Business sellers: Selling their baby is super-frightening. These owner’s put in so much time, effort, and love into it they can’t imagine someone else taking it over. Of course, these are the people who often are forced into selling (the three D’s, divorce, death, and disability corner them at some point) because they didn’t plan for and make an orderly exit.

Salespeople, advisors, and similar: Making phone calls. When teaching my class at the SBA on growing a consulting business I tell the story of one of our Partner On-Call franchisees who told me he’d stare at the phone for 10 minutes, finally pick it up, have a great call, and stare at it again for 10 minutes. His version of the move Ground Hog Day.

Salespeople, etc.: Asking for the order, because you just might hear no.

All of us: Doing the things we know we need to do. In other words, having the discipline to do things that aren’t much fun. Often because as in the prior two items, there’s risk.

So, put on a costume and scare the heck out of whichever things listed above frighten you. You’ll be glad you did.

“Living in the past is for cowards.” Mike Ditka

 

Preconceived Notions Are Dangerous

Regarding my upcoming book, Company Growth by Acquisition Makes Dollars & Sense, a good friend asked me why I bothered having a print edition, implying most book sales are now electronic. I answered it was because most of the sales for my two existing books are the print versions.

And, according to the Association of American Publishers, as recently noted in the Wall Street Journal, last year printed book sales grew by 4.5% while e-book sales declined by 17%. Maybe there’s a reason why Amazon is now opening brick and mortar stores. Could it be for all those printed books people are buying?

Preconceived notions can be dangerous. No, they’re usually dangerous.

  • I’ve heard people question why they should do a marketing action because, “It didn’t work for someone I know,” ignoring the fact it’s worked for most other people.
  • Business buyers constantly make judgments about target companies with only high-level information. I tell them to ask (about everything).
  • Salespeople wonder if they should call prospects, so they don’t.

This isn’t like fake news, it’s rushing to judgment, and because of it we make mistakes or miss out on opportunities.

“The other day I was thinking, ‘I just over-think things.’ And then I thought, ‘Do I though?’ ’’ Demetri Martin

Are You Listening?

The big news in the NFL earlier this year was the best player in the NFL, Aaron Rodgers, was injured and will be out at least eight weeks. I was listening to a press conference as his coach described how they weren’t going to go after a veteran quarterback to replace him, how he had two and three years invested in the quarterbacks on the roster, and felt comfortable moving forward with them.

Then a reporter asked him if he would try to sign Colin Kaepernick. The room took a sudden chill as the coach glared at the reporter and said, “Didn’t you just hear my answer to the previous question….?”

A brilliant example of when people are so busy thinking of what they’re going to say they don’t listen to whomever they’re speaking with. At a recent conference, we discussed building a relationship, as soon as possible, when you meet someone. And a great way to do this is to listen and ask intelligent questions related to what the other person says.

A great illustration of this is when, after a 15-minute conversation where the other person talks for over 13 minutes, they tell you how you really understand their situation or their business. It’s why I tell business buyers and sellers they have to get to know, and like, the person on the other side of the transaction. And you start the process by listening.

“Silence is the ultimate weapon of power.” Charles de Gaulle

It’s the Simple Things

Reading about the University of Washington’s big victory over rival Washington State I noticed the following from UW defensive coordinator Pete Kwiatowski, “When you beat the guy across from you, it’s a simple game.”

It always comes down to doing the basics. As I’ve told my clients for years (and mention in my book, Buying A Business That Makes You Rich) when you do the things you’re supposed to do, good things happen.

For business buyers, this includes implementing a comprehensive search system, building a relationship with the owner/seller, realizing the vast majority of sellers care about their employees and legacy, and recognize you want to pay a fair price for a great business.

For business sellers, the number one overriding “simple thing” is making sure your business is ready for the buyer’s in-depth analysis. My top four things are – show growth, reduce dependencies (especially on the owner), have solid financial systems and accurate financial statements, and demonstrate how you attract and retain great employees.

And for increasing sales, whether you’re an advisor, banker, business owner, or employee, it comes down to constantly and consistently getting the word out about the value you provide. You may set a goal of increasing revenue by 18% but if you don’t market, make telephone calls, or see people how the heck will you achieve your goal?

A Simple Way to Lose Customers

Here’s a good way to lose customers. Change their agreement, which renews annually, without telling them and have the new agreement greatly reduce the customer’s benefit.

This happened to me with my executive suite. I’ve been with them almost 10 years and found out in November how my August renewal dramatically changed what I get. No notice, nothing.

A large corporation bought the locally owned company a few years ago, I was waiting for rate increases, and figured they’d at least tell me in advance. I have to “not renew” with three-months notice but they don’t have to notify me of changes.

I’m in the market for a new executive suite.

 

Know Who is Your Best Customer

The Wall Street Journal recently published an interesting article on how banks are reducing the number of branches. They explained how Bank of America, using Indiana as the example, is overall reducing the number of branches but the steep cuts are in small towns as they add branches in Indianapolis, especially the more affluent areas of the city.

If we look at car dealers, we see the (ever shrinking) auto section in the paper doesn’t have ads for Lexus, BMW, Acura, Audi, etc. The ads, shouting out low prices, are for Ford, Chevy, Hyundai, Dodge, and similar.

In both cases it’s using data to reach the target customer. The same techniques should be applied to small business, even though most don’t have anywhere near the money or data to fine-tune it as much as big business can. It comes down to knowing where your customers are so you can reach them most effectively.

The same holds true in business buy-sell. Sellers need to know who their best buyers are (the logical buyer) as a quality buyer is worth more than a higher price (a buyer recently lost a deal when someone offered more money and now the seller wants to reopen communication because the higher price came with baggage, that being a not very good buyer).

Buyers need to know what they want, not, “I’ll know it when I see it.” This means a lot more than business type but understanding how they will fit into the operations. For example, a manufacturing engineer is probably not going to be good with a pure sales organization, and a sales guru won’t do well running a process oriented manufacturing business.

Know what you want, who your customers are, and go after them in the best ways possible.