Repeat business is best and it’s what business buyers want and sellers love because it increases value. Listen for some great examples and tips.
I was at an educational event and ended up talking to someone in a completely different industry than mine. When he heard what I do his comment was how one of the toughest things about small to lower middle market businesses is they have owners who won’t let go, i.e. the owner is a dependency. So true, and we all know many owners like this.
It reminded me of a recent meeting with an owner who said, “I manage the managers. I get called when there’s a problem.” He’s over having to be responsible for everything.
What a difference between the above two stories. And this isn’t just with small companies. I’ve recently seen a few middle market businesses with the same issue. As the business grows the owner(s) keep doing what they did, which may be improving processes, having the important customer relationships, or having (too) many direct reports.
Do you see yourself in the above example? Do you see clients of yours? If so, realize the value of the business is higher if the owner manages the managers. Recently a very qualified buyer walked away from a deal because the seller was so important to the business, and the buyer didn’t have expertise to replace a departing owner (who didn’t want to stay for more than 90 days).
So, how do you determine if the owner’s a dependency? It’s not hard. Often the owner will brag about all they do. Or, ask what they do on a daily, weekly, and monthly basis. If it’s a consumer business check the reviews and see if they mention the owner or the company or a variety of employees.
An owner should do as little as possible below their pay grade.
“Truth is confirmed by inspection and delay; falsehood by haste and uncertainty.” Tacitus (a Roman Empire Senator)
“You have to get comfortable with the uncomfortable if you want to grow.” I heard this recently and it hit home. It reminded me of our Partner On-Call member who had a hard time picking up the phone, until he picked it up, and the call went great. Of course, he deliberated again for 15-20 minutes (his estimate of time) by staring at the phone before making another (successful) call.
The other day I asked Jessica to make a list of the top three things she’s uncomfortable with after one year in her job. Her list was:
Writing – not surprising, is it? As I tell groups, if you can write a few paragraphs people are impressed because most people can’t write a decent sentence. So, she works on it weekly.
Asking for referrals – this is tough, isn’t it? To actually ask someone for something. It takes confidence in yourself, which was another issue with our Partner On-Call franchisees, being at the desk where the buck stops is a lot different than running a middle-market company or a large department.
Follow through – again, it’s easy, for 80% of us, to get distracted. Start five things, finish none, repeat the next day. An accountant friend recently told me she’s not organized (yes, surprising coming from an accountant). It’s why I short list tasks, number them, and don’t start the next one on the list until the previous one is done.
What are your uncomfortable things? (We all have them.) It takes effort to get comfortable with them, but it’s worth it.
“You have to get comfortable with the uncomfortable if you want to grow.” Matt LaFleur
Birds are attracted to bird feeders. Customers need to be attracted to us by what we do marketing wise. Take a listen.
“We can’t measure what you’ve done for us over the years. We are so far ahead of where we would be without your help.”This is one of those statements that sticks in your brain, at least it stuck in mine.
The above was said by the Director of Education of the island country of Antigua as we reviewed our Rotary service project and planned for the future. No matter what business you’re in, look at your testimonials; do they sound like the above? i.e. we’re better off with you (or your company) than without you? This being one of Partner On-Call’s tag lines.
When I teach my class at the SBA on “Dynamically Growing a Consulting Business” I use the “better off” line at least half a dozen times. I want to drill it into the students head you have to offer value, not just be an expert in your field. It doesn’t matter if you offer advice and counsel, make widgets, rent money, or anything else, your customers must feel they can’t live without you.
There’s not much more I can write on this subject without being redundant by filling more space.
Some things are the same everywhere. I’m writing this on the flight home from Antigua, following our Rotary project. Last week we were at one of our favorite schools, a prestigious private primary school.
We had some issues with the Internet, so I talked to one of the non-teacher employees about it and asked if the principal, Mrs. Pringle, was still there that day. He replied that she no longer worked at the school and said if she did still work there these issues wouldn’t be happening.
Leadership is leadership whether it’s a large business, small business, non-profit, or a school. Good leaders keep the situation under control when “things happen.” And, the employees know (a good leader from an ineffective one).
Here’s a different example. Because we didn’t do this project last year all of our students were first timers. So, no experience. While the teacher assigned team leaders, after a few days we could see changes. On one or two of our teams the natural, take charge kids stepped up and very quickly we had the real leaders. They were the ones who not only knew what they were doing but did what needed to be done and instructed others on what to do.
In your business do you see people stepping up? Business owners, do you allow this to happen (employees taking charge)? I ask because a dependency on the owner is something I’ve seen a lot of lately and it usually means a lack of delegating. Combined with customer concentration issues (the owner has the relationships with the few customers totaling 75% of annual revenue). It’s a huge issue, it scares business buyers and banks.
“One of the hardest things in life to learn are which bridges to cross and which bridges to burn.” Oprah Winfrey *
* Owners, burn the bridge where you control everything and cross the delegation bridge.
What’s the difference between being a manager and being a business owner? Let me use a sports analogy. I recently read the following about new NFL coaches (as it’s that time of year where there’s job turnover).
