Taking Action – Maybe Tomorrow?

The Wall Street Journal had an article titled, “New Ways to Battle Procrastination.” So, I tore it out to read later.

Seriously, I did tear it out and did so because I was about to go into a meeting and wanted to get rid of the rest of the paper. Like a lot of people, I have a list of things I need to do. And I love checking off those I complete.

But, and this is a big but, when it’s something I can quickly do, I do it right way. Unlike some people I know who say, “I’ll put it in my book.” As we head into 2020, what are the things you want to get done before yearend?

My advice is, get everything you can get done in the next two weeks so 2020 is dominated by new initiatives, growth strategies, and enthusiasm.

“Nothing so needs reforming as other people’s habits.” Mark Twain

Priority: Make Customers Feel Special

It’s common knowledge cable and satellite TV companies have been losing customers to cord cutting, i.e., people using only online streaming services for their in-house viewing entertainment. So it has to have been a balancing act for these firms on how to keep customers, advertisers, and content providers happy.

For years it seemed customers were at the bottom of the list with an example being watching recorded shows on a DVR. Yes, you could fast forward but it’s a game. Watching On-Demand often didn’t allow you to fast forward through commercials (although we figured out you could jump forward and rewind back a little). 

But now, at least on Xfinity, many shows have “smart resume.” There’s a colored bar showing where the commercials end. I’m not sure how the advertisers or content providers (who often charge advertisers) like it, but we sure do.

So, how do you make customers feel special?

  • Sometimes it’s saying, “no.” If you’re not the best option, refer a potential customer to someone better suited to help them. We do this at least once a month.
  • Solve their problem! This is really sales 101. No band-aid solutions, no one size fits all, provide a solid, long-term solution.
  • Communicate, regularly. When things are going well, be in touch because when there’s a hiccup (maybe not even your fault) it will benefit you tremendously.

And by the way, the above philosophy applies doubly to your employees.

“Children see magic because they look for it.” (Author) Christopher Moore

Vaping and other Naïve Actions

There was a recent news story about a Seattle area law enforcement officer suing for about $11 million because of a health condition caused by vaping (a CBD product and something else to relieve his stress and pain). Am I missing something?

He heated a chemical concoction, inhaled it, and figured all was good? He couldn’t imagine burning chemicals could cause bodily damage. 

I also see a lot of naivety in business and in the buy-sell world. A lot of it reminds me of some old sayings like:

  • “Build a better mousetrap” (and the world will come to you).
  • “If we build it, they will come” (Field of Dreams).
  • “Our product is the best on the market” (but the competition markets better).

In the buy-sell world what I see the most is:

  • It’s easy to find a good buyer (they’ll all be standing in line for my business).
  • Finding a mature, profitable, and fairly priced business is easy (it’s the mature, profitable, and fairly priced part that adds the complication as there’s no shortage of lousy and/or overpriced businesses).
  • I (buyer) can fix this business (turnarounds make headlines for a reason, they’re rare).
  • There’s a lot of discretionary cash to cover my debt (are your mortgage, car, tuition, utility payments discretionary? To cover debt you need “real” cash flow after a fair market salary).
  • Our competitive advantage is we’re the cheapest so pay us a lot for the business (someone will figure out a way to undercut you; value is when people pay more for a great product and service).

Don’t vape yourself into trouble in your business, the one you buy, or the deal you want when you sell.

“They always say time changes things, but you actually have to change them yourself.” Andy Warhol

Politicians, Businesspeople, and Rotary’s 4-Way Test

As we experience the holiday season with Peace on Earth, Goodwill to All, Thanks(giving), and the meaning of all this, I want to share my thoughts on what I consider to be one of the best codes of ethics around. It’s Rotary’s 4-Way Test and how I see it applying to politicians and businesspeople.

The 4-Way Test is:

  • Is it the truth?
  • Is it fair to all concerned?
  • Will it build goodwill and better friendships?
  • Will it be beneficial to all concerned?

Is it the truth?

