Musing on Leadership and Entrepreneurs

I recently attended a panel discussion lead by Bonnie DiMatteo of Atlantic Consultants. She calls the program “Atlantic LEADERPRENEUR℠ Panel Series series. The premise is “Helping Entrepreneurs Navigate the Journey to Leadership.”

As we all know, entrepreneurs are very special people. They are willing to takes risks that many folks are not willing or able to do. They have a commitment and a passion for their vision and their values. They will go through walls, work non-stop to realize their values and vision.

At some time during their careers, as their businesses grow, they come to the realization becoming a leader is the next step in the process of success. This may be harder for some entrepreneurs than anything else they have done in their careers.

I have experienced that with my own companies in my career. As my businesses grew, I came to the realization I can’t do everything myself. Building a management team with the same vision, values, passion and commitment became the most important goal for the growth of the company.

It requires moving from player to coach. Mentoring the team, coaching the team, giving more responsibility for the day to day operations of the company to your team. Holding them accountable, patting them on the back, kicking them in the butt. There is less hands-on work involved, but much more management and leadership.

Here is a list of some of the things that I feel are absolutely necessary, in terms of developing entrepreneurial leadership. There are plenty more, depending on the business you’re in. But chew on these for a while, and let me know what you think.

• Dissatisfaction with the status quo, coupled with a strategic vision for improvement.
  
• Communication is crucial. Hoarding information does not make you more important or more powerful. The more you share with your team, the better chance they will all be on the same page as you, and working toward the same goals, with the same determination and passion. That is what power is.
  
• Flexibility in thought, word, and deed. Being open to all types of feedback, but also knowing when to hold on to your vision in the face of nay-sayers.
  
• Finding, hiring, developing, and retaining the right people for the right jobs. Then, get the hell out of their way, and let them use the talents that you hired them for!
  
• Help your people succeed by properly delegating. This means explaining the task / goal, providing the necessary resources, and adhering to a schedule of deliverables. Assign tasks to the right people; do not wait for volunteers. Create metrics to measure progress or lack thereof. Do not micromanage! You have more important things to do.
  
• Reinvention and self-improvement are key for the long-term success of your business. You don’t know it all. Understand where your own gaps in leadership lie. Keep tilling the soil of your knowledge and understanding through continuing education, coaching, mentoring, industry and empowerment conferences, and a good library.

These are just a few of the leadership traits that are necessary for the successful entrepreneur. Do you have any others that you’d like to add to the list?

Do You Know Who Your Stakeholders Are?

Recently, I was asked to conduct some interviews of “stakeholders” for a non-profit organization. When I began to make the list of people to speak with, it grew well beyond the usual suspects.

I began to think…in the for-profit world, do we really know who all of the “stakeholders” are?

What exactly is a stakeholder, anyway? 

BusinessDictionary.com defines stakeholder as "a person or group who has an interest or concern in an organization."

If we accept this definition, then stakeholders are definitely more than just the owners and/or investors. Think about it. You have a number of other important groups who may well be considered stakeholders, such as:

• Employees - Are employee interests truly a focus of your business operations? Treat employees as your most valued assets, by promoting a safe and nondiscriminatory work environment, and encouraging their participation in the business’ direction. In return, you get quality work and purposeful customer service.
• Customers – Are customers a primary influence for your company? Long-term relationships with satisfied customers are key to building sustainable financial success over time. Most organizations collect data on customers, in order to focus on more targeted and efficient marketing and sales efforts.
• Suppliers/Vendors - Supply Chain Management involves close collaboration between suppliers and business buyers, working together to deliver value to end customers. These relationships are essential, especially in logistics and distribution, as companies look to trim costs, increase customer value, conserve energy and natural resources, etc.
• Bankers – Does your business use some form of debt in its capital structure? If so, your company benefits its creditor by giving it a means to earn a return on the financing it provides. On the other hand, companies going through financial difficulties can negatively impact creditors through delaying interest or principal payments, or in worst cases, defaulting on the loan.
• Neighbors/Community - Many businesses view all those around them - locally or globally - as primary stakeholders, because important corporate decisions/actions can have either a positive or negative impact on many people, regardless of whether they ever engage in business with your company.
• Your Local Municipality - How significant is your business' location? Are the taxes you pay to local and state governments substantiated by the quality of infrastructure serving your business and your customers?
• Politicians – If your business is large, having a visible politician on your side can be helpful in getting some of your business concerns addressed. If your business is small, knowing which of your local and state representatives support small and medium-sized businesses can be helpful can be helpful in the same way. And the business success of their constituents is something that politicians can always use to reflect positively on their own leadership!

As you can see, there are a number of possible stakeholders for any business – and I’m sure there are others that are relevant to specific industries. It is imperative to consider your business’ impact on all of them when creating your business strategy and your strategic plan.