“If there’s one thing I’ve heard from new head coaches, it’s dealing with all the things he’s not anticipating, and still devoting the proper time to the things he was.”
In other words, there’s a lot more responsibility. You don’t have just your silo of duties, you have everybody’s silos. It’s like the owner who told me he came to realize while he didn’t have to know how to do everything in the business, but he had to know what needed to be done, who needed to do it, when it was to be completed, and what it looked like when done (correctly).
And then there’s the unanticipated. I learned many years ago, the hard way, you can’t budget the whole day because something will sneak in the side door and disrupt your schedule. It could be a client situation, a great new prospective client, a negotiation item, etc. But something will disrupt your day and the tighter your schedule the increased odds this will happen.
Similar is scheduling meetings too close together. Especially in today’s world of smartphones, giving yourself enough time between meetings is smart. Because the tighter our schedule the more likely Murphy’s Law appears by having the first person we’re meeting show up late.
Coaches strive to become a head coach; many executives strive to be owners. It’s often more work but with higher rewards, financially and emotionally.
“Success is relative: It is what we can make of the mess we have made of things.” T.S. Elliott
Can you think of many industries not affected by technology?
You might think construction as people still pound nails, drive screws, lay flooring, etc. But plans are now downloaded, iPads are prevalent on job sites, communication is by text, etc. Cars are nothing but a computer on wheels. Kitchens have become high-tech with Wi-Fi appliances, Amazon Echo or Google Home devices providing recipes, being a timer, and more.
I mention this because of a Wall Street Journal article from last year titled, “Technology Spells End Of Roughneck Boom.” It seems automation and artificial intelligence are replacing high-paying blue-collar jobs in the oil drilling industry. One expert said jobs like measuring well conditions thousands of feet underground could decline by 25%. Also, efficiency is improved, inspectors now get their efficiency-driven schedules determined by a computer algorithm, they use augmented reality glasses that send real-time feeds to the office, and get back data via those glasses showing him how to perform complicated tasks.
This improved efficiency reminds me of one of my favorite stories. Bill bought a company that, in simple terms, sold blocks of service time. A good analogy is a hotel; if they don’t rent the room today, they can’t rent it twice tomorrow. The company’s website was a brochure and within a couple months he converted it to an ordering system, almost eliminating phone calls and phone tag. The good news is he didn’t get rid of the employees he had them do productive marketing work to grow the business.
We’re going through something similar. We just upgraded to Salesforce. We’ll use 10% of its capability but if it does the one primary thing we want it to do it will more than pay for itself in saved time – and everything else will be a bonus.
Like most things, there are good and not-so-good implications from new technology, new processes, or anything else. It’s using the good changes to overcome bad changes that makes a difference.
“Perfection is like chasing the horizon. Keep moving.” (Author) Neil Gaiman
I’m talking to an owner who’s pretty darn proud of the fact he doesn’t do any marketing or have any sales effort because it’s all “word of mouth.” He tells me this knowing I know his friend (with the same type of business) in a noticeably smaller market that has two to three times the revenue he has.
My first thought was, maybe if you did some marketing, you’d be making more money, and more importantly, have a more valuable business. By his own admission, this owner spends a good amount of time working “In” the business. He’s working well under his pay grade when he does this and probably works more hours than he would if he grew the business.
Word of mouth is great, especially for businesses like mine where referrals are the platinum standard. But those referrals only come as the result of marketing. But for a more traditional B2B or B2C firm (like this one that sells to businesses, government, and consumers) there needs to be marketing plus some sales effort.
A salesperson should be calling on the businesses and government buyers letting them know about new offerings, building the relationship, etc. As consumers, what’s the first thing we do when we need a new product or service? Right, we Google it. Some SEO or AdWords is sure worth a try.
Marketing is what creates customers, which creates buzz, which leads to the word of mouth phenomenon, and even more customers.
“I don’t always follow my own advice.” Edith Wharton
In November I had the pleasure of attending the all-staff dinner as part of the Farallon Consulting retreat (Farallon is an environmental consulting firm on whose board I serve). It was an exhibition of culture at its best.
While I only heard reports about the day’s activities (and happy hour) I witnessed a group of people on the same page. While there’s an endless supply of “bad” stories about managers, culture, etc. a good way to start the new year is to consider what a good culture means, whether you have a few employees, dozens, scores, or hundreds.
- Realize even companies with the best culture still have issues, but those issues are at the other end of the spectrum from the shenanigans on The Office. It’s simply because people are people.
- A good culture means better collaboration to achieve goals, whether it’s increased revenues, better productivity, reduced costs, or anything else. When employees work well together the boss (business owner in small companies) spends less time refereeing and more time strategizing.
- When employees enjoy their work environment they want to work there, will do extra, will not be job switching and that means higher employee retention. Given the costs of replacing someone, this is huge.
There are a lot of people who help companies improve their culture, and it’s worth it (when done correctly). This month is a good time to assess your culture and do what it takes to improve it.
“Every day on Earth is another chance to get it right.” Steve Earle