Selling Your Business: Now or Later?

As you can see from this recent article in the Wall Street Journal, timing is everything when you want to sell your business.

Although this recession, in  many instances, has put off plans for selling a business, many people have good businesses that can be sold today for a “good” price, even in a bad economy. However, the prevailing feeling is “if my business is worth $X now it will be worth $Y in a few years, so I’ll just wait.” 

Very bad idea, very bad.

When I was looking to buy a business, I ran into situations like this all the time. The seller was looking for a price he/she was offered five years ago, but waited on the theory it will be worth more in a few years. But as we've seen, things change rather quickly these days, and before long, they realized their business was now worth substantially less than it had been. It’s a hard pill to swallow.

The moral of this story is that the passage of time does not always guarantee an increase in value of a business.  Sometimes, it is just the opposite.

I owned several businesses. I learned very quickly that timing is everything in life. When it’s time to sell, then SELL. Do not wait.

For more thoughts on this topic, I invite you to check out this article.  For some nuts & bolts thinking on the sale of a business, check out this article.

Delegating for Success

After reading an interesting article by Vanessa Merit Nornberg called Leadership: 4 Traits of Incredibly Effective Delegators, I had some additional thoughts...

Of all the difficult things a small business owner has to do, Delegation is one of the most difficult in the beginning.  It's a lot different than just giving orders.

Every small business owner or entrepreneur thinks he/she can do it better than anyone else. However, as the business grows you can’t do everything yourself. If you try, it will deflate your important people’s egos. They will feel you don’t trust in them or have faith in their ability to carry out their responsibilities correctly.

Try it. In the beginning it will be awful! However, once your people begin to succeed, they will be much happier and you will have time to actually run your business, rather than working 20 hours a day.

I learned this the hard way. I had some very unhappy people who were very important to the future success of the company. They came to me and asked for the responsibility. Reluctantly at first I gave it to them. The deal was they had to agree to be held accountable, as well. After a few stops and starts, it really worked well. Soon I had ample amounts of time to think about tomorrow while my management team worked on today.

Delegation is a wonderful thing - if you do it correctly, and with the right people.  If you are interested in delegating smarter, give me a call and we can discuss.

You Should Be Committed

John Spence has touched upon the Four Biggest Challenges Facing Industry Leaders in his recent article.  He explores some excellent points here.  However, I will take the liberty of adding a fifth:

Commitment

Nothing will get done well in any business without the 100% commitment by the CEO/Owner. The old saying goes “A fish rots from the head.” If the CEO is not committed then it is impossible to expect full commitment from any of the top management, department heads,  and so on down the line.  However, with full commitment from the CEO to a goal or ideal, dedication becomes contagious. 

What does Commitment feel like?
A corporate culture that lives and breathes the Corporate Mission.

Recently I received an email from a company that I had worked with in the past. They are only 20 years old but have grown tremendously, with offices all over the US and three continents. In the email they stated their corporate values then gave examples of the milestones they have reached in pursuit of these values. By taking these values off the plaque on the wall and communicating them in real terms to customers, partners and employees, they have demonstrated commitment in action.

What does Commitment look like? 
Everything each employee says or does is in the best interest of the company, fellow employees and vendors, and most importantly the customers.

A client in the service industry received a call from a customer on Super Bowl Sunday with a major crisis that couldn’t wait for Monday morning. The CEO took the call, and went out to the site himself with his top managers, where they assessed and fixed the problem. As difficult as it was to get his men away from the game, the fact the CEO was the first to be there, fix the problem, and now has a customer for life. Maybe even future Super Bowl tickets...

What does Commitment sound like?
The differentiation in the marketplace that says we are better than our competitors and we can prove it by action, not words.

I was involved with a manufacturing company as an investor and investor in a very competitive business. Moving quickly to respond to customers’ needs was and is paramount in this business. We discovered, through surveying our customers and prospects, that most companies were taking too long to get back to them with quotes. Sometimes it would take as long 2-3 weeks. 