Adjustment Agent, Not a Change Agent

In my experience, when beginning a new assignment I see a lot of fear and uncertainty in the eyes of the employees.

On my first day of an assignment, I am being introduced by the “Organization's Stakeholder(s)” as a Consultant/Advisor who will “assist in making adjustments in the way we do business to set the stage for the growth we all know we can accomplish, but are not quite sure how to get there.”


UH-OH.

With that introduction, I must start my assignment by convincing the employee population that I am not here to “clean house,” take anyone’s place, or turn the place upside down. This - in and of itself - is not an easy task!


I begin by interviewing every manager in the organization individually, from the COO on down, asking each to share their thoughts as to how the company can be adjusted to run better and more profitably. In a small business or a family business, this question may not have ever been asked of them before.  Some are hesitant to answer, uncertain of how it would be received. I assure them that all responses are held in the strictest of confidence, with no attribution at any time.

This is how I gain their confidence, so that the management group will speak their minds. For the most part, the interview is very enlightening for them. Once that word gets out, the entire process to get the information I need for the future becomes much easier. 

From these interviews emerge “themes” concerning what people think the organization needs to remedy, in order to sustain future success. These themes can be:

• Lack of communications both up and down
• No Vision Statement or Mission Statement
• No Organization Chart or Job Descriptions 
• “I am not sure to whom I report!!” is never a good thing.
• Reliable and timely financial statement
• Budgeting “we never know how well are project is doing”
• Recognizing both the Strengths and Weaknesses of the company

After the interviewing process has been completed and an interim report has been made, it’s amazing how much the staff has bought into the process!
The operative word is “ADJUSTMENT,” not change.

It works. Give me a call to discuss.

Hiring a CFO

Do You Need to Hire a CFO?

In most successful small businesses, there comes a time when circumstances dictate a necessary change in the Finance department. The tell-tale signs include:

• The realization that your bookkeeper is not growing and developing as your company continues to grow and develop
• The financial reporting is inconsistent, concerning accuracy and/or timeliness
• The size of your company (revenue, number of employees, complexity of organization) will determine your need for a CFO
• When a company, especially a small to mid-sized company, has grown large enough to require accounting, treasury, and tax functions, as well as when strategic planning is needed for an organization
• When your top-line revenue grows quickly - hitting more than $5 million in revenue -  you start to have more complexity in your financial management
• When you have more than 30 employees. The larger your business, the more complex your financial operation.
• When you need a formal audit
• Whether to satisfy your business' stakeholders or a third party, such as a taxing authority or bank or venture capital investors, if you need to undertake a financial audit it's best to have a CFO in place
• Audits are required by regulators and exchanges if a company wants to hold an initial public offering (IPOs), or be involved in a mergers or acquisitions

OK, So Who Do I Hire?

Determine which qualifications you believe to be most important to that role. Traditionally, a CFO was simply the senior financial manager, the person responsible for preparing the financial statements, dealing with banks and investors, planning corporate tax strategy, and developing budget forecasts.

But nowadays, business is more complex. A CFO must be a strategic thinker, an excellent communicator, an organized manager, have a strong business sense, and have exceptional finance skills. He or she must be able to lead the Finance Department, but also the wherewithal to speak frankly and convincingly to the CEO, especially when aggressive or radical change clashes with fiscal responsibility.

Here are some traits, characteristics, and experience that CEOs should carefully consider in hiring (or promoting) a CFO. The priority of these traits will vary from company to company, but all of them should be weighted significantly when making this very important hiring decision.

• Accounting and Financial Competence: This is a no-brainer, in terms of the first priority. Many CFOs are certified public accountants (CPAs) and/or MBAs. The ability to put numbers accurately in a business context is absolutely essential to what every business needs to be successful.
• Integrity and Ethical Standards: Again, another no-brainer. While these traits are important for any member of senior management, it is absolutely imperative for the CFO. The proper handling of an organization’s finances can make or break the business.
• Financial Vision and Foresight: A CFO must be in tune with the business’ market, enabling him or her to create and implement business plans, and to anticipate financial management issues.
• Deep Understanding of Business: This may be important to your business, although a CEO may want to broaden these criteria to include hiring someone in a similar, yet different industry. In Finance, best practices can often transcend industry lines, but a fundamental knowledge of business is always necessary for the CFO.
• Excellent Communication Skills: The CFO needs to be able to communicate the financial health of the company to all stakeholders, and present complex information in a way that can be understood by non-financial people. This becomes even more crucial if your business is going public, as the CFO will be presenting information to analysts, potential investors, and the public.
• Confidence: A CFO needs the ability to make decisions on behalf of the company with confidence and assertiveness. People can sense fear and trepidation. As much as the CEO, the CFO needs to be able to “walk the talk.”
• Leadership: It is all well and good for CFOs to have confidence in themselves, but they must also inspire that confidence in others. This requires demonstrating emotional intelligence, self-awareness, self-regulation, motivation, empathy, and social skills. This executive will lead teams and manage people, not just be immersed in numbers.
• Perspective on Risk: The CFO should show a willingness to try new things and take calculated risks to grow the business and improve the financial position of the company.
• Results- Driven: The CFO needs to set goals that are specific, measurable, achievable, relevant, and logical.

