Projections, Projections, Do We Really Need Stinkin’ Projections?

I know they need to “check the box” and get projections. In this case, “they” being bankers. Recently one asked for three years of projections with the first two years by month and the third year annually. Just for fun, consider the following:

  • The folly of predicting winners in March Madness. Column in the Seattle Times said pick Kentucky, they’ve got it all. Oops, out in first round. The WSJ had a column saying pick the defending champs because most don’t pick them. Oops, out in second round. In conference tournaments one announcer said Iowa was so hot they’d go to the final four and another said Seton Hall would go deep as they were peaking at the right time. Oops, both out in the first round.
  • It’s early 2021, vaccines are available, and things are opening up. Would you, would anybody, have predicted future mask mandates after politicians proudly stated if we get vaccinated there’ll be no more masks? What about massive supply chain disruptions, employees taking control of the job market, or a war in Europe?
  • What about inflation? (Almost) nobody predicted that (I’d bet those who did predict inflation are those who have predicted inflation, a stock market crash, depression, etc. for the last 10 plus years, and are finally right). The Fed chief said it was transitory. The Seattle Times business columnist said the other day he was wrong when he said inflation had peaked in December.
  • Just read about all the SPACs. It seems few if any are hitting their projections.

Look, projections can be a good exercise and they set goals. But three years out? The one thing I can predict is in three years multiple things will have happened that nobody thought of.

“Until the lions have their own historians, the history of the hunt will always glorify the hunter.” Chinua Achebe

Contrasts in Style

In the US, especially in Washington State, when there’s a government project everybody gets paid the absolute maximum wage, even if they’re inexperienced and not worth that wage. In Antigua, where we are now on our Rotary project, government projects seemingly pay everybody the absolute minimum, as in minimum wage.

We have a journeyman electrician helping us because he’s learning computer networking to add to his skills and abilities. He’s the one who told me about the wage situation, which is why is doesn’t do government work (we’re paying him 4X the minimum plus a bonus)

Learn from these government extreme policies, apply them to small business, and pay attention to the following.

  • Pay people what they’re worth and bonus them when they exceed expectations.
  • Create an atmosphere so people want to stay. If they’re good, and maybe even mediocre, they’re getting calls weekly or more often from recruiters. 
  • Watch out for the hiring bonus trap. A client has to be careful because the going rate for hiring bonuses is more than the bonus amount for current people in the same position (Yikes! See the bonus pool going up?).
  • One thing employees have learned from Covid is they can go do something else if they want to. It may not be your or your client’s, fault, it may be a desired life change (so do what you can do  to postpone this as much as possible).

Sometimes (often) we can learn a lot by traveling and helping others, as well as listening to them.

“Okay, that’s it, I’m out of here.” (The hilarious) Jan Martinka as she ended her talk at an Antigua awards ceremony and exited stage left.

PS People in Antigua have asked us what the hell is going on in Ukraine. It’s a tough question to answer.

When You’re in Over Your Head

We were in Antigua on our Rotary project in the schools although this year there were no students given there’s a ban on field trips in the Bellevue School District. So, we adults are doing a lot of the work the kids usually did.

I quickly realized I was in over my head when attaching RJ45 connectors to ethernet cables. I haven’t done it in over seven years, when I wired access points around my house. If I was the one responsible for cables we’d be in trouble. So, I figured out other things I can do (besides project management) and I found some of those things to help this incredibly successful project, which has made the lives of many people richer (including us).*

The same philosophy goes for many other things in life and business. Don’t do everything. Get experts  who can do whatever it is faster and better. Doesn’t matter if it’s menial tasks like attaching connectors to cables or strategy or advisory work. Get the best suited person for the task and concentrate on those things you do best (and better than others).

I find it a good sign when a business buyer says they want to focus on vision and growth. It’s also good when an owner says “I don’t know how to do that because we have people who do it for us.


“Those are the memories that make me a wealthy soul.” Bob Seger

Making the Simple Complicated

My wife was going crazy. She said our younger daughter was going crazy. Why? Our grandson needed a picture of his dad in his work uniform (police officer) for school in a day or two. They were frantically trying to find one on their phones, sorting through thousands of photos. My response was:

“Have her take a picture of him in his uniform.”

We all move too fast sometimes and miss the obvious answer. You do it, I do it, we all do it. Often the obvious answer is right in front of us. Which is why one of my favorite sayings regarding business buy-sell deals is: The bigger the spreadsheet the less chance of a deal.

Don’t get bogged down in the minutia, don’t overthink, don’t make something simple complicated, no matter what the business or personal situation.

“If you can’t be kind, at least be vague.” Judith Martin

“it is more fun to talk with someone who doesn’t use long, difficult words but rather short, easy words like, ‘What about lunch?’” A.A. Milne

Agendas Can Get in the Way

We all have agendas, every one of us. First let’s look at a couple in the media and then some in business.

