One Bad Apple

In college basketball there are players known as being, “one-and-done,” as in playing one year for the college team and then going off to the NBA (because of rules preventing them from going to the NBA straight out of high school).

As a casual fan, I’ve come to appreciate the job certain coaches do with these players (aka prima donnas), not to mention their parents. Most of these players don’t want to be in college, it’s only a steppingstone, and often they tend to be culture disrupters. This appreciation comes from seeing all the other teams where these one-and-done players cause the team to underperform.

It’s just like in business, isn’t it? You strive to build a culture for growth, profits, advancement, and an enjoyable workplace and yet one person can damage, if not destroy, this. In an owner group I’m in I’ve heard about employees who:

  • Refuse to cooperate with others, it’s their way or no way.
  • Exhibit inappropriate behavior, sexist (sexual) in nature.
  • Bully co-workers.
  • Leverage special-class status (threatening that any action towards the employee would result in a legal action based on said status).

The above and other situations are why there’s constant interest from owners and managers on culture, employee relationships, managing all the HR regulations, etc. It’s a balancing act whether you manage single digits of people or hundreds. Unfortunately, there’s no easy, quick-fix solution; it takes patience and skill.

“Anything can happen, but it usually doesn’t.” (Humorist) Robert Benchley 

Your Business is Really a Community

I wrote this in Antigua, West Indies on another Rotary service project installing computers and Wi-Fi networks in schools, training teachers how to teach more effectively, with and without technology, and setting up our eighth sewing center.

As we were organizing the latest sewing center it really hit me how big community is on the island. While US cities from New York, to Seattle, to many others have neighborhoods and those neighborhoods have organizations, in Antigua it just seems they are tighter.

Main reasons for this are many people don’t have cars, they often stay in the area they were born, and so very much of their lives center around church (many, many types of churches, most of them small given the lack of mobility). They help each other on a regular basis. Ladies we would not consider to be “well off” sew clothes for those less fortunate because they care.

Think about this in regard to your business (or, for advisors, your client’s businesses). Community is like teams within a business. Most business buyers I meet tell me they are good at team building. Given a business is its people, both employees and customers, being able to bring employees together for a common goal is incredibly important. 

I recently wrote about our most recent Getting the Deal Done Breakfast Conference and guest speaker Bob Donegan, president of Ivar’s. Ivar’s has employee turnover less than 1/3 the industry average. Why? Because they value their people, give them advancement opportunities, and decision-making authority, especially if there’s an unhappy customer (from management down to maintenance people they can offer unhappy customers remediation). 

In a recent meeting with a roomful of business owners the following was asked, by an owner looking to buy another company, “What do I do first after closing?” The common answer was, talk to your people, ask them what they would do to grow the business, and, above all, listen. Good advice whether after an acquisition or any other time.

“Man’s character is his life.” Heraclitus

A Great Team Equals Success

We’re in Antigua, West Indies, on our Rotary project, working in the schools. Over the course of the trip I’ve had 12 meetings (in seven business days). They’ve included:

  • Government – meeting the acting Prime Minister, the Board of Education, and the Director of Education (really the COO of the school system), the Minister of Information and Technology, and the Director of Education.
  • Funding – a (great) meeting with our top non-Rotary funding source.
  • Media – appearing on Good Morning Antigua and a morning radio show.
  • Rotary – attending the Rotary Club of Antigua’s meeting.
  • And a few others.

This project is like business, there are partnerships everywhere. In business you have partnerships with customers, employees, suppliers, advisors, and more. In addition to the above Rotary, funding, and government partnerships my Rotary club also partnered with:

  • The Bellevue School District’s technology department, to provide the people to install computers and Wi-Fi networks.
  • Our trainer, who we hire to instruct the teachers on how to more effectively reach their students using technology (lesson plans, exercises, interactive, etc.).

Just like a business, we couldn’t do it in a vacuum. We need all of the above. And the result has been we’ve had an extremely successful trip, probably our most productive.

“We learn from history that we do not learn from history.” Georg W.F. Hagel

If You’re Going to do Anything, Make an Impact

At a recent meeting of the Bellevue Breakfast Rotary Club, I barely paid attention to 90% of the program. Why? Because in the first few minutes the speakers said a few things that got me thinking (and ignoring most of the rest of their talk). To summarize what they said:

For whatever we do (business, personal, charity, etc.) we need to not consider the actions, the money, or anything else other than the impact we make.

What is the impact we make when we do things? For example, I wrote this while in Antigua, West Indies, on our annual trip to work in the community and schools. Our impact is least five things:

  • We give Bellevue tech students incredible on-the-job training as they setup computer and Wi-Fi networks (and live with local families). 
  • The Antigua teachers are learning to use computers to reach their students more effectively.
  • The students learn via different means (and learn more we hope).
  • We’ve created more accountability (from the adults in government, especially when we we’ve had to cancel projects because they didn’t live up to their obligations).
  • Ladies learn how to sew, improving their economic well-being, increasing their sense of community, and greatly increasing their self-esteem.

