Ten and one-half years of owning an iPhone and a freak accident gave me my first broken screen. I had the phone in my jacket pocket, put it over the back of an office chair with a fancy metal design around the back, got out of the meeting, grabbed my phone, and found a beautiful design radiating up my screen.
Replacing an iPhone screen is not cheap. So I bought a tempered glass screen cover with a lifetime guarantee. Pretty cheap compared to this happening again. One could say it’s a form of insurance.
One could say many things we do in life are a form of insurance. We have our attorneys do things to keep us in compliance and out of trouble. Our accountants make sure the IRS or, heaven forbid, the State DOR doesn’t come after us. A good banker keeps you not track versus just lending money (to anybody).
And of course, people like me in an advisory business give our clients peace of mind, ask the right questions, let clients know when they have the right answers, etc.
The cost of a bad contract, erroneous taxes, or a bad business decision is huge. The cost of someone who’s seen the situation hundreds of times and knows what to do, and not do, is virtually priceless.
It’s why we all have businesses.
“If you don’t have a seat at the table, you’re probably on the menu.” Elizabeth Warren
At the start of the 2018 baseball season you might not have believed it when you saw a record number of games snowed out across the Midwest. The Seattle Mariners got off to a decent start is and that’s pretty good when you consider four starters (all proven good hitters) were each on the disabled list for 10 days or more.
They’re winning, and hitting well, because they’re lineup has depth. And depth is something too many businesses ignore. Yes, a lot of owners’ love being in control, but it doesn’t add value.
Maybe I’m sensitive to this because recently I’ve run into a lot of businesses that sound great until you find out what the owner does, which often is way too much. One was described by his number two as, “a very active president” but it’s another that deserves mentioning.
When the owner said he could only be reached at 8:00 pm or later it caught my attention. He has what appears to be a very successful business, but my comment upon learning more was, “He has a high-paying, long-hours job” and the business has a dependency, which is him.
During the day he visited job sites, ran a machine, met customers, etc. At night (8-11 pm he said) he did bids, bookkeeping, and other office work. Yes, he made good money but how could someone replace him? No sane buyer would pay for the company based on the current profits knowing they’ll have to hire a full-time employee to replace some of what the seller does.
The point of business is to have people below your pay grade do work you shouldn’t be doing. As they grow and get experience they should delegate the same way to others. This is what’s called depth, not a dependency.
“Isn’t it nice to think that tomorrow is a new day with no mistakes in it yet?” Novelist Lucy Maud
One of our family members is a fanatic watcher of The Office. He says he’s seen each episode dozens of time (perhaps a little hyperbole here). The Office and Dilbert are similar in that they both have a clueless boss, a sneaky co-worker, the paranoid person, and the nice “mom type” person.
Just like real life. In big business and small business. It’s called culture and it’s what CEOs and owners. are concerned about, or at least should be. It’s part of government too, as we’re seeing with all the stories of harassment, of all types (in government and in large firms).
There’s stuff going on at Google, the Seattle Times just had an article on the non-advancement of women at Microsoft, I look across the lake to Seattle and see any and every unsuccessful group blaming others (and the Seattle government jumping on the cause and looking for money to help them), and across the country the news always seems to have something about strippers, porn stars, and prostitutes.
Do you think it’s any wonder why so many people think about owning their own business?
When you own the business, you can create (or fix) the culture so it’s done your way. The large corporate/government politics and similar can go away. It’s one reason a lot of people choose to work for a small business even though the total comp package may not be the same as at a large corporation. Because whether you’re an owner or an employee there can be a lot more important things than the money.
“Sometimes I’ll start a sentence and I don’t even know where it’s going. I just hope I find it along the way.” Michael Scott on The Office
It was mid-month, not even close to a full moon, when I had three weird and similar situations occur with business owners.
- An owner told me he would be glad to sell his business, but nobody would see his financial statements or tax returns. Only his CPA and the IRS see them he said. It seems he had sold another business to a consolidator that only cared about revenue. All he had to do was prove his revenue and they were happy. He figured this applied to all business sales.
- My friend Tom Broetje with CFO Selections talked to me about a possible referral and warned me I’d have to explain to the owner why he’d have to share his tax returns. I guess he questioned why he’d have to show them to anybody (buyer, bank, etc.).
- Finally, we got an NDA from an owner and the last paragraph said the buyer needed make a $5,000 completely non-refundable payment just to see the financial information. When I said in my 25 years in the buy-sell industry I’d never seen or heard of this she replied, “Well, we’re pretty savvy businesspeople.” No, you’re not. You’re not motivated and just being annoying.
I know there’s a (small) trend of people buying houses without seeing them in person but they don’t buy sight unseen as they take virtual tours and often have agents onsite to advise them. People wouldn’t take a job without meeting their boss, reviewing the requirements, etc.
And that’s what a buyer’s analysis is, a virtual tour (see the financial information), “interviewing” the seller, and studying the product, processes, etc. This is normal and something the seller should do on a buyer, an employer on a new hire, and a business on prospective customers and vendors.
Some people will never own a business. They won’t buy, start, or get a franchise. Others are continually starting or buying companies. And there are subtle differences between the types of people who get into business.
My old friend Bill Pearsall coined the term “re-entrepreneur” for people who buy not start businesses. But it goes deeper. Most of the individual business buyers I work with have developed management and leadership skills in the corporate world and want to use them to grow whatever business they buy. They understand the importance of a good foundation and since they’re not “product” people there’s less chance they’ll work “in” the business.
After working with people who started a business and considered buying another one (to grow, get employees, have a different customer base, etc.) I find most of them don’t always get that you have to pay for what you’re getting.
Having started something they often ask, why would I pay (that much) for it when I can grow into it?