Politicians – I think I could stop here because we all know they all lie, about everything. We have a President who sets the standard with over 12,000 verified false or misleading claims. Politifact states Obama made about 14% the number of “pants on fire” lies as Trump (yes, Democrats and Republicans, they all lie). Here in Seattle a Seattle City Council member, on the Berkeley “ban natural gas” bandwagon, stated a natural gas stove poisons the air in the house. A University of Washington scientist debunked that one pretty quick.

Business – My experience is most businesspeople are pretty truthful, other than owners who blend their business and personal checkbooks. They may write off some personal expenses but do report their income. When it comes time to sell, most care about their legacy (they want the buyer to succeed) and really care about their employees thriving with the new owner.

Is it fair to all concerned?

Politicians – Again, pretty simple as they only care about getting re-elected and the people who can help them accomplish that. This means donors and lobbyists not you or me.

Business – Most really care about their employees and customers. Yes, some (way less than 50%) are greedy, pay low, don’t provide benefits, etc. One telltale sign is often the retirement plan. If it has 95% going to the owner, you have to watch out for that person. 

Will it build goodwill and better friendships?

Politicians – Yes, if you’re a donor, a donor’s business, or a donor’s cause. Otherwise, you’ve got to be kidding.

Business – Small business is relationship business. You can’t succeed if there’s not goodwill between employer and employees, the business and its customers, vendors, and service providers. Face it, customers usually have options. In today’s labor market employees have a lot of options (on my list of the top four things an owner can do to prepare the business for sale is, “Show you can attract and retain great talent.”

Will it be beneficial to all concerned?

Politicians – You know my thoughts on this. See the above three sections. If it’s beneficial to the politician they’ll do it (often meaning they’ll do what the Party tells them to do).

Business – If you’re in business, large or small, you must be able to solve problems, meaning beneficial to your customer, your vendors, and you. Try making a promise like a politician and not delivering on it (we’ll have your order out by the end of the month but when it’s two months late you’ll lose the customer). Things must be beneficial to employees also, or they’ll leave. Most want career advancement and want to be able to take pride in their work.

Conclusion

It’s the holiday season and this is a fun essay. I’m sure you picked up on the general theme, we businesspeople have a higher ethical standard than those we elect. As you give thanks on Thanksgiving, wish friends and family Merry Christmas, Happy Hanukah, and Happy New Year, realize it’s best to carry all those feelings throughout the year, not just in December.

No Floundering Here; Only Great Insights

On October 23 we had our 12th annual Getting the Deal Done Breakfast Conference at the Bellevue Club. As always, our sponsors and expert panelists (beside myself) were PRK Law (Greg Russell), Hutchinson Walter (Marc Hutchinson), Columbia Bank (Bill Barclay, and Chinook Capital Advisors (John O’Dore). Of course, we couldn’t have done it without our ~175 attendees (I don’t have the exact count yet, but Jessica told me she counted three empty chairs).

As I welcomed everybody, I quipped that regular attendees might think we’re a food industry conference given over the last half dozen years we’ve had Renee Behnke (Sur la Table), Joe Whinney (Theo’s Chocolate), Robbie Bach (owner of Manini’s Pasta), and Joe Fugere (Tutta Bella). I explained it made sense to have all of these food industry people because the food industry is a tough and competitive business so it takes really good business people to succeed in it. 

Which brought us to the introduction of Bob Donegan, president of Ivar’s, who spoke on “Lessons our flounder taught us that allowed us to thrive for 82 years.” In recapping Bob’s talk, which received nothing but rave reviews, I won’t steal his talking points but will summarize for you. Bob concentrated on what I’ll call the big three non-financial factors all businesses deal with:

  • Employees
  • Customers
  • Vendors

Employees are on the top of Bob’s list, as they should be. His opening remarks on employees were centered on finding and keeping good people. One of his lessons was, hire for enthusiasm, train for skills. And, keep employees happy. They keep them happy by constantly recognizing their people and making it fun. 

The results include, while industry turnover is 250-400% Ivar’s turnover is 18% for management and 100% for staff. Given it costs over $2,000 to train a new staff member this is huge (with over 50 locations). This leads to better customer service, lower L&I claims, reduced food waste, and higher pay. In addition, it allows the company to give every employee medical, dental, counseling, a 401(k) and meals.

