When Free is Best

We had just begun a multi-hour car trip, tuned the radio to XM’s Bruce Springsteen station, and they were starting a replay of one of his concerts, from Seattle! As they play these concerts they promote the website, www.live.brucespringseen.net, where you can buy entire concerts (at reasonable prices).

To the best of my knowledge the Grateful Dead were the ones who took it a step further and started not requiring all content to be paid for (albums, tapes, CDs, etc.). (Just look how it’s proliferated on YouTube.) They encouraged fans to record shows and share the bootleg recordings. On the other hand, I understand keeping tight reins on content like movies where the only way to make money is via ticket sales or DVD or streaming rental or purchase. But if the objective of the content is to sell concert tickets, services, or something else, the more (free content) the merrier.

For the Kindle version of my books I allow readers to share with others. I’m glad to have people share what I’ve written or said (as long as the attribute it to me).

Think about this for your business. What can you put out in the world that will lead to more business? Have a problem with your garage door, appliance, vehicle, plumbing or electrical? There are tons of YouTube videos on how to solve the problem.

Become the expert and then let others know you’re the expert.  Because, for every person who can figure out how to do something via a YouTube video, your book, or anything else, there are multitudes who will need your help.

“In the beginner’s mind there are many possibilities, but in the expert’s there are few.” (Zen master) Shunryu Suzuki

One Track Minds Means Inefficiency

I look across the lake (figuratively) at Seattle and its City Council. I see a bunch of single issue councilmembers with no big picture focus or strategy. This was confirmed by the headline in the July 19 Seattle Times about how the city wants to push forward with more bike lanes. The sub-headline was about how transportation officials see obstacles, mainly all the existing construction downtown.

But Seattle has a couple councilmembers who only care about having more bike lanes (forget the homeless, mentally ill, etc., we need bike lanes). Without effective leadership you have a dysfunctional organization, whether it’s a government, business, or non-profit. And it got me thinking of a few businesses I know and their issues.

  • A friend doesn’t believe in business plans, strategy, metrics, job descriptions, etc. Is it any wonder the firm bounces around and he spends almost as much time doing things like driving a truck as he does running the company?
  • Another firm has a COO who runs roughshod over the owner. He doesn’t listen to the owner, won’t hire people for needed positions (he can do it all), and makes sales at low margins. No leadership, no (positive) results.
  • A past client thought delegation was a sign of weakness. So, he had his hands in everything. From bidding (his expertise), to sales (he was good once it got to the technical part), and accounting (of which he knew almost nothing, especially regarding the balance sheet).

During speaking engagements, I tell audiences a good business buyer and owner is someone with skills managing people, processes, systems, and money (to some varying degree). The people part is the most important, especially giving them the latitude to grow.

“The art of delegation is one of the key skills any entrepreneur must master.” Richard Branson

“You always hear about delegation, but people make the mistake of delegating and not following up. I give authority, but I stay in touch. Otherwise it doesn’t work.” Wayne Huizenga

Predicting Business Success and Sports Drafts – A Crapshoot

We were trying to help a young friend of the family with his job search (before and after insisting he meet with Matt Youngquist at Career Horizons). Whether it’s just him or because he’s a millennial but he was pretty full of himself. We think his attitude was (is), “I’m smart, I’m cool, and I’m in digital marketing so companies will be chasing me.” His effort reflected this.

I kept telling him it’s expensive for companies to make a hiring mistake. No matter how good someone is, they’re going to take their time, do multiple interviews, and thoroughly vet everybody. He never seemed to get this.

Which brings me to the topic of this memo. It’s hard to predict results. Sports are exciting because of upsets. The person with a chip on their shoulder often turns out to be the best employee.

  • With all the pre-employment tests, interviews, background checks, and more, it’s still a crapshoot. I remember helping a client as he hired a supposed super-star salesperson in his industry. Everything, and I mean everything, aligned the way you’d want it to. And the guy was a bust.
  • When I’m coaching or mentoring people new to the advisory world I hear all the right things when it comes to marketing. Then the real-world hits. I remember one of our Partner On-Call franchisees who said all the right things but couldn’t get over the barrier of, “I’m selling myself not a big company.” He couldn’t handle being the guy at the desk where the buck stops.
  • In the buy-sell world it’s always tough. The seller must, absolutely must, feel the buyer can successfully run their baby, I mean business. The buyer must trust the seller to the extent they feel everything is on the up-and-up, so they’ll have every opportunity to take over and run with it.

The above is why when you find a good person, keep them. When you find a good business strategy, implement it. And when you find what works for you so you’re productive and happy, go for it.

“Never think you’ve seen the last of anything.” Eudora Welty

You’re Camping, You Don’t Need to Wear Underwear

We were fishing along the shore and came across the campsite of a group of early-teen canoeists who were just waking up and making breakfast. All of a sudden I heard one say the title of this memo.

There are certain things we need all the time and some we need some of the time. I’m not going to offer an opinion on if you really need to wear underwear when camping. Go with your preference.

