I was a cafeteria monitor for at least my senior year in high school (maybe my junior year also). It wasn’t a bad job. We made sure kids didn’t act like kids, food wasn’t thrown, the lines moved along, and the finished trays didn’t back up on the conveyor back to the kitchen. The benefit, monitors got as much food as we wanted, and we had a great team of cooks who served 2,700 kids a day (it was a closed campus) and growing boys need a lot of food.

I hadn’t thought about this in way-too-many years until I saw a headline in the Wall Street Journal on July 26 that said, “Supply Chains Pinch School Menus.” Food suppliers to schools are having a tough time getting food and other supplies, they don’t have enough workers, and transportation is an issue.

Just like almost every other business these days. It’s tough operating a business when you don’t know when you’ll get materials, will you have enough employees, will your customers want what you have if they can’t get other things needed to make their product or do their business. The article mentioned one company “gambling” on stockpiling fruit without knowing what the schools would be ordering.

It also changes due diligence for business buyers. They must now look at the supply chain, the suppliers, how they get the product, etc. For a while the top worry was easily employee availability and if supply chain worries haven’t overtaken that worry, they’re a close second. Another example in the article was about suppliers backing out on their customers. Tip to owners (especially soon-to-be sellers), have multiple suppliers and always be in contact with them.

For buyers, it’s be cautious and investigate the heck out of the supply chain.

“We can understand things better. We can never understand things fully.” (Physicist) David Deutsch

We recently took a long-weekend trip to Denver to see a client and relax for a few days. I noticed something I often notice in airports and it’s most people overpack. It’s summer, there aren’t too many places to go where it’s not warm (meaning no parka to pack), and I can’t see how people need more than a carryon size suitcase plus a backpack for their computer, headphones, book, etc. Face it, most people go places where there are stores and wash machines.

Of course, most of us overpack in life and business also. Too much stuff around our houses, too many clothes in the closet, too large a list of things-to-do around the house, etc. And in business, it’s just as bad or worse. 

Business owners and sellers overpack as follows:

• They make things too complicated, often for employees and for customers (ordering and reaching someone for service should be easy not hard).
• They don’t invest in up-to-date technology or processes. Business buyers like it when there’s low hanging fruit, meaning easy upgrades that save time and money and I can’t remember the last time a sold business had all current hardware and software.
• Micromanaging, which slows down productivity and employee growth.
• Making the business, or a critical part of it, dependent on the owner. This is a big one and, as I wrote a few months ago, an owner told me a large firm “beat me up on price” because they said the business was too dependent on him.:

Business buyers also overpack:

• Dreaming there’s a perfect business out there. Wake up, there are no perfect businesses or perfect deals.
• Getting analysis-paralysis. As I say in the preface to Buying A Business That Makes You Rich, buying a business requires a leap of faith and you want to make it off a chair not the roof. But you’re still making a leap, so make a decision.
• Not realizing it is work. It takes effort to locate, analyze, and structure a deal on a mature, profitable (and fairly priced) business. It’s pretty darn easy to buy a crappy business or grossly overpay.

And, in my market of sub $10 million deals, realize relationships rule. Nobody will buy from or sell to someone they don’t like (which also means they don’t trust them). Unpack the ego, get rid of excess baggage, use your team, and get the deal done.

“Remembering that you are going to die is the best way I know to avoid the trap of thinking you have something to lose.” Steve Jobs

“You can lead a man to congress, but you can’t make him think.” Milton Berle

There’s an old story, about how if you put a frog in boiling water, it will hop out but if you put it in cool water, slowly raise the temperature it will stay in the water and eventually die. I don’t know if it’s true or not, but I get the concept because when my electric shaver blades get dull, I don’t notice it until they’re really dull. The change from day-to-day, week-to-week is so small it’s not noticeable.

The same thing in business, old practices (habits) are hard to change. Take the company that manually entered about 400 transactions into an online portal for payment. The new owner found a $50 a month software package that did all of them at once, using information already in the system.

Or what about the companies still writing and mailing checks when most vendors make it easy to pay online (and many take credit cards). One client manages credit card payments to get an extra 45 days of working capital, plus the points or cash-back.

It’s why I say new owners of a business are often “A Breath of Fresh Air” and it’s not just culture. They often are more in-tune with technology and employees love it when they have tools to be more productive. Heck, many years ago a client doubled his (newly owned) business in two years and he said the main driver was an online ordering system to book jobs versus phone calls (and phone tag).