Customers are second on Bob’s list and directly tied to the employees via the customers service provided. Ivar’s does a great job of knowing their customers, and I mean really knowing their customers. Again, Bob shared some statistics (he’s big on measuring being a former CFO). Three of the most interesting categories of metrics, for Ivar’s seafood bar business division, are:

Ivar’s customers visit 3-4 times as often as the national average for a fast serve facility and will travel five times as far (on average).

Their customers average age and income is 50% more than the national average customer while the average purchase is almost triple the average.

The average customer satisfaction score is 50% higher than average, over 90%.

Vendors are also important to Ivar’s and Bob told a story about taking care of a preferred vendor during a time of crisis. They kept paying them even when not getting deliveries. He also told of a partnership with a Native American tribe that gets them high-quality Yukon River salmon. This is why they refer to their vendors as partners.

He closed his talk by discussing how they always think long-term, not quarterly profits. This shows in all of their metrics. And, he emphasized they always want to have fun (which is what I tell business buyers needs to be on the top of their list of reasons why to own your own business). 

Conclusion

I don’t know about other cities so maybe this isn’t unique, but the Seattle area has quite a few, well known restaurants putting people first. Not only Ivar’s but Tutta Bella, Dick’s Drive-In, and Mod Pizza. They offer (one or more of) second chances, benefits, tuition programs, career advancement, and more. And it pays off.

Do Your Customers Know You?

We’ve been working on an ongoing project with Pacific Software Publishing to locate acquisition targets of companies doing website hosting. Many moons ago I came to the conclusion a lot, and I mean a lot, of businesses would be shocked to find out how and where their websites are being hosted. Here’s a handful of what I’ve seen (and my client has many more examples):

A common refrain in business is to get to know your customers. But what about your customers getting to know you, in specific:

  • Unlicensed server software
  • Servers in a house basement without climate control
  • Antiquated hardware and software
  • Hosting as a minimal and (pretty much) ignored part of the business

How you work – using the above example this would include reassuring customers about your equipment, software, facility, support, etc.

Your processes – letting customers know the best way to do just about anything with you including ordering, problem solving, service, etc.

Your people – who are your people, who’s the client liaison for support, logistics, and, most importantly, the following point.

Problem procedures – what happens if there’s a problem with service, delivery, quality, or anything else. In a small business the owner should let it be known they will get involved and help solve any problem.

In buy-sell deals I say one of the three key factors is education (on what it takes to get a deal done). The same with customers. The more insights you share, the better the relationship. 

“If things were simple, word would have gotten around.” (Philosopher) Jacques Demida

Knowing Your Market

“Millennials are less loyal, so service agreements are on the decline. Will need to create “clubs” for them to join, with a monthly fee to be a member of the club.”

The above is from a research site to which we subscribe for industry and buy-sell deal information. This line is about the HVAC industry, which has long thrived on service agreements to maintain heating and air conditioning equipment (often mandatory on commercial properties). 

I’m not saying go out and have your business start a “club” to attract younger customers. The lesson here is, know your market. Social media is huge, popular, and many businesses really don’t understand it. So they either don’t use it or they use it incorrectly. I use it some and have come to realize LinkedIn is far and away where my business network and prospective clients are most active.

An example of knowing your market is that people have asked me why my blog doesn’t have comments. It’s because after briefly allowing comments I realized three things:

  1. Most of the businesspeople I associate with don’t have the time to write a lot of comments (I don’t have time either).
  2. I was getting bombarded with robot comments, mostly scams.
  3. People who do leave comments do it mainly for themselves, not for the benefit of other readers.

It’s tough trying to reach prospective customers who can be a moving target. So, understand where your customers hangout (figuratively not the specific restaurant, bar, coffee shop, etc.) and be there for them. The same holds true for those who can refer customers to you

“Different strokes for different folks; And so on and so on and: Scooby dooby dooby.” Everyday People by Sly and the Family Stone

The Business Roundtable Creates a Snit Attack

The Wall Street Journal (and I’m sure others) sure had a snit attack last week after the Business Roundtable came out with their latest report saying companies shouldn’t emphasize shareholder return over taking care of employees, customers, suppliers, and community. 