Are you surprised there are bi-partisan bills to forbid members of Congress to actively trade stocks while in office (as they have access to “insider” information)? This trading has been something both very left-wing and very right-wing politicians have been accused of. Of course, will anything happen? 

No surprise, probably not because those responsible for taking the bills to the respective floors are active traders. As we know, their agenda (all their agendas) is to benefit themselves first and their constituents and the country next. 

Then look at the vaccine and related issues (disclaimer, I’ve received two shots). Lots of agendas. 

  • Don’t tell me I have to get a vaccine.
  • Everybody must get a vaccine.
  • Can’t go to public places without a vaccine card.
  • You must wear a mask.
  • You’re ridiculed if you wear a mask.
  • Executive orders circumventing democratic processes (to be in control).

I know people who won’t get a vaccine because of number one above, some who can’t because of chemo treatments, and some who just don’t trust a synthetic vaccine, which really isn’t a vaccine but a “shot” because it doesn’t absolutely prevent Covid like the vaccines for polio, measles, rubella, etc.

And of course we hear about people who cheat to get a fourth (or more) shot even when after it was mandated in Israel ABC news reported, “An Israeli hospital on Monday [January 17, 2022] said preliminary research indicates a fourth dose of the coronavirus vaccine provides only limited defense against the omicron variant…”

And speaking of vaccine agendas, follow the money. The top investors in Pfizer are Blackrock, Vanguard, and State Street. For Moderna it’s about the same with the top investor a British investment firm. Think the push for governments paying for more shots is altruistic? Think there are government employees thinking about leaving government and getting a nice job in pharma or the pharma lobbying industry?

Let’s move to things in our daily business lives. Everybody we deal with has an agenda, some aggressive, some for personal gain, some for business gain.

Employees – Just read the articles on people sabotaging fellow employees for their own benefit and you’ll realize it’s often “all about me.” Career advancement by any way possible is common (but it’s not done by all). Long-term, doing the right thing the right way is more beneficial to career growth.

Advisors – The attorney was a good friend, he had done our wills, we referred business back and forth, and did things socially. I called to ask a yes or no question about a new will, got the answer, and then a bill for over $125 for a “minimum phone call” charge. He lost the job of the new will and future referrals to his firm. Doing the little extra for a client pays off in the long run. 

Customers – A friend shared with me how a long-term customer recently left for a few pennies an item, ignoring that he had provided proprietary (and exclusive) designs, which she wanted to take to a competitor. Good customers value service, quality, and value. 

Business buyers – The good ones, the majority, want a win-win deal. Some want the best deal possible, for (only) themselves, and these are the buyers who rarely, if ever, actually do a deal. It must be too good to be true and sellers are too smart for that. A mature, profitable, and fairly priced business should be the goal. 

Business sellers – Sometimes there’s a huge emphasis on the price, at any cost. The real emphasis should be a fair price from a great buyer. who will let the employees thrive, preserve the legacy, and make any payments due the seller.

Fact it, most of us have agendas, but good agendas don’t make the headlines or cause problems.

When You’re Behind the (Proverbial) Eight Ball

We are constantly bombarded with news and information about 5G. How fast it is, what it can allow us to do, how it may interfere with air traffic control, etc.

We don’t hear too much about 3G (old news) unless you’re in the security and alarm business. Because sometime soon all alarm systems that use 3G will be obsolete. Alarm companies must replace the wireless cards in their systems with updated cards that are more advanced than 3G and this must be done in-person (and it’s a cost that can’t be fully passed on to the customer). 

The industry also has an issue when the alarm system is connected to a landline. Why? Because almost everybody is switching to a VOIP system and these systems don’t work with alarm monitoring. So, guess what? Another switch is needed with new equipment.

So why talk about all this that’s specific to one industry? Because it points out how all of us need to stay up-to-speed on changes and anticipated changes. If we don’t, we’ll be like the alarm companies that ignored the 3G phase out and have been calling other firms asking if they’ll acquire them (and pay for the upgrades).

Think about what it could be in your industry. Is it cybersecurity, new regulations, new technology now available, alternate suppliers, or something else? Doing it the same old way because that’s how it’s always been done may lead to catastrophe, especially if a competitor moves faster and disrupts your market.

“There is nothing to be learned from the second kick of a mule.” Mark Twain

“You have to grow up, start paying the rent, and have your heart broken before you can understand country music.” Emmy Lou Harris

Founder’s Syndrome Can be Deadly (to the Business)

I’m working with a client whose company was hurt and is experiencing a slow recovery. After decades of ownership the owner is burned out and knows he needs to sell, but also fears not having his business. For background, it is not a dynamic industry, the management team is weak, and their pace is the opposite of “having urgency.”

We’re talking with an industry buyer with the right people, the right technology, and the money to take my client’s firm and modernize it. FYI, estimates are my client would need to invest about $1 million to get the needed technology and people.