In life we all need certain things from food, water, shelter to Maslow’s hierarchy of needs. In business there are also some basics and they include:

  • A solid competitive advantage, which includes your value proposition. Your competitive advantage is why people pay what they do so you can make a profit, stay in business, and support your employees and their families.
  • A way to let others know about your value, i.e. a good marketing plan. Even the most valuable brands in the world like Apple, Google, Coke, Microsoft, etc. do marketing and advertising. Nobody will do it for you.
  • Good operations and delivery. This could be production efficiencies, being organized, having solid systems, and more.
  • A way of knowing how you’re doing. This means accurate numbers and monitoring them to make sure you’re not off track.
  • Finally (for this essay), a solid team. Because if there’s a dependency on the owner or certain key employee there’s a catastrophe waiting to happen.

Take care of the basics, do the things you’re supposed to do, and good things will happen.

“Doubt can motivate you, so don’t be afraid of it.” Barbara Steisand

 

Which Employee Would You Want?

A little after they opened at 9 am on the Friday before the July 4 weekend I went to get a haircut. I wasn’t the only one and was told it would be about 20 minutes. So, I walked across the street, got a cup of coffee, checked emails, etc.

I came back 17 minutes later and instead of two stylists there was only one. After a few minutes another customer told me the other stylist didn’t feel good and was across the street getting food. (My thoughts flashed to my friend Steve Brilling’s stories about owning hair cutting franchise businesses and his biggest issue being the punctuality, mood, and condition of the stylists.)

The stylist came back, went behind the counter, and ate her food. By now there were five or six people waiting. Two other stylists were scheduled to start at 10 am, one arrived about 9:45, and the other at 9:50. The first saw the situation, quickly got ready, and said he’d start early (and I was next). The second proceeded to setup, clean his equipment, and watch the clock. At 10 am sharp he took the next customer.

So which employee would you want, the one who jumps in to help or one who watches the clock? What about the one who showed up not prepared to work and had to take 30 minutes off to get food and eat it (and 9 am is not an early start to the day, is it?).

The above is not uncommon, just substitute any industry. Every business is looking for employees, great, good, and even not-so-good. Employers tolerate mediocre people because it’s better than the other options. Companies are moving away from drug testing to get people.

This is why I added, “Show you can attract and retain great employees” to my items of what owners should do to make their businesses more attractive to buyers.

“Your employees come first. And if you treat your employees right, guess what? Your customers come back, and that makes your shareholders happy. Start with employees and the rest follows from that.” Herb Kelleher

Some Rules are More Important Than Others

I don’t know exactly what happened.

I don’t know if it happened to a male or female.

I do know that my wife nudged me and pointed to the airplane’s pilot reaming out a passenger for touching a flight attendant (perhaps inappropriately?). I heard things including:

  • “We will have law enforcement meet you when we land” (and they did, the Port Authority police escorted the man off the plane as the rest of us were asked to stay seated).
  • “If I hear of anything else I’ll land the plane at the closest airport and have Marshalls meet you.”
  • “Don’t you ever touch one of our attendants again.”

Some things are just off limits, and that includes just about anything on an airplane. One of my thoughts was, if this guy stands up (to confront the pilot) how fast could I get there? (Pretty fast with only two people on aisles ahead of me and – making a judgment call here – I’m bigger, stronger, and faster than both of them.)

Create a disturbance or touch an employee on a plane (or joke about weapons) and there’s no leeway on the rules, you’re in trouble. Steal from your employer and you’re gone.

Other rules may have some slack.

  • Some employee transgressions may need to be accumulated to force action (which is why HR people recommend detailed employee file notes).
  • An appraiser may say a business is worth a certain amount but that may not be what it sells for. I recently, again, had a buyer say he’d pay a couple hundred thousand more than “it’s worth” because he knew what he could do with that particular business.
  • Marketing rules have a lot of flexibility. The only one that’s sacrosanct is to always be marketing. What you do for your marketing doesn’t have to be rigid.

It’s the rules with leeway that make life and business interesting. And what can separate good leaders from not-so-good ones. Knowing how to handle situations to help others, without enabling them.

“People never believe in volcanos, until the lava overflows them.” Philosopher George Santayana

 

Innovation isn’t just in tech

When we think of innovation we think of the technology industry, don’t we? We tend to think of disrupters like Amazon, Google, Netflix, and others. Or perhaps the company that started SaaS (Software as a Service), which has permeated into way too many industries and businesses. It seems almost every time I look at some service they want a subscription; from wine clubs to every software possible, to maintenance agreements, and more.

Here’s an interesting non-tech industry innovation taking place in Washington (and I’m sure other states). It has to do with the cannabis industry, specifically retailers. While legal in a handful or two of states, the Feds still haven’t legalized marijuana. Therefore, the businesses can’t take debit or credit cards because they all run through a federal system.

Or can they (take cards as payment)? Shops have started taking debit cards because they’re able to set it up to be an ATM transaction not a debit card purchase. It’s treated the same way as going to any cash machine. Voila, an innovative workaround.