Taking care of people sounds like a good subject for Labor Day week. And what the Roundtable is suggesting sure sounds like the Costco model. Fair prices, good jobs at a fair wage with benefits, very community focused, and while I can’t comment directly on suppliers, I do have a friend who sells to Costco and loves doing business with them.

The above is also what my clients strive for. A client looking at a business to buy didn’t see an expense for benefits. He commented on how he’ll have to add in that cost (versus the common adding back of expenses) because he wasn’t going to be an owner not providing benefits.

I looked at a company recently whose owner seemed to be bragging about how little he could pay his employees. He didn’t connect that with the fact he had high absenteeism and constant turnover. 

With an extremely high employment rate it pays to take care of your people, especially in our robust economy.

As an economics major, I well remember Milton Friedman, who’s the person who stated a corporation’s primary obligation is to the shareholders (and which the Roundtable is now disagreeing with). I think he was wrong then and it’s a wrong philosophy now. Take care of your people (including customers and suppliers) and they’ll take care of you.

“Success is a great deodorant. It takes away all your past smells.” Elizabeth Taylor

Financial Shenanigans Versus Incompetence

The Wall Street Journal and others recently reported about an accounting expert who had predicted the Madoff Ponzi scheme and recently went after GE for what he said are their deceptive accounting practices (of course, GE responded this person didn’t know what he was talking about). But this is not about GE but rather about accounting irregularities in general.

We have a government with annual deficits of $1 trillion and with a lot more “off the books” because there are non-budget items. On August 26, 2019 the WSJ had an article about how CEO pay is often much higher than disclosed (due to stock appreciation and clauses that escalate compensation).

And then we get to my world of small business where it’s usually not malicious but is accounting incompetence. Too many owners think their accounting department is like Cinderella – the weak little stepsister who must be tolerated at as little cost as possible. Sometimes it’s because they’d sooner “play” with their product than worry about the numbers and often it’s because they’re doing so well it becomes “management by checkbook,” as in, there’s plenty of money so who cares about cash flow, metrics, etc.

I’m working on a potential deal where the owner (and his advisors) setup five companies, two operating, one management, one for real estate, and one for equipment. They are so intertwined it will take a good CFO or forensic accountant to figure out exactly what their earnings are. And, it’s management by checkbook when the owner says, “we bought too much equipment and too many vehicles last year, so we’ll have to sell some.”

Tip to owners – one of the top three things you can do is have solid financial systems, accurate statements, good management reports, know your KPIs, and other metrics. It makes your life easier, especially as it seems we’ll have an economic correction soon, and when it’s time to sell, increases your value and attracts better buyers.

“The simple truth is that truth is hard to come by, and that once fount it may easily be lost again.” Karl Popper

The Best Lessons are From Dogs

I recently read Dave Barry’s latest book, Lessons From Lucy; The Simple Joys of an Old, Happy Dog. It’s funny, as one would expect from Dave Barry, insightful, poignant, and not exactly what I expected from him.

I’m not going to “steal his thunder” and give away all his lessons. Read the book (it’s a fast read and extremely entertaining). I will share one lesson, because it’s one of the few mantras I have in my business.

Don’t stop having fun. (And if you have stopped, start having fun again.)

On page one of my book, Buying A Business That Makes You Rich, I state that in addition to all the reasons people have for wanting their own business, fun needs to be at the top of the list. The same goes for a job, yet too many people slog through their days, collecting a paycheck (sometimes a very good paycheck) but not building a career or a lot of happiness.

It’s even more important in our personal lives (to have fun). We can’t go through life like the Puritans, feeling we have to suffer on earth to have everlasting life. But considering most of us spend 25-35% of our adult lives “on the job,” it’s crucial to be doing something you like if not love.

And guess what, when you’re having fun it carries over to your co-workers, customers, family members, and others, and, increases productivity. There’s a lot of money spent on advisors helping employees, and owners, get to the point of enjoying what they do and doing their jobs better. It’s often called culture and it’s a lot easier to destroy a culture than build a great one, which is one reason for all the experts providing great advice.

“Wine is sunlight, held together by water.” Galileo Galilei