Now, if you find a candidate with all of the traits listed above, my suggestion is to hire him or her immediately! But most candidates will have some, several, many, but maybe not all of these traits. As the hiring manager for this position, you need to assign a weight to each of the traits, and decide which are imperative for your business now, and which can be coached over time. As a CEO and business owner, this is one of the most important hires you will make. So take your time, and do it right!  If you're unsure about anything, let's talk.

The Importance of Job Descriptions and Organization Charts

Organizations must be flexible to be competitive. Many times employees are expected to do more than one task in a smaller company.  Having a multitude of responsibilities thrown at him can be overwhelming for a person who was hired to handle one specific job.  But on the other hand, multi-tasking is part of the fun for someone hired for a position that carries a variety of responsibilities. 

The important thing to understand is that, typically, the problem is not in the asking of an employee or group of employees to take on some additional tasks.  Most people do want to help, within reason.  The problem is that quite often, these extra tasks are for “when you get a minute,” or to do “on a slow day.”  And so these tasks get absorbed into an existing job that someone is already getting paid to do.  And let’s be honest, the assignment of additional job tasks may have more to do with the individuals involved than the jobs themselves.

This is where the water can get muddy.  What you need is to clearly and transparently document the responsibilities of each position within the company - not the people right now, just the positions that they fill.  Then chart how these positions are, or should be, grouped and stacked within the organization.

This type of graphic illustration can assist management and employees in understanding their roles and how they impact one another. 

Job Descriptions

Job Descriptions are the bricks that are used to build an organization’s structure.  Each full-time position should have one, and frankly, part-time positions and internships should have them, too. A thorough Job Description should:

• Clearly and factually state the functions and objectives of each position within the organization
• Include the boundaries of the position’s responsibilities and authority, including the job title, department, tasks, required experience and skill level 
• Be permanent enough for inclusion in an Organization Chart, but must be reviewed and updated regularly to ensure its relevance
• Provide an overall understanding of the position for the job holder and the immediate superior
• Provide a basis for the hiring manager to match an applicant to the job requirements
• Provide a basis for performance evaluation, improvement, potential promotion
• List the salary range or job grade level for the position

Organization Chart

Once Job Descriptions have been completed, the Organization Chart may be created or re-worked. The chart provides a visual map of all of the employees in a particular business, and clearly identifies direct reporting lines within a department as well as an entire organization.

The Org Chart is typically arranged in a pyramid shape -- hierarchically -- with the head of the organization at the top, and lines connecting each position to the one above him to whom he reports, and to any below him that he directly supervises.  Keep in mind that an Org Chart is a graphic illustration of the jobs that make up your company, not of the people who work at your company.  Not to sound cold or impersonal, but you are trying to build an organizational structure that will have a longer shelf life than any individual employee. Therefore, the Org Chart must be practical for any qualified individual, not just the person currently holding down the job.

That said, a clear Org Chart will

• Identify roles and design an organization structure to meet the business' long term objectives
• Clarify the chain of command, and functions, of each department
• Identify organizational imbalances and overloads
• Provide appropriate level of contact information
• Orient new employees as to who does what within the organization

Oftentimes in business, we get too busy with the day-to-day challenges of running a smooth operation and addressing customer matters that we lose sight of the importance of building a sound structure for our own company.  Let me tell you, this is a serious oversight.  Don’t wait for things to get too loose and disconnected before you document and organize your company.  Do it now, and then maybe things don’t get too loose and disconnected.  I have had first-hand experience with the benefits that clarity in job and organizational structure can bring.   Sometimes, it’s the one ingredient that pulls the whole thing together.

Back-of-the-House

Despite quality products, courteous service, and a spotless reputation, the ultimate success or failure of a business often lies in how well its “Back-of-the-House” functions. The Back-of-the-House is not sexy. It’s not glamorous. It's what the public doesn't see.  But it is vital to the success (or lack of same) of any business, like a strong foundation is to any new structure being built.

The Back-of-the-House is where data becomes information, and information becomes an essential business tool for every part of your business. The accurate and timely gathering, processing, analyzing, and reporting of business information creates a solid foundation on which the rest of your company thrives. On the other hand, weak or non-existent Back-of-the-House functionality will leave your business flapping in the wind.


