Employee Lesson From Sports

In early January the Seattle Times broke a story saying the Green Bay Packers asked the Seattle Seahawks permission to interview Seahawks general manager John Schneider for the GM job in Green Bay.

The Seahawks refused permission and Schneider supposedly wanted to interview for (and wanted) the job. The Times reported NFL rules say permission can be denied if it’s a lateral move but can’t be denied if it’s a promotion. It became a moot point Sunday when the Packers filled the position.

I doubt this will have any effect on any of the parties moving forward but things like this can be sticky situations. Many years ago a client had an employee leave, they went to enforce a non-solicitation agreement, the customer said, “we don’t want to be in the middle so figure it out (without us).” What do you do? Run up legal bills, lose any chance with the customer, or let it go?

I remember another client who did everything right when hiring someone but the industry’s 800-pound gorilla put their legal department on it and the cost of winning wasn’t worth it.

What’s interesting about sports is it’s in the culture to groom people (primarily assistant coaches) for advancement, knowing the advancement will probably be with another team. There’s pride in seeing protégés move ahead, as it should be.

“Never take anyone’s advice.” John Banville

If You’re in Business You’re Providing Value

Recently we had to take our Kitchen Aid mixer in for repairs. I was amazed at the sight of hundreds and hundreds of small appliances on the shelves of the repair shop. In this age where so much is disposable (think electronics like a DVD player) there were a lot of items being rehabilitated.

It demonstrates there’s a need for all kinds of services. The shoe repair shop near us looks the same, hundreds of items on the shelves. Good shoes or boots cost hundreds of dollars and it makes sense people want to keep them even when the basic parts wear out.

Think about where you add value. The above examples are simple to understand. Your appliance works again or your shoes don’t leak. At “Partner” On-Call we always said our goal is to have our clients better off with us versus without us. Here’s a simple three step process.

  • Determine how you can get in front of more people you can help (it’s using the phone and in-person meetings, not Twitter).
  • How do you figure out the value you can add (ask questions)?
  • Impress them with valuable information before they hire you (no hard sell, have them realize what they’ll be missing without you on their team).

We all can provide value. But if your value stays hidden within you it’s not helping anybody.

“A life spent making mistakes is not only more honorable, but more useful, that a life spent doing nothing.” George Bernard Shaw

Make Yourself Dependent

We recently went out for dinner with some good friends and in our discussions the husband touched on how his customers tell him if he was to leave they don’t know what they’d do (he’s in sales of technical production equipment). In other words, he’s indispensable, at least in the short-term.

I often mention how business owners need to reduce and eliminate dependencies but there’s a flip side to it. Often we need to make ourselves a dependency. This can take many forms.

As described above, an employee with special skills, especially in small to lower middle market businesses, has job security. Not only is it expensive to replace someone, in today’s market it’s darn hard to find great people. Our friend has good job security.

When your company provides crucial services to your customers you’ve become a dependency to them. Without abusing it, it’s revenue security. It’s why repeat business and any “value-add” service is the top choice of business owners (and buyers).

On the other hand, if you are the reason one of your suppliers has customer concentration issues you have some leverage (as long as there are other suppliers). This one is easy to abuse. I remember in grad school learning about how Sears would become the highly-dominant customer of mid-sized businesses and use that to buy the company, and not at what the price would be if they weren’t so dominant.

While I “preach” about the evils of dependencies, if you’re the dependency it can be a good thing.

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


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


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?

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.


Relationships Rule

The other day I was on a conference call and heard a business seller give a very eloquent explanation of why he wants to sell his business to a particular buyer. He mentioned numerous things, including he’s a good person, he’ll preserve the culture, we share values, I don’t want to sell to a large company, etc.

Every year there’s at least one deal where this happens (the extreme is when the owner sells to someone she likes for a price lower than someone else offered), or a buyer says he won’t negotiate much because he really wants the business, one reason being how much he likes the seller and what the seller has done with the company. Buy-Sell is a microcosm of all business and life, i.e. relationships are the most important thing there is.

I (over)emphasize this in my books, Buying A Business That Makes You Rich and If They Can Sell Pet Rocks Why Can’t You Sell Your Business (For What You Want)?).  Small and mid-sized business transactions won’t happen if the buyer and seller don’t get along. Getting along great doesn’t mean there’s a deal, it means you have the potential for one.

Just like life, right? We hire people we relate to, we hang around with people we like, we date and marry people we get along with.

Many years ago, I learned a lot from a program called “Counselor Selling.” Having never been in anything close to sales before it opened my eyes to how important relationships are. Want to do business with someone, build a relationship before talking about product.

Adapt or Perish

It’s interesting, and a bit sad, to see town car drivers waiting and waiting and waiting outside of hotels as Uber and Lyft cars come and go with passengers. As much as the ride companies disrupted the taxi industry they did the same, or more, to town car industry.

Or at least they disrupted the drivers who still do things the same way they did five years ago. I look and see how my clients’ businesses and my business have changed over the last five years and how others haven’t changed at all. And it’s not just technology. Often it’s speed. Speed to market, speed to getting in front of customers, to getting the job done.

Your customer/client is better off if you solve their problem sooner versus later. From advice, to product delivery, to having a car when and where you need it, with you being in control of the ride

Political Shenanigans and Business Buy-Sell

In the recent news is the story of how Pakistan’s Prime Minister Nawaz Sharif was removed from office based on corruption charges and not being “honest.” I’m guessing there were some political motivations behind this.

What was reported by only some outlets was one of the key pieces of “evidence.” Some London real estate was owned by his children and his daughter produced a document showing she was not an owner but only a trustee of some offshore accounts. The problem is, while dated in 2006, the font they used wasn’t commercially available until 2007.

This sounds like something out of the young-person mystery. The teenage detective foils the bad guys by showing they used a non-existent font on their old documents (while all the adults debated and argued).

I don’t see things this blatant in the buy-sell world. What I see are people who disguised a business’s profitability by using Adjustments, Assumptions, and Add-Backs (to, of course, inflate the true picture). For more, see my article at https://www.martinkaconsulting.com/wp-content/uploads/2013/12/AAA-not-to-the-rescue.pdf.

The Rotary Four-Way Test starts out with, “Is it the truth” and it’s a great motto to live by.