What about in other, more day-to-day, scenarios? It’s about the result. In one of my first sales jobs the manager told me to never think about the commission and only think about how I/we were helping the client, i.e. the impact we have on them. Here are some examples close to my business:

  • Whether it’s interactive or by example we should be impacting and improving our family relations and abilities. When Vince Lombardi was coach of the Green Bay Packers, he said to his players their priorities were, “God, family, and the Green Bay Packers.” So I list family before anything work related.
  • As an employee you should be making an impact for the company where you work. They have to benefit (profit, financially, culturally, and community wise) from what you do. If they don’t, why do they have you there.
  • When I help someone buy a business it’s a life-changing event. They are taking control, which is quite an impact on their family and themselves.
  • The same can be said when someone sells a company and moves on to their next great adventure in life. The impact is often phenomenal.
  • Maybe what happens before a sale is more important. If you, me, or anybody else can help someone achieve balance, be more productive in less time, or enjoy life more, it can be a much larger impact than buying, selling, or doing their job better. 

Conclusion

Sales managers (should) tell salespeople to take the necessary actions (calls, meetings, proposals, etc.) and if they do the impact will be helping a customer. Whatever you do should be focused on the impact you make on others and if you do that you’ll make an impact on your own life.

When the Employees Steer the Ship

A company Jessica and I have been helping has a dependency problem, which is not uncommon in small businesses. Unlike most, it’s not the owner and it’s not a customer concentration issue. It’s an employee, specifically the (former) operations manager.

I should say “almost former” because she’s ingrained herself so deep into the operations that she’s still working part-time even after she moved out of state. There are a few things only she can do, and they’re important tasks, some critically important like pricing.

You may ask, “How does this happen?” Just look at some of the causes (at this company and in general):

  • The employee takes over, is controlling, and won’t delegate (just like a founder/owner). This is what happened in my above example.
  • The owner is lazy and may think he’s delegating but he’s really offloading. 
  • The technical aspects of the business are not the owner’s expertise (and don’t often need to be) but the company isn’t large enough to have depth.
  • There’s not cross-training, no team building, and maybe not training in general.

It doesn’t take much effort to have this happen and I can speak from personal experience. Jessica’s been off for a couple days, there are some things I have to do using Salesforce, on which she’s much more accomplished than me, I got some done, and needed to speak with her before finishing.

When things are going well it’s no big deal. But if the employee leaves, gets sick, or is in an accident there’s a problem. It’s just like exit planning. Most owners don’t think of preparing the business for sale or they ignore it until it’s time to sell and then it’s too late. An employee dependency is something that can usually be prevented (or cured) if you pay attention to it.

“Children aren’t happy with nothing to ignore. And that’s what parents are for.” Ogden Nash

Has COVID-19 Derailed Your Planning? Tips From a Crisis Management Expert

For most business owners I’m guessing your strategy is off track and any exit planning is on the back burner given our minds are on the ramifications of the COVID-19 virus. What is probably on the minds of many is, “How and when can I get out as I don’t want to rebuild it again?”

It comes down to choices. Here’s one of those choices: 

Is the pain of rebuilding your business greater than the pain of selling at a discount? If it is, once there’s stability it’s time to sell. If the pain of selling at a discount is greater, then do what you can when you can. And depending on your industry, it could be a quick rebound or a long, slow process.

We should all realize there is nothing most of us could or can do when something like this wallops us. Customers can’t buy if your business is (forced to) closed. You can’t make sales calls when ordered not to. But that doesn’t mean you go into hibernation mode.

For tips on how to minimize damage I interviewed my friend Dan Weedin, who is a crisis and disaster management expert (you can see more about Dan at www.danweedin.com). Here are the questions I asked Dan and his insights, followed by a few pieces of information from me:

What were you telling clients 6, 12, and more months ago about crisis planning?

Business owners should create a written business continuity plan that covers who’s in charge of a crisis, what are your continuity paths with employees, customers, suppliers, and the community. Know your emergency preparedness procedures for things like loss of power, loss of water, damage, etc.

What about pandemic preparation?

“This caught me by surprise given it’s been 100 years since we’ve had anything of this magnitude.” He said if he had told clients to prepare for virtually the whole economy shutting down, he feels they would have thought he’d gone crazy. The biggest problem with this situation is the uncertainty as it’s different and scary. With other crisis’s (fire, tornado, flood, etc.) we have an end point, so we deal with it, and recover.

What about recovery?