Allow me to share a story about a recent client engagement. A few weeks ago, I completed an assignment for a wonderful small company. The owner wanted to grow his company, but soon realized the “Back-of-the-House” was not functioning properly.

We identified five things that needed to be addressed immediately, in order to facilitate the kind of growth that the owner was envisioning.

1. Financial controls and reporting were extremely deficient. They did not have the financial information to determine gross margin and profitability. They did not have controls for reporting cost of work in progress in terms of Actual vs. Budget.
2. There was no Organization Chart. No one was sure to whom they reported, or who reported to them. Employees frequently “served many masters.”
3. There were no Job Descriptions. The breadth and scope of each employee’s job was based on what they've been doing, and how long they've been doing it.
4. Responsibility and accountability were not delegated; only tasks. Not only did this slow the pace of business, it also prevented many employees from developing their own business judgment and acumen because they were only doing part of the job.
5. Owner felt the need to make all business decisions. All the time. While he thought he was taking extra special care and responsibility for everything in his company, he was, in fact, causing delays in production, losses in profit, and more than a few angry customers. Not to mention, he was also stunting his management team’s growth.

With these issues identified, they were prioritized and addressed directly. The following actions took place in the subsequent six months, which resolved a great many organizational problem areas, and made for a clearer path to success:

• A well-qualified, experienced Chief Financial Officer was hired, to provide timely and reliable reports on the business’ numbers and finances. The company will benefit greatly by having both up-to-date and historical numbers that they can use to chart their growth.
• An Organization Chart, based on specific job functions more than individuals, was created and approved. This will bring planning and order to company’s organizational structure, as it continues to grow.
• Job Descriptions were created for every position within the company, and every employee now had a written description of their duties.
• A Mission Statement and Vision Statement were created and presented to employees and customers. The reason for the company’s existence, and the goals it strives to achieve, need to be articulated to everyone who interacts with the company. And the company needs to be held to the standard of these statements.
• The position of Chief Operating Officer was created and filled, to run all facets of the day-to-day operations. The company’s owner is well-known within the industry, but the company’s reputation, as well as his own, was in danger of being tarnished because of his insistence of running, as well as representing, his company. With a dedicated COO, projects will be delivered on time and within budget, and customers will receive the level of quality they have come to expect. And the owner gets to do what he loves to do the most, and is best at - being the face of his company.

Keep the Back-of-the-House in good working order, and your business will be in a much better position to achieve the level of growth you seek.

What Have I Been Up to Lately?

In the professional life of a Business/Management Consultant, some assignments are better than others, for different and various reasons:

• The level of challenge
• The people with whom you work
• Cooperation or lack of same
• The amount of buy-in from the stakeholders

My last assignment had just about all the good things one could hope for.

In the beginning, ownership was skeptical as to what I could accomplish. Long term employees viewed me as a threat to their jobs and to the status quo, neither of which was true.

Instead, I represented myself not as an “Agent of Change” but as an “Agent of Adjustment”.

I interviewed the employee population. Asked them lots of questions. I assured them that all answers would be kept in the strictest of confidence, and no attribution given when I made my report to ownership. I kept that promise, and it worked out so well!

With the cooperation of ownership, we installed good financial reporting and controls by hiring an excellent CFO. We created an organization chart with job descriptions for every employee.  We hired a COO, so that the owner could do what he loves best and not have to worry about the day-to-day problems of running a business. We created budgets, something the organization had never done before! Each quarter we gave a report of the financial results to the department heads. The employees were thrilled to be included. Lots of questions were asked, and good answers were given.

At the end of the assignment (10 months duration), they had a farewell party for me. I felt very good about myself, knowing the company is going to become far more successful with all of these “ADJUSTMENTS.”

The moral of this story is that change does not have to be scary, threatening, or require a total upheaval to be successful. Effecting change by adding a few well-placed business adjustments really can make a significant impact on an organization.

8 Tips for Small Business Owners - Part 2

Last week, we discussed four tips for small business owners that will help lead their companies to success.  I hope you were able to step back, and take stock of how well you are applying those principles to your business, because I've got four more for you.

5. Know Your Competition

Yes, you have competition. Every business does. Don’t be stupid. Don’t be arrogant. No one “owns” a market. At the very least, each of your customers has the choice between buying what you sell, and buying NOTHING.

If you acknowledge that you do have competitors, then study them. Don’t copy them, don’t imitate them, but know them well. Not just their products and prices, but how they go about doing their business. The Art of War taught us to “keep your friends close, but keep your enemies closer.” The better you know your competition, the better you can fill a need that they are not currently filling.