We made a commitment to respond with a preliminary quote within 24 hours. There were some starts and stops in the beginning but once we reached our goal of 24 hours, we impressed the hell out of our present and future customers, and stood out immediately in the marketplace.  Money where the mouth is.

These are just some of the benefits of a truly committed leader, whether you are one, want to be one, or work for one (or wish you did).

Management by Objective

Management by Objective is not a new concept. It has been written about in many books and articles over the years. If used properly it can be extremely useful to any company. I used this in a company I owned many years ago. It was so successful I continued using MBO in every company I owned after that.

The concept is very simple:

• Create a set of goal for your company. When you do this make sure you include your management team. This way they will buy into and take ownership of the concept.

• You will have the overall goals for the company such as increased profits, increased market shares, etc.

• Present the goals to the whole company

• You then set divisional goals

• You then set goals for each individual within each division

• Make the rewards whatever you think will motivate the whole team

• The rewards are only realized when all employees act as a team. If there are slackers on a team, the other team members will put pressure on them to produce or leave.

This is a great team builder. But remember, if the CEO and by extension the management team is not fully committed to this concept it will not work.

Benefits of a Board of Advisors

Most small and medium size businesses think an Advisory board is just for big companies. Nothing could be further from the truth.

I have owned several businesses during my career. I have made more mistakes than I could count. However, I think the biggest mistake I made was one of omission: not having a Board of Advisors.

The CEO/Owner of a business is the BOSS, the decision maker, the visionary, the person at the top. This person will surround him/herself with a strong management team presumably. As a team, they will create the strategy to take the company forward. However, the company/CEO may need more than that to reach both his/her personal and business goals. This is where a Board of Advisors could be of crucial importance.

Assembling a Board of Advisors is as much an art as well as a science. Each member should have skills/experience in an area of expertise that will be helpful in advising and guiding the CEO. They should also posses access to other outside people that the CEO in the ordinary course could not reach. Board members will have a fresh outlook of the company. Bring new ideas to consider, do not be afraid to criticize the CEO. Be available when the CEO has an issue to discuss.

Members of a Board of Advisors should be paid for their services. Asking them to take a half to a full day of their time for a lunch or dinner is not a way to pay them for their expertise, experience and advice.

I have served on many Boards of Advisors. The CEOs that take this activity seriously will benefit greatly from it.

What Makes a Good Business Leader?

There are all kinds of ways of defining a good leader. Therefore there are no right or wrong answers to this question.

I think the best leaders are determined by results. However these results can be measured both quantitatively and qualitatively.

Quantitative:

• Did he/she attain the stated sales/profit goals?
• Did he/she attain the stated increase in market share?
• Did he/she launch an important new product successfully?

However, in many cases, the Qualitative measurements are at least if not more important in certain circumstances such as in a “turn around” situation or a new company start-up in its later stages.

• Does the CEO (leader) have a clear vision and able to articulate it to management?
• Has the CEO (leader) recognized his/her weaknesses and hired people who posses those strengths to fill those weaknesses?
• Is the CEO (leader) able to “rally” the troops to get the job done?

Both of these measurements are very important. Although sales and profits ultimately define the success of a good leader, long term success relies on the qualitative as well.

Hey, no one said this was going to be easy!

Bad Bosses are Bad News

I recently read an interesting post on Harvard Business Review's blog, called How Damaging Is a Bad Boss, Exactly?  Having witnessed the ill effects of poor leadership in businesses throughout my career, I believe that is a significant determining factor in a business' overall success (or lack of same).

Bad bosses cost the company in so many ways:

• Loss of good employees - the better the employee, the less tolerant he/she will be of a bad boss
• Cost of replacing and training - for every good employee you lose, there are valuable resources used to try to make up for that loss
• Bad morale -  your service will certainly suffer with a bad boss, as customers will bear the brunt of your employees' unhappiness
• Loss of productivity -  your business' production will certainly underachieve, if not suffer, due to lack of motivation

It is incumbent upon senior management to recognize bad bosses early and to replace them with good ones quickly. If not a company will have nothing but trouble going forward.

If a good employee is honest at an exit interview he/she will tell why they are leaving. Management should investigate immediately, and act quickly and decisively!