A good idea is to look around your business and notice all the things you’re doing the same way you’ve done them “forever.” I’ll bet there are some tools out there to make mundane processes less burdensome. 

“One of the symptoms of an approaching nervous breakdown is the belief that one’s work is terribly important.” (Philosopher) Bertrand Russell

New York City finally announced the results of the Mayoral primary. As per a variety of sources I deduced because of ranked choice voting this election was slower and more troublesome than usual (like announcing results that included over 100,000 ballots used to test the new system).

But let’s not go over their inefficiencies, let’s look at why (as per experts) and how it relates to businesses, especially those wanting to sell (for top dollar). As per the reports, the election board is filled with people who have been there way too long, has (political) cronyism, and nepotism, which makes for a culture none of us would want in our companies. As it relates to small business:

Nepotism – and it’s not always bad to have family members in the business but look at this situation. The owner of a nice, growing, and profitable business has his two sons working for him and they are key employees. He needs the money from the sale to retire but says the sons don’t have enough for a down payment (even with a bank/SBA loan at about 10% from the buyer). A first reaction of any outside buyer is going to be, what are the sons going to do if dad sells to me? It’s solvable (we’re meeting soon to go over options) but it will take more time, effort, and money than if the planning had started three years ago (there’s a story in If They Can Sell Pet Rocks Why Can’t You Sell Your Business (For What You Want?) about a couple that planned to transition the business to their son).

Old, long-term employees – an owner states how many of the employees have been there 20-30 years and what I hear is they’ll all be retiring at about the same time. The situation is amplified when there are three or four owners who all want to sell and leave. A good succession plan phases the owners out over time so when it’s time to sell the whole management team doesn’t have to be replaced at the same time. 

Culture – the NY election board (supposedly) has a culture of, “Who cares when the work gets done, I have things to do.” Things like go to the gym, run personal errands, long lunches, etc. In a business, a lifestyle culture is sometimes seen as an opportunity and sometimes as the threat. When an owner told a buyer his sales team and he work just enough to make the income they want, it scared off the buyer. He saw opportunity but it would take effort. He knew (from his meetings) these people weren’t going to change. They’d either keep working with limited results or leave. And having to hire a new team is a sign of disaster.

A lot of what it takes to eliminate the big red flags a buyer sees as lowering value are not hard to fix. They take time and effort. Get an experienced guide, pay attention to the details, and allow enough time to do it right.

“If a politician found he had cannibals among his constituents, he would promise them missionaries for dinner.” H.L. Mencken

“Tradition is the living faith of the dead.” (Historian) Jan Pelikan

The Trump Organization allegedly avoided paying taxes on almost $2 million of compensation to an employee. The allegations and prosecution shouldn’t surprise anybody because:

• There’s politics involved.
• There seems to be a family history of this.
• Most business owners do the same thing but do it to reduce the owner’s taxes not the taxes of an employee.

One of the most irritating aspects of small business buy-sell is when the owner blends their personal and business checkbooks. I’m not talking about a meal or ballgame or round of golf now and then, I’m talking about paying for obvious personal expenses with business funds. One owner (I know his son, who bought out dad’s half of the business) felt the role of the business was to pay for his and all his kids personal bills (insurance, Costco, groceries, etc.). The son doesn’t feel the same way because he plays it straight and gets audited financial statements.

Of course, then the seller will say it’s the job of the buyer (and the bank) to determine what is really a legitimate business expense and what isn’t. In other words, “I’m cheating the IRS, but I won’t cheat you.”

But what if there’s an “Oops” and you must sell? A deal from years ago had an owner who was like the dad mentioned above, and she knew it. When a medical issue arose, she was stuck. She knew the risk and understood the increased price of the business would be more than many years of tax savings. And she’s right! Ignoring the time value of money, it’s 10 years or longer of tax savings to equal the increase price. 

Nobody wants to pay more taxes than they’re obligated to. There’s an inherent desire to get the tax bill as low as possible. But consider the big picture and it’s why I tell owners (and it’s in my book If They Can Sell Pet Rocks Why Can’t You Sell Your Business (For What You Want?)) to not play any games for three years (or more) because in the long run you’re way ahead.

The point of this memo is, just because you can do it (and others, including big names also do it) doesn’t mean you should do it.

“We must believe in free will. We have no choice.” Isaac Bashevis Singer

“At 50, everyone has the face he or she deserves.” George Orwell