And for you hardheads who still think you have no competition, consider this: you still have to be able to articulate to customers why buying your product is better for them than standing pat. Don’t laugh – “doing nothing” is one very serious competitor!

6. Business Planning

It is still amazing to me, after being in the business world for decades, that some small businesses and family businesses operate year after year without a business plan. It’s like trying to drive to someone’s house, and not having a map or GPS, and not even knowing the person’s address, or town or state! You just figure you’ll get in the car and figure it out on the way. Because you’re smart that way. Yeah, right.

Business planning is a complicated matter, depending on the depth and breadth of your business and your market. There are few generalities (other than to create a plan!) that can be offered in a short article like this, but here are two that go hand-in-hand.

One, always overestimate your expenses. And two, always underestimate your revenues. These two things, while they may not look pretty on paper when you write them, will make most end-of-the-year “surprises” be pleasant ones. It’s one thing to be ambitious with your business planning, but being realistic to the point of slight pessimism may make running your business a bit less stressful on you and your managers

7. Value Beats Cost

As stated above, sales are what keeps your business alive. The more sales you make, the better off your business will be. But sometimes, those sales plateau or decline, and you need to figure out why. Oftentimes, the knee-jerk reaction to declining sales is to lower your prices. Who can resist a good deal, right? Wrong. Assuming that you did your homework when you initially created your pricing, chances are very good that the cost of your product or service is not the reason people are not buying.

Lowering your prices does several things, none of them good. It devalues your product when the world knows that what you are selling is below the market norm. And think of those people who did pay the full price for your product. These should be your best customers, but now you run the risk of pissing them off when they see that you selling the same thing to others for less money. The same principal applies to those “New Customer” special deals. You’re going to give a better price to someone who has never used your product or service than you give to someone who is an existing customer? Really? Go back to point #1, and get your priorities straight.

Instead of fretting over pricing, concentrate on the value of what you offer. You can increase value in many ways, through innovation, upgrades, bundling with other products, or penetrating other markets. Concentrate on these things, and don’t become a discounter.

8. You’re Not Superman or Wonder Woman

Finally, the thing I have to constantly remind small business owners is that you don’t have to do it all yourself.   You don’t have all the answers. You don’t have all the skills. Hire intelligently, and surround yourself with smart, hard-working people with skills and experience that you do not have. Don’t look for clones of yourself; look for complementary pieces. When you find them, treat them well, give them the tools they need, and then get the hell out of their way. They’re going to help you be successful.

These tips, and those presented last week, are not silver bullets to bring you instant business success.  No such thing exists, you know that.  But these fundamentals are the foundation of a business built to succeed.  The rest is up to you and your team!

8 Tips for Small Business Owners - Part 1

You and I both know that there are untold numbers of books and articles written each year, advising business owners and leaders on how to improve their chances for success. There are thousands of ideas and things to consider, some of them old school, some of them bleeding edge. None of us who think about these things for a living have all the answers, but most of us have something to contribute to the challenge of successfully running a small business.

Whether you are a seasoned entrepreneur, or the proud owner of a shiny new MBA, I have compiled a short list of tips for your consideration. While you might be tempted to think that some of these are pretty obvious (and, yes, they very well may be), I would counter with the fact that knowing something, and being able to execute that something are two very different things. So read this first, and make sure you are doing (not thinking about doing, but doing!) the things on this list. Then come talk to me about the more complicated stuff.

1. Set Your Priorities
This is especially important for those who are starting a new business, but it is also something that older businesses need to be reminded of periodically. Cash flow is the lifeblood of any business. Sure, you can get a business going with loans, grants, investors, even your credit cards, but you will, at some point, need to pay the piper. And until the piper has been paid, you have that hovering over your head, and factoring into every business decision you must make.

Customers are what you need. Not “satisfied” customers. You need ecstatically happy customers. They will not only bring you repeat business, but they will tell their friends, family, and colleagues about you. Landing several of these kind of customers, and doing everything in your power to keep them loyal to you, is your Number One priority. Without customers, you don’t have a business; you have a hobby.

2. What Are You Selling?
There is a school of thought that says being the first to market with a new product or technology is the way to success and riches. And to the handful of businesses over the years that have been able to score on something new, that would seem to be the case. But upon closer view, there are thousands of struggling businesses, or former businesses, who thought for sure that their new brainchild was something that everyone needed and would buy. But they either over-estimated or misunderstood the public’s needs, or else they simply did not know how to introduce a new product or concept into the public’s imagination.

You need to offer what people want to buy, not necessarily what you want to sell. Having a small slice of a proven market is preferable to having a huge slice of nothing. You want to innovate? Great! Innovate from the vantage point of a sound market where the product is already an established item. Then, make it better. Bundle it with other things to create more value. Make it bigger, make it smaller, make it faster, change its color. Do what you can do to keep it fresh and exciting to people, but with the knowledge that the heart and soul of your product is already established.

