CEOs Set the Tone

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As you probably know by now having read my posts in the past, I am fascinated about how business people become CEO’s, and what they must focus on if they are to succeed at doing their job.

The other day, I was reading Adam Bryant’s Corner Office column in the New York Times, (read article here) and I really resonated with Blake Irving’s (CEO of GoDaddy) comment that “…when you’re the C.E.O., you get to set a tone from your seat that’s different than if you’re working within an organization. That ability — to actually shape the culture, talk about the things we’re going to do, how we’re going to treat each other, what we want our values to be — is different. I didn’t realize it until I was in the seat.”

Creating a culture that motivates, and inspires people to drive the business forward may be equally critical to driving revenue if the CEO is going to be successful in increasing the value of the business, which should be the goal of every CEO.

As always, I look forward to receiving your thoughts and comments.

97+ Experts on Driving Small Business Growth

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Check out my article “Growth Means Turning an Entrepreneur Into a CEO”  alongside dozens of other expert contributors in Recalculating 97+ Experts on Driving Small Business Growth.  We were each asked to write special 1000-word contributions for the book based on our expertise.  Topics covered are: Leadership, Finance, Marketing and Sales, Human Capital, Operations and Technology.

You can purchase the book on Amazon in either Paperback or the Kindle edition HERE.

As I have often said in my talks, and as I conclude in my article, ” In my experience with hundreds of clients, I’ve found that whether one chooses or not to grow the business, the principles of systematizing, being deterministic, and increasing value for the business still hold true for any business, and becoming a CEO may not be a choice after all.”

I look forward to hearing your thoughts.

 

The Long and Winding Road

 

Jon Reinfurt

As many of you know, I often talk about small business owners becoming CEO’s, so I was quite intrigued when I saw this article in last week’s Sunday New York Times Business Section (read full article here) focused on what it takes for a young person starting his or her career to eventually become a CEO in the corporate arena. In particular, I wanted to see if the long and winding road to the CEO’s job in the corporate world was all that different than the long and winding road to the CEO’s job in the world of small business.

No one doubts that hard work, brains, leadership ability and luck are key factors for climbing the corporate ladder, but new evidence shows having experience in as many business’s functional areas as possible and building relationships within an industry may now be just as important.

Data from a new study by LinkedIn of almost a half million onetime management consultants showed that experience in one additional functional area improved a person’s odds of becoming a senior executive as much as three years of extra experience. Burning Glass, a firm that scours millions of job listings to determine labor market trends, found a surge in demand for hybrid jobs, that incorporate expertise in different fields such as both technology and finance.

If as as Guy Berger, an economist at LinkedIn says that to be a C.E.O. or other top executive, “You need to understand how the different parts of a company work and how they interact with each other and understand how other people do their job”, then indeed the same is just as true for a small business owner who wants to become a CEO. There really is no difference!

I urge you to read the full article and let me know what you think.

Silicon Valley Apocalypse: Near or Far?

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In March of 2016 earlier this year I had written about how “Startups Remain Believers Despite the Warning Signs (article here), so I was enheartened to see an update by Katie Benner in the NY Times, August 28, 2016 Technology section that talked about how start-ups in Silicon Valley are beginning to narrow their focus (article here).

Seasoned venture capitalists warned that many start-ups would eventually suffer the plight of a very cold winter, and the worst was yet to come. However, despite these apocalyptic predictions, most start-ups are still here, but many of them have definitely made adjustments including layoffs and accepting smaller and more realistic valuations. Ms. Benner writes, “Entrepreneurs who once talked about how fast their start-ups were growing are now spouting from a bible of fiscal responsibility.”

Venture Capitalists are still sounding the alarms, and given the economy, the pending election, and world events, who knows what will happen to the stock market, and what that will do to the flow of funds for start-up ventures? However, as an entrepreneur, a business owner and a management consultant who has experienced the ups and downs of the marketplace many times, I am pleased to see that start-ups are paying attention and are more receptive to taking fiscal responsibility. My advice continues to be to take the time to understand your market, make adjustments where you need to, and also make smart investments where you need to as well.

Strategies for Success in Personal and Business Planning

Michael Gansl and Michael Korn provide precious insights on how business owners can make plans in order to attain their financial and personal goals through organization, making choices and increasing value.

Organize:

Manage and Systematize

Make Choices:

Be Protectionistic and Derministic

Increase Value:

Build Personal Wealth and Business Value

 

 

Is Wanting to be a CEO a “Stupid” Ambition?

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The other day I came across this article in Insights Stanford Business (Link here), and was quite intrigued by the title: “CEO: Refocus Your Ambitions”, and especially the subtitle: Why the CEO role can be a “stupid ambition”.
 
Well, it certainly caught my interest, because the tag line of my business, Voice of Reason Consulting, is that “We turn business owners into CEO’s”, and I can’t imagine why becoming a CEO is a stupid ambition.
 
So, I read on to see if I could understand what Paul Polman, CEO of Unilever was trying to say. (Link here)
Bottom line I agree with Mr. Polman’s statements that “People’s self worth should not be measured by net worth” and that “You need to have something where you want to have an impact and that aligns with your values. It will drive your passion.”
 
However, I firmly believe that any business owner who is invested in their business and is intent on growing their business must focus on 3 basic tenets: systematizing the business; being deterministic about the business: and ultimately increasing the value of the business. I would never call this a “stupid ambition”.
 