That said, every so often my client will say something like, “I’m not sure others can do what we do.” I call this the “Founder’s Syndrome.” As in, my business is so special it will be tough for anybody else to run it. In this case he’s ignoring the fact the suitor overlaps about 2/3 of what his firm does, has about four times the sales, is growing fast, and is very profitable.

Founder’s syndrome usually equals an owner dependency. As in, the owner is the only one who can:

  • Work with key customers.
  • Finalize and approve all bids.
  • Design products (last year we ran into a company whose 82-year-old owner was the lead designer of very complicated and technical products). 

On the flip side, a great owner will listen to his or her CFO, management team, and outside advisors. They’ll delegate and let people grow. They realize their value goes up when they are somewhat expendable, because they work on not in the business.

“Every sin is the result of collaboration.” (Author) Stephen Crane

“The problem with putting two and two together is that sometimes you get four, and sometimes you get 22.” (Author) Dashiell Hammett

It’s Not a Problem, It’s Just Small Business Accounting

While evaluating a company, there were some questions about how some financial transactions are handled on the books. Multiple theories of what could be going on were brought up. I finally said, “I’ll bet it’s just small business accounting.”

After an explanation from the owner, we all came to realize it was nothing more than small business accounting. Because during the year nobody generally looks at their books except the owner and their accountant and sometimes their bank. They don’t worry if things aren’t done exactly the way they should be throughout the year because they know there will be year-end adjustments to get everything in line.

This was not too bad of a case. As I have said and written many times, one of the problems with small businesses is the accounting department is often treated like Cinderella, the weak little stepsister off in the corner. For many owners, they love their product and want to grow their business so it’s a pain to have to deal with all the accounting detail. It’s the same as why salespeople would sooner be out making a sale than submitting paperwork.

And when it comes time to exit the company and sell it, it’s often an issue as the buyer, their CPA, and the bank want to know exactly what they’re getting into. It’s why one of my four immediate things an owner can do to make their company ready for sale is to have great financial systems, so you have accurate financial statements. Make it so those on the outside know exactly what is going on when they look at your financial statements.

“Invest in inflation. It’s the only thing going up.” Will Rogers

The Great Resignation = Taking Control

“The pandemic has unleashed a historic burst in entrepreneurship and self-employment. Hundreds of thousands of Americans are striking out on their own as consultants, retailers, and small-business owners.” This is the opening paragraph from an article in the November 30, 2021 Wall Street Journal titled, Workers Quit Driving Jobs in Droves To Become Their Own Bosses.

Here are the most interesting pieces of information I garnered from the article:

  • Through October of 2021 4,540,000 new businesses applied for a federal tax and identification number, up 56% from 2019.
  • The share of workers with firms of 1000 or more employees has fallen for the first time in 17 years.
  • The percentage of workers who are self-employed is the highest it has been in 11 years.
  • From a person who started their own business, “I feel so successful and wake up every day like, “’I wonder what’s going to happen today.’”
  • Another person who struck out on their own said his favorite part is not having to deal with corporate policies or bureaucracy.
  • This person also commented, when offered a job from one of his clients, “I told them, I’ve seen the light.”

While a very high percentage of the new businesses are people starting a company, primarily one where they will be the only employee, there are other ways to be in business for yourself. For people who may not have the business skills to start or by a business, a franchise is a great way to enter self-employment.

For those who have the skills necessary to manage people, money, processes, and enthusiasm, buying a (mature, profitable, and fairly priced) business is often the best option. And in the spirit of the holidays, if you or someone you know would like a complimentary copy of my book, Buying A Business That Makes You Rich, let me know and we’ll get you a paper or Kindle version.

The same offer of a free copy goes for our other books:

  • If They Can Sell Pet Rocks Why Can’t You Sell Your Business (For What You Want?) 
  • Company Growth By Acquisition Makes Dollars & Sense
  • Getting the Deal Done. 

Overthinking is Prevalent

On New Year’s Eve I was talking with a new business owner. He closed his deal and takes over operations on January 3. During the conversation he stated he is nervous and has anxiety about owning and running a company. I told him if he wasn’t nervous there would be something wrong with him as it is a huge step. 

Or, as I say in my book, Buying A Business That Makes You Rich, you are making a leap of faith and you want it to be off a chair not the roof, which he clearly is doing (making a small leap) due to all the diligence and preparation. His response was an indifferent, “OK.: Then I said:

“Don’t overthink it. You’re smart, capable, and have run larger companies than this.”

His enthusiastic response was, “That’s really great advice.”

It’s something we all do too often, we overthink by wondering about:

  • All the things that could go wrong, which have never gone wrong in the past
  • Scenarios about how others will react when they probably aren’t giving the issue one iota of thought
  • All the minutiae, most of which doesn’t matter at all, and keeps us from moving forward with our plans on a timely basis

A new year is a great time to consider this. Although it is just as important every day, week, every month of any year. 

“If you can’t beat them, arrange to have them beaten.” George Carlin