3. How Are You Selling?
The “power trio” of business is Marketing, Sales, and Customer Service. Having one or two of these things covered is not going to make it. These three disparate functions need to play nicely together, and to provide the same message to the customer. If one flounders, the other two can rarely save the day. If two of these flounder, pack up the business and try something else. It doesn't matter what your business is. Marketing will put the idea into the customer’s head, Sales will make the promise of filling the customer’s need, and Customer Service keeps the promise with every single interaction. These three functions are your business’ foundation, not your product or your technology.

4. Know Your Customers
Don’t assume you know what customers want. And don’t guess what they want! It is your job to know what they want. Be certain. Have confidence in that knowledge… because YOU SPEAK TO YOUR CUSTOMERS. You ask them questions about what they like and don’t like about your product and your company. Then you give them MORE of what they like, and LESS of what they don’t like. This is not rocket science here, people. But it is amazing how few businesses really do this with any kind of intent. Oftentimes, companies send out surveys that are completely self-serving. What kills me is the companies that ask you to take surveys, and in the next breath, have the audacity to ask you to rate them as all “10’s” or whatever the highest score is. They are not using the survey results to better their company; they are using it to better themselves.

The better way of knowing your customers is to talk with them at every opportunity. Every time they come to your shop. Every time they call. Every time they keep an appointment with your salesperson. Just ask a few questions to get them talking. “What can we do for you that we’re not doing?” “What are we doing that you wish we weren’t?” “What’s coming down the pike for you in the next few years, and is there any way we can help you with that?” Simple little questions that show that you care. This is how you get to know your customers.
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Next week, we will discuss four more tips for running a successful small business.  Until then, work on the points listed above, and set your business up for success.  Remember, it's more than just doing the right things; it's doing the right things right!

React to This!

I was reading an interesting article, Your Problem Solving is Killing Your Growth, which made me think that perhaps  the value we continue to put on the ability to “put out fires” and “think on one’s feet” has turned our business world into a reactive one, rather than a proactive one.

The best way to be a “problem predictor” is to become a customer-centric company. In other words, ask the customers what they want, and how they want it. Their problems are your problems to solve. This is a great way to stay close to them and to avoid or resolve many issues before they impact business. The ability to predict - and prevent - future problems is a key component to your company’s continued growth!.

Strategic Thinking for Small Business: Where & Why

As a small business owner, you have most likely at one time or another referred to yourself as “Chief Cook and Head Bottle Washer.” For those of you in the food business, this may be a literal definition of your role. To others, it is a term that represents a business owner who does it all in his or her business. Sometimes, this is because you are a one-person operation. Other times, it’s because you like to… ahem… have control of everything in your business.

But whatever the reason you wear that tag, the fact is that the vast majority of your time is spent running the day-to-day operations of your business. While this may seem to you to be an appropriate, if exhausting, role, the fact is that while you are taking care of business today, you don’t have much time to think about tomorrow. And I’m not talking about tomorrow as one day; I am talking about the indefinite future.

If the world stayed the same for decades at a time, this would not be an issue. But you realize that today’s world is rapidly changing. This is no longer your father’s world. Hell, it’s not even the same world as five years ago. So how is your business going to continue to grow and thrive and remain relevant, if you don’t take the time to think strategically about the direction it will take in the future? This is the difference between working IN your business, as opposed to working ON your business.

As a business owner, you need to make the time to think strategically. You can’t just be operationally busy all the time; you need to escape the day-to-day business operations to focus on a short- and long-term strategy. And I’m not talking about doing this on your 15 minute lunch break, as you jam a sandwich in your mouth. I’m not talking about a 5 minute bathroom break.

Rather, I am talking about prioritizing your strategic thinking time as if it were an important client meeting. You know very well that if your best client or customer needed to have an hour long sit-down with you this week, you would make the time for that to happen!

But, you say, strategic business planning is for Big Businesses, the ones with layers of management with fancy degrees, who have teams of people under them to handle the day-to-day operations. To that, I say this: consider your smaller size an advantage. You are more nimble. You are better able to see an opportunity and switch gears to capitalize on it. You don’t have to sit through endless boardroom (or bored room!) meetings, while MBAs float theories and projections past one another. You are probably in closer touch with your customers, your employees, and your industry, than some bigwig Fortune 500 CEO. Use that to your advantage! Huddle together on a regular basis with your constituents – your top managers and customers - in order to address business challenges and explore options. Seize these opportunities to out-maneuver your bigger, slower rivals.

The Commercial Appeal, from Memphis, TN, recently did an online study where they asked small business owners: “How difficult is it to budget CEO time away from managing?”