Neither model, either “I want to pay for a great base” or “I’ll pay a little because eventually I’ll do it myself,” is wrong. They’re just different.
“The art of the creative process is not seeking and finding; it’s bumbling.” Jonathan Safran Foer
There are a lot of things I can do around my house. Paint, install doors, fix some electrical and plumbing issues, etc. There are some things I can’t or won’t do including building things needing a permit (new elevated deck), a kitchen or bathroom remodel, etc. The latter items are when I use an expert.
I got to thinking about this during some recent sports injury rehab on my leg. I had tried chiropractic, massage, stretching, cupping, and foam rolling. All gave short-term temporary relief but no long-term fix. Finally, I met a sports medicine therapist. He put me on an exercise program to build up the muscles supporting the injured area. And, it worked. Quickly!
Everybody reading this has an area of expertise. The trick is getting others to know about it. I think about most of the people I’ve used and its word of mouth. Personal and business friends have provided quality referrals, much better than I can get from any phone app.
Doesn’t matter if you’re an expert at making things, fixing things, providing advice, or something else. If people don’t know about your value proposition it’s a useless skill. So as with all businesses, it comes down to marketing. The more people who know what you do and how well you do it the better. You can’t be bashful about getting the word out.
“Whatever you do, kid, always do it with style.” George M. Cohan
Driving home from an evening meeting I was listening to “How I Built This,” an NPR interview show (and podcast) with entrepreneurs. This particular episode was a fascinating discussion with and story about Mark Cuban. Mr. Cuban is well known for being on Shark Tank and owning the Dallas Mavericks.
He became wealthy via a few business endeavors, the biggest one being the invention of streaming audio on the Internet. He said this came about because he wanted to listen to University of Indiana basketball games while living in Texas.
But, the point of this memo is something the host, Guy Raz, asked Mr. Cuban. At one-point Cuban was in his 30’s and a multi-millionaire. Raz asked why he didn’t just “retire” and not work. This is what separates entrepreneurs, good business people, and those who love what they do from the pack of people whose top dream is retirement. The reporter had a hard time understanding why a rich person was still driven.
I know firsthand about this because my dad went from the former group, as one of the most dedicated employees a firm could want, to the latter group after his company did something underhanded to a group of employees, including him. After he died I found a letter to his boss detailing how much sick time, vacation, and other “off days” he had, how he would use them to determine the date he could stop working, and have his retirement kick-in on his 62nd birthday.
Most, if not all, of the people reading this love what they do or are in the process of finding that something they’ll love. It really is a mindset.
“Normality is a paved road; it’s comfortable to walk, but no flowers grow on it.” Vincent van Gogh
The NFL combine is going on in Indianapolis as I write this. It’s where the best college players gather with team representatives to show off their skills. They sprint, lift, run obstacle courses, and are interviewed by coaches. One veteran reporter wrote, when asked how important this event is for coaches to evaluate talent levels:
The coaches know who can play. Now they want to know who can be coached.
Isn’t that business (and life) in general? When we hire someone we want someone who can be coached. We don’t want a know-it-all, we want someone who will be a team player.
It’s just as important when seeking new clients. In the class I teach at the SBA on growing a consulting business one of my favorite lines is, “The only thing worse than no client is a bad client.” When we solve a customer’s problem we want them to participate, heed our advice, and implement it. Being stubborn doesn’t work.
It doesn’t matter if you’re selling highly technical components for an end product, providing advice, or repairing critical equipment. It’s a lot easier when your client is “coachable.”
“Common sense and a sense of humor are the same thing.” Clive James
There was a story in the sports section about a Toronto Blue Jays pitcher who had just gone through baseball’s salary arbitration process. He is, to put it mildly, irritated with the team. He said it was tough sitting in a room hearing how bad you are for five hours.
Now let’s put that in perspective. As I recall, his salary was going to about double and the arbitration was over if it should be about $5 million a year or $5.5 million. I am guessing the team wasn’t badmouthing or denigrating him but giving statistical backup as to why their offer was justifiable (compared to his asking price).
My question is, why was the player in the room? Isn’t this something his agent should handle? There are reasons for agents, intermediaries, and other client representatives. When it comes to negotiations we can shield our clients. Someone can tell me what they think about my client, the offer, or anything else about the deal that might be taken the wrong way (and I can do the same to them).
We all know the feeling. I remember selling a truck, the prospective buyer showed up, and the first four or five things out of his mouth were all pointing out what was wrong with the truck. He thought he was negotiating. I thought he was insulting and there was no way I was going to sell it to him unless the offer was for the asking price, which of course it wouldn’t have been.
I’ve sat in meetings where business buyers and sellers have yelled at each other, and then closed the deal. If your skin is so thin you can’t take it, use a pro.
“Human beings are the only creatures who are able to behave irrationally in the name of reason.” Anthropologist Ashley Montagu
I had my annual client breakfast in February. My guest speaker was Aaron Blank, owner of The Fearey Group, a Seattle PR firm (www.feareygroup.com). His topic was, “How to break through the noise in a world of communication chaos.”
His presentation was extremely well received by the group of diverse-business owners (manufacturing, service, software, distribution, blue-collar, white-collar, etc.). Aaron mentioned how important it is to embrace your influencers, build your brand, how SEO and PR are intertwined these days, and gave some great tips on technology projects to make the job easier.
He finished with five tips. You’ll notice how four of the five are constantly mentioned or used in this memo.
- Use video, including live video such as Facebook Live.
- Blog, blog, blog, and have guest posts and blog for others.
- Publicize any news (about your firm and you).
- Reporters still matter but you have to target them and show them value.
- Build a large network.
His bonus tip might be the best of all – Keep it short and simple.
“The world is full of magic things, patiently waiting for our senses to grow sharper.” W. B. Yeats