So ask yourself, are you doing anything innovative in your business? Have you found new ways to attract, serve, or keep customers? Any new services or products on the horizon?

Talking about a business with someone recently they mentioned how an owner, when asked why his sales aren’t a lot higher, said he didn’t want to work any harder as he was happy with his income. That’s atrophy. If you’re not growing you’re stagnant and on the way down. Innovation doesn’t have to be game-changing, it has to make positive change.

“In preparing for battle, I have always found that plans are useless, but planning is indispensable.” Dwight Eisenhower

When It’s Your Own Money….

A few months ago the Wall Street Journal’s Business section’s headline was, “China Conglomerate Gets Lifeline.” The sub-headline was, “Government is helping HNA Group right itself after acquisition spree loaded it with debt.”

The lesson here is simple, don’t over-leverage yourself. It’s good advice for us personally and in business.

But notice how they got in trouble; an acquisition spree. I’m a big fan of growth by acquisition, when it’s done right and for the right reasons. Heck, it’s why in my book, Company Growth By Acquisition Makes Dollars & SenseI cover 19 reasons to consider this strategy.

Here’s a big tip – if the deal only makes sense if the acquired company grows, it’s a bad deal.

There’s a lot of money out there, especially in the private equity and family office world. In my world, where bank financing is the primary source of funds we have my favorite two sanity checks:

  • It’s the buyer’s money (not a fund).
  • The banks have debt coverage ratios and good bankers want the debt coverage to be well above the minimum requirement.

My tip doesn’t only apply to company acquisitions. It applies to other things as well. If you get a new customer at a discounted price hoping to show them your quality and then raise prices, you’ll (usually) be disappointed. If you hire someone who isn’t qualified hoping they’ll improve, you’ll be disappointed.

Optimism is necessary and important. Optimism without common sense gets us into trouble.

“No matter how cynical you become, it’s never enough to keep up.” Lily Tomlin

Opioids Aren’t The Only Addiction

This memo was co-written by Jessica and John based on Jessica’s observations at a recent event.

150 attendees, great presentations, and numerous breakout sessions made for a rewarding and enjoyable day. Thanks to Columbia Bank for sponsoring their annual Women’s Event.

However, I noticed right from the start the majority of the people had their phones sitting on thetable. When the speaker was speaking I noticed some were scrolling, a few got up and walked out of the room (to make calls I’m assuming), and some were just staring at their device. Talk about an addiction.

Keep in mind the sessions were a maximum of 45 minutes and had 15-minute breaks between sessions. To me, it’s a sign of respect when someone is speaking to pay attention, nobody is as good a multi-tasker as they think they are.

Which brings me to an article in the Wall Street Journal on this very subject, it’s titled, “Eye on the Ball, Not on the Phone.”

The articled reported about how a number of managers tried different tactics to limit personal phone use at work. Why? Because just having their phone sitting on their desk lowered the employee’s cognitive performance compared to having it in another location.

Some bosses installed an app to track total time on the phone, which resulted in less time spent on the phone as the employees knew they were being monitored (this was a 45-day study).  One manager eliminated all personal phone use at desks, another had employees go to a common area to use their phone, and one manager stated he missed his phone jut as much as his employees did.

This comes down to finding a balance.  Each company’s balance will be different but right for them. This is the same as when business buyers evaluate if the seller’s responsibilities are what the buyer wants to be doing. For instance, if the current owner does all the sales and the buyer is a “behind the scenes” type of person, then the business probably isn’t a good fit. But if the buyer likes getting in front of people then it may be a fit. For more on this subject see our article, “The Magic Question – What Does the Owner Do?

“If ignorance is bliss, why aren’t there more happy people in the world?” Comedian Stephen Fry

The Robots Are Taking Over

“Say goodbye to your bank teller and your insurance agent” is the opening line of a just released Fast Company article titled, “AI Could Kill 2.5 Million Financial Jobs – And Save Banks $1 Trillion.”

Google just announced the launch of “Duplex,” an AI application that can call and make appointments for you with the party on the other end of the line thinking it’s a human. There’s a resume scanning program that can review 1,500 resumes an hour (good luck to job seekers trying to stand out in the crowd).

Fast Company based their article on research from the firm Autonomous that recently issued an 84-page report on this and predicts:

  • Software agents (machines) will hold conversations with clients.
  • AI will oversee the ever more complex regulations department with real-time oversight of the company’s actions.
  • AI will determine credit risk, insurance underwriting, assess claims damage using machine vision, and select investments (don’t investment firms already use computers to time trades?).

Over half of what I do with/for my clients is advise, counsel, and provide quasi-therapy versus analytical work like spreadsheets, reviewing documents, etc. I think we’re a long way off from when machines can offer the “personal touch.”

Maybe they will replace some jobs like insurance agents or claims adjustors. But I wonder how many people will really want this. It, again, goes back to John Naisbitt’s statement about how the more high tech we get the more high touch we’ll need. Interesting times indeed.

“The use of life is to spend it for something that outlasts it.” Willam James