Be worried about your supply chain. Your area and your firm could be back to work but if your suppliers are in other states or countries and they aren’t back to full speed you’re still treading water. Look at options now.

What are you telling clients now?

First, it’s different than what I would have said a week or two ago. My top things are:

  • Stay educated. There’s a lot of data out there. Know what’s happening with governments and their policies.
  • Employee safety is number one. What can you do to keep them safe?
  • Innovate. What if this is our normal for three months?
  • You can’t over communicate. Communicate to create community.

What are some examples of what businesses are doing?

  • A gym is holding virtual training sessions. They want customers back when they’re allowed to open instead of buying Peloton’s, building fancy in-house gyms, etc.
  • A bar is doing online cocktail making classes as they know they’re customers will remember them and be back.
  • A shared work facility is doing a virtual happy hour to keep front-of-mind.
  • A winery, not able to do tastings, offered their club members free shipping if they added three bottles to their order. They’re delivering the wine so the customers don’t get it at the store.

In the future he will do pandemic training as part of disaster planning and his final words to me were, “Talk about things other than COVID-19 and be a distraction to others.”

I (John) also realize we’re in the middle of something we never thought would happen, much less planned for. So, we have to move forward from where we are. Here’s my advice, most of it good for all times not just during a crisis.

Take care of your employees and customers. They are tied for number one on any list you have. You don’t have a business without your people and those who buy from you. Do what you can to keep your employees, have them come back if you had to let them go, etc. Stay in touch with all customers, even if they’re not buying now.

Be wise with your cash and at the same time work with (take care of) your suppliers. You want them around in the future. If you have a line of credit, consider using it to get cash on your balance sheet.

Do not “hunker down.” Be as large a marketing machine as you can be (as Dan said, you can’t over communicate), especially if you can do it for little or no expense. Use social media, emails, phone calls, etc. Besides regular messages, one thing my company did was send a request to lot of business friends to help a family my wife is assisting. The mom escaped an abusive situation and is trying to get her kids and herself back on their feet. We got some donations of things they need and kept my name in front of people for a great cause. A win-win.

There’s a Lot Going On in Today’s World

Just some thoughts given our current situation. Disclaimer: You will probably find something to like and dislike based on your political preferences.

  • Mother Nature, the Hand of God, or whatever you want to call it can bring billions of people to their knees pretty quickly.
  • A few weeks ago I was in the “it’s not that serious” camp. Then I started seeing the hockey stick like charts of how this exploded in other countries. Amazing how South Korea handled it, versus Italy, because South Korea took action and took it quickly.
  • There is ample evidence government officials (of both parties) knew this could happen and took no preventative action. Bill Gates repeatedly warned of this and the National Institute of Health ran a model that showed we weren’t prepared.
  • The response from government should scare you about what it would be like if the government ran all health care (for some personal insights into the testing fiasco read Peggy Noonan’s WSJ column from March 21 – she describes her experience with the maze of getting tested and then getting results)
  • On March 16 we decided that to get away from news we’d watch comedy, starting with some Monty Python videos. It was a week of mostly funny stuff, which sure lightens the mood.
  • This could be much worse than the financial crisis of 10-12 years ago, especially for small businesses.  
  • Will $1,000 or so per person make a meaningful difference?
  • Bankers are contacting their loan customers, worried about how this is affecting them (and their ability to repay).
  • A trillion-dollar stimulus package on top of trillion-dollar deficits, wow! FYI, I wrote the White House a couple years ago complaining about these huge deficits during an economic boom.
  • It would be nice if our president would act like he actually cares.
  • On the local (Washington) front, our governor spent all last week lecturing us like a primary school teacher lectures her little kids. And to no avail as the headlines have been about people ignoring his warnings and hanging out all weekend in groups in parks and on beaches.
  • There’s going to be pent up demand when this calms down and let’s hope it quickly brings back the jobs being lost, especially the lower wage jobs.
  • I think and hope it will spur activity in the buy-sell market. I’m guessing there will be a lot of owners who will say, “I’m done, it’s time to get out.”
  • The sports page and sports networks don’t have much going on, do they? 

All in all, pretty scary stuff we’re going through. I have no doubt we’ll make it through all of this. From a business perspective, now is the time to be active. Waiting this out in the equivalent of a bunker will delay your (business) recovery.

Small Business Survival Tips During COVID-19

I won’t be disingenuous by marketing services when most of us are in survival mode so I will make all readers of this newsletter an offer:

If you have questions about what to do, how to handle things, need a sounding board, or simply someone to vent with call me for free telephone counsel. Or, if you’re sick of being cooped up and simply want to talk, give me a call or suggest we meet for a walking coffee (at a safe distance).

On to a few miscellaneous thoughts on our current situation.