Only 3 percent said they had “found a way to balance management and CEO duties,” and 8 percent allowed they were “inconsistent but getting better at it.”

However, over 50 percent of the respondents said they “can’t focus on CEO tasks for putting out fires,” while 33 percent of them completely rejected the premise with, “I’m a small-business owner, not a CEO.”

So, do you want to increase your CEO activity, especially on the strategic end? Here’s a suggestion:

At least once or twice a year (if not more), fire yourself from jobs that someone else can do. Promote yourself to jobs that only you can do. This will free up some time and put you on a course toward performing the tasks of a CEO, including charting the long-term course for your business.

Knowing When to Sell Your Business

Small business owners sell their businesses all the time. Every once in a while, they sell for the right reason, at the right time, and everything turns out well for them. However, more often than not, there is regret. According to a study by PwC, 75% of business owners are dissatisfied with the result of their exit. There could be a lot of different reasons for that dissatisfaction, but knowing when the best time to sell a business probably could have alleviated many of them.

Let’s look at some considerations for selling your business:

• You get an offer well above the company’s projected valuation – an offer you can’t refuse.
  These are the kind of small business sales that you read about, and that create buzz. For example, Facebook’s recent acquisition of WhatsApp, for the tidy sum of $19 billion dollars (yes, that is billion, with a “b”). While most of us know about Facebook, who the hell knew anything about WhatsApp? Obviously, Mark Zuckerberg and his people did, and the former founders / owners of WhatsApp signed off on the acquisition, and are now set for life.
  
  But please don’t start licking your chops right about now. This kind of deal does not happen very often, and it is folly to hope that it will magically happen with your business. Not trying to be rude here, just offering a dose of reality. So let’s move on to some more realistic considerations.
  
• Changes in your personal life will affect your business, and you need the extra money.
  The wrong time to decide to sell your business is when you really need to sell your business, due to life events that are not business-related. A divorce, a serious illness, a disabling accident to you or a loved one, gambling debts… you get the idea. I’m not saying that these types of matters are not as important as your business, but selling your business to resolve these issues will more than likely cause you to make an unsatisfactory deal. Ultimately, you will do what you have to do, to address whatever crisis you are facing. Just understand that this is probably the worst reason, business-wise, to sell a company.
  
• You look into the future, and see the writing on the wall.
  You feel that tough times are ahead in your industry. Evolution in technology or shifts in business or consumer needs may well render your company’s products and services obsolete, or at least less in demand. The value of your business may never be higher than it is now.
  
  You may also realize that global demographics are not in your favor. More and more Baby Boomers, who are retiring earlier, or find themselves unemployable, are starting small businesses. This could mean more competition in your industry. Smaller businesses, with less overhead, willing to do the work your company does, at a fraction of the cost. You may feel that you don’t need that aggravation, going forward.
  
• You see a more lucrative opportunity elsewhere.
  Your business may be too small to ever be big, and you've got some big ideas. The more you've learned about business, the more you understand the limitations of certain industries or companies. You want to accomplish more, and you know your current organization will not get you there. The neighborhood bodega is not going to evolve into a gourmet wine and cheese shop with an international clientele. So selling your small business may give you the financial leverage to get into a bigger game, where your ideas can really develop.
  
• Your company is growing faster than you can fund it.
  Your business may be getting too big to be small, and it is more than you can handle. While you are grateful for the success you've been able to achieve, you realize that you are having difficulty in keeping up with customer demand. You don’t want your reputation for quality and service to suffer, but trying to satisfy a huge influx of business may not be your strength. All of your instincts tell you not to turn away business, but you begin to think that maybe a larger organization could better handle the growing customer base.
  
• Your business is no longer fun, or interesting to you.
  When you started your business, you had a reason. It could have been your love of the industry, or a great idea you had for a product, or maybe you just enjoyed being a contributing member of the business community in your town or state. But it had to have been a good reason; people don’t go through the effort of starting and maintaining a business just for the hell of it. But whatever the reasons you had for starting the company, let’s just say, to quote B.B. King, “the thrill is gone.” If your heart is just not in it anymore, perhaps it is time to let someone else take it off your hands. You’re not getting any younger, and maybe selling the business is a good way to secure a comfortable retirement and diversify your wealth.
  
• Ultimately, the best time to sell your business is when the company and its sales are peaking.
  The best way to ensure getting good value for the organization that you have poured your life’s blood into is to take full advantage of the success it has shown. You've created a company that has strong management, and runs effectively without you overseeing every detail. Sales are strong, customers are happy, employees are engaged. This is the kind of business that is very attractive to buyers, and will command the best price.

The bottom line here is to start thinking and planning the sale of the company a few years before actually doing it. The stronger the organization is, the more you will be compensated for it. Unless, of course, Mark Zuckerberg comes snooping around.

Pointless New Year’s Resolutions for Your Business

I don’t know that “corporations are people,” but I do know that businesses are run by people, and therefore are prone to the same mistakes and miscalculations that we mere humans often fall prey to. And although we realize that the calendar is an arbitrary, man-made, slice-and-dice of the year, we still put a lot of emphasis on the late December – early January period as one of putting some changes into effect, in our personal lives or in our businesses’ lives.

In my view, New Year’s resolutions for your business are pointless if:

• You feel you have to wait for January 1 to implement them.
  This shows a lack of urgency to the resolution. Who is the genius that decided that the middle of winter was the best time to make changes in our lives and businesses? 
• You resolve to do (or not do) things without first establishing a clear plan to navigate to success. Winging it means you change some things kind of when you remember to do so. It does not show the commitment to change that is necessary. Without a clear plan, you do not have a resolution; you have a hope, a dream, a wish. Good luck with that.
• Your resolutions are too big. Rome wasn’t built in a day. I mean, even Lost Springs, WY probably took at least a few days to build. Very few people or organizations succeed when they bite off more than they can chew. Instead, break the big goals down to a succession of small goals, tied together with one purpose in mind.
• Your resolutions are too small. If your big change this year is that Fridays are now “Hawaiian Shirt Day,” it might be fun, but it does not qualify as a business resolution of change. Sorry. If you want to resolve to change something, then change something that will impact your business in a significant way.
• The resolutions you make in December seem like a big pain in the ass in January. If the love of the resolution dies that quickly, then you have to wonder about the importance / feasibility of the idea in the first place. 
• Your resolutions are directed by industry changes or regulations. They are no longer resolutions, but mandates. Do not mistake one for the other.
• Your resolutions are created solely by you, the boss, and handed down to your organization. Without input from your team, your business resolutions become personal directives from the boss. We know how much employees just love having change foisted upon them, with no say in the matter!

Frankly, the idea of New Year’s Resolutions for businesses is a cute one, but not terribly practical or binding. Strong businesses have a Business Plan, complete with tactics and strategies. This is significantly different than resolving to do some things differently in the coming year. If your idea for a New Year’s Resolution is something that will positively impact your business, then perhaps it should be included in your next version of the business plan, instead of simply “resolving” to do something differently this year.

Put that on your list of New Year's Resolutions!

Family Business Decisions

The good part about family business is that many of your co-workers, including management, are family members. 

The bad part about family business is that many of your co-workers, especially management, are family members.

When business decisions are made among unrelated businesspeople, there is usually discussion among senior management, and then the Boss (the CEO, the President, the Big Kahuna) makes the ultimate decision, and everyone goes along with it, if they wish to remain employed at this company.

In family businesses, the business decision-making dynamic is often blurred with the family dynamic.  Family roles were defined and ingrained long before most of the family members became part of the business team.  These roles often reveal themselves in business decisions, whether consciously or sub-consciously.

Oftentimes, there is consensus about a decision, be it a new technology, or entering a new market, or creating a new product, or moving to a new location.  But maybe it’s not a unanimous decision.  In the corporate world, such decisions are made, and if certain parties cannot abide by said decision, then maybe they look to work elsewhere.

But what if the lone dissenter is the patriarch, the owner, the founder?  Or what if the dissenting vote comes from the “favored” offspring?  Does a father tell his oldest child to find work elsewhere?  Does a daughter tell her father to get out of the way, because he’s standing in the way of progress?

These are sticky situations, for both the business AND the family.  These kinds of situations put some tough personal issues on the table.  Like, what is more important, a successful business or a unified family?

To avoid having business and family roles bleed into one another, smart businesses have an agreed-upon decision-making process in place, including what to do in the event of a divided vote.  If the resolution process of these types of issues is accepted and in place before a business decision is put on the table, then resolving them is a much smoother, less emotional ordeal.

In their 2005 paper, Ludo Van der Heyden and associates pointed out four distinct elements that should be in place to enable fair process in business decision-making:

·         Communication - Each person impacted by the decision on the table should be given an opportunity to share their views, and have their questions answered.

·         Clarity - Accurate details of what the decision entails should be provided, including perimeters and any changes it will create.

·         Consistency - A roll-out plan for each taken decision should be in place, so that when changes are made, the integration process is already familiar to the company.

·     Changeability - Flexibility around revisiting previously taken decisions and rules should be facilitated, to ensure that the business, and the rules it lives by, have the opportunity to evolve as the business climate changes.

If these four elements are the cornerstone of every business decision a family business makes, it will go a long way in making the process a smoother, more professional, less emotional one.  I believe these elements are important for all businesses, but with the additional baggage of previously-established family roles and relationships, they are imperative for the continued development of successful family businesses.