This virus has affected every business. Some are busier than ever – the grocery industry, medical supplies, etc. Most are stagnant at best, in horrible shape at worst – restaurants, catering firms, bars, their suppliers, theaters and other arts organization, athletics, car dealers, repair shops, etc. All are wondering what the heck is going on, when will it end, will it end?

I’ve read a lot on the virus and understand why the plea for social distancing. This virus is wickedly contagious at short distances and has a long life on surfaces, which is why they say don’t touch your face (hard for those of us with tree pollen allergies).

The testing of NBA players showed people can have it, and transmit it, without showing any symptoms. A chart in the WSJ recently showed about 10% of those tested have it, but those without any symptoms aren’t generally getting tested.

The president says he wants the economy back by Easter. Medical experts say it’s not feasible. Would be nice and it does pay to be optimistic but the peak of his predicted to be in April (earlier states like New York, later in others).

No matter what your political persuasion be careful of what the extremes say. This isn’t exaggerated to prevent the president from holding rallies (Fox News) and everything the administration says isn’t BS (MSNBC). 

Conclusion & Advice

Whatever your business is, be doing marketing. Call customers, referral sources, be on social media if it’s a fit for what you do. Be present instead acting like you’re in a business coma.

Take care of your employees the best you can. You want good talent back when this is over. Work with an employment attorney, research the Family and Medical Leave Act, know about State programs, and keep up to speed on new Federal and State legislation and disaster recovery programs.

Also take care of your customers, even if they’re not buying now. This could be better terms, deals, or simply talking with them.

Communicate with your suppliers. If cash is tight, let them know, work out payment plans, and above all, don’t be silent about it.

Work with your bank, especially if you have a term loan and cash flow issues. I’ve also heard a lot of PE firms are telling their operating companies to use the lines of credit to strengthen their balance sheets cash position so consider this.

If business is slow, do those administrative things you’ve put off. Take care of personal things. And be ready because there won’t be an announcement saying, “It’s over, back to normal.” It will sneak up on us.

Creativity in a Crisis

Once again, the phrase, “We live in interesting times” is being used.  There’s nothing but news about the coronavirus and at the same time marketing creativity is starting to flow. 

  • The Catering Company in Kirkland is offering ready-to-heat meal packages with reduced rates, no delivery charges, and emphasizing their food safety protocols.
  • Precor is running ads promoting the benefits of working out at home in the “clean, fresh air.” With many people scared to go anywhere, including the gym, they’re hitting a raw nerve their potential customers have.
  • An HVAC company is extolling the virtues of an air scrubber. Whether it works anywhere close to airplane filtration systems (hospital quality, removing 99.9% of contaminants) it sure sounds good. 
  • I received an email from HubStaff informing me their system helps track the accountability of employees working from home including automatic screenshots, website activity, and activity level based on keyboard and mouse usage. Given and owner told me she feels her working-at-home people get done about 70% compared to what they do in the office I’m sure there will be interest for this type of tracking software.
  • Pagliacci Pizza is marketing touch free pizza delivery. Order online, leave a tip online, and get it delivered at your door with no person-to-person contact.

To me the calm and quiet feels like Christmas and New Year’s with one exception. There still seems to be activity between business buyers and sellers. And, historically an economic slowdown has meant a vibrant buy-sell market as individual buyers fear losing their job (or they’ve lost it), owners say, “Not again, it’s time to retire,” and other owners see opportunity to grow (by acquisition).

“Nothing dates harder and faster and more strangely than the future.” (Author) Neil Galman

Details, Details, Details, and Ambiguity

The attorney looked at the audience and said, “Make sure you understand everything in your agreements. If there are any ambiguities, they will come back on you, not your attorney.” This was many years ago when said attorney and I were on a panel together.

Wise words, aren’t they? I will never forget them. I thought of this the other day when an exit planning client told me about a dispute over a distribution agreement with another company. And, it seems the other party also ignored this advice, thus a mess.

Without giving away any details, my client signed an agreement that gives the other side an out. The other party signed it including a clause that gives additional control to my client. How does this happen you may ask? Here’s how.

  • My client got to the point where he told his lawyer he didn’t want to spend any more money on legal fees. The lawyer had mentioned the out clause, but the client was mentally more concerned with fees than anything else. However, the lawyer should have said something like, “There’s no charge for this conversation as you need to realize the other side can get out of the agreement at any time, leaving you with expenses and no recourse.”
  • The other party said, when it was pointed out there was a clause giving my client ownership of the brand (versus distribution rights), “An employee of ours put that in there and we didn’t notice it.”

In both cases, not paying attention to the details, not noticing ambiguity, and being cost conscious versus results conscious. In the buy-sell world there are more details, more intricacies, and lot more words to read and understand than in the above example. 

In all cases, don’t ignore the advice above.

“A little alarm now and then keeps life from stagnation.” (Author) Fanny Burney