I welcome your comments.

Life Style Business vs A Business Poised for Growth – Which Would You Choose?

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If you’re thinking of increasing the value of your business, I believe that first and foremost, you need to know what type of business you want to be. Do you want a lifestyle business or one that is poised for growth?

In a lifestyle business, all the profits go into the business owner’s pockets. In a business poised for growth, most of the profits go into growing the business – systems and people.

If it’s growth, are you ready to deal with growing Accounts Receivables, Payables, Payroll, Employees, etc., etc. Growth requires hiring and firing people, training employees, developing a managerial level, developing vital and actionable executable business plans at every stage of growth. Growth may also require a significant financial investment or several investments over time – from whom – You? Private or public outside equity investors such as angel investors, venture capitalists? Bank debt? or both? Or growth may even require partners – silent or working?

If it’s a life style business, can you stay competitive in your marketplace without growing? Can you maintain the status quo in a changing marketplace? Do you have a book of business that a buyer will value and pay you for your past efforts? Be aware that buyers are paying for the future – their future with what was once your business.

Whether you have a life style business or one that is poised for growth, do you have a business plan in place? It can be an annual plan or one that is projected several years out. Does it include both your personal and company’s goals, your core values, how you will grow revenues, sales, marketing, finance, accounting? Is it a flexible plan? Can you change or pivot quickly if necessary?

Since business is never easy, since so many business do not succeed over time, it is truly critical to know which type of business you want to be when you grow up!

3 Steps for Sustainable Business Growth

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Step 1 – Systematize the business.

Processes need to be recognized, procedures need to be written down in order for the business owner to move beyond his/her own thoughts, his/her two hands, and for outcomes to become predictable. Employees need to be trained, they need to be consulted for their ideas as well, and together the systems that are the lynchpins of growth need to be formulated. I can’t emphasize strongly enough that this effort should start as early as possible in the history of one’s business.

Perhaps, one of the most important tools a business owner needs to master, is understanding that his/her accounting system provides crucial information for managing and growing the business. Accounting systems such as Quickbooks, or free ones such as Xero, Freshbooks, Zoho, and others are relatively easy to grasp and are one of the most effective tools for managing and growing one’s business. The P&L, the Balance Sheet, management of cash flow are too critical to leave to one’s accountant or bookkeeper to manage on an infrequent basis.

An important tool in systematizing one’s business is creating a Dashboard of Key Performance Indicators. You’ve heard the expression that “cash is king”. An example of a relatively simple but very effective Dashboard is one that helps you manage cash flow by integrating it with a Sales Pipeline and a Forecasting Legend to predict the probability of sales and cash available to the business. Using this critical tool, a business owner can choose to look at as often as he/she likes – daily, weekly, monthly, quarterly, to truly understand the health of the business, and whether it is capable of growth at any one point in time. The bottom line is you need to proactively manage your business life. Organizing and systematizing the business will ensure you do that. It really is about working on your business, not just in it!

Step 2 – Be Deterministic.

To make it real simple, I’d like to take the liberty of defining the phrase, “Be Deterministic “, as doing business that is NOT random, but my making the choice to act on a particular sales opportunity, by choosing which types of prospects you want to pitch your products/services to, by choosing to respond or not to RFPs, by choosing whether you want to sell on value or price, volume or quality, or even on a value pricing model where you determine the relationship of your product or services value relative to the price you charge.

Is being deterministic pie in the sky? Don’t we have to take business no matter from where or from whom it comes? I’m a realist – “ya gotta do what ya gotta do”, but as you grow your business it becomes even more important to do what you need to do – make real choices that enhance the growth and well being of your business.

One of the ways to becoming deterministic is to do a SWOT – Examine your business’ strengths, weaknesses, opportunities and threats on a regular basis. The SWOT is a picture of a point in time, and you need to know where your business is at any point in time if you choose for it to succeed.

Understanding the market you want to be in is another way of being deterministic. How big or small is the market you want to be in? How much market share do you need or want to capture? What is your competition like? What do you need to do to be competitive?

What about the actual target prospects/clients in your marketplace? What are they like? What are their must haves, nice to haves? Can you accommodate their requirements? Should you be dealing with a purchasing person who needs the best price or a manager who need to solve a business problem?

And, when do you decide NOT to seize an opportunity? Is it too small, too large, not enough gross margin to be profitable enough, not someone you want to do business with because you don’t trust them?

If you believe you always have the choice, and you are disciplined enough to use the tools you have, and keep looking to your market, and your targets for answers, you can be deterministic, and you will make the real choices to enhance the growth and well being of your business.

Step 3 – Build Business Value.

I would like to focus on building the value of one’s business that is poised for growth. From a high level strategic perspective, I’m going to suggest a business owner consider answering questions such as these:

Do you understand your business at any point in time? Understanding your market, your target audience, your own people, are all important components of the puzzle of increasing value. Have you systematized your business so it will function without you? Are you a great boss? Do you offer excellent company benefits? Do great people want to work in your company? Have you chosen the best possible people to help you manage and grow your business so they will carry the business forward without you? Have you created a business culture that sets your business apart from other companies in your marketplace? Have you created a Board of Advisors or a Board of Directors toad value to your business?

Do you have some intellectual property that will set you apart from your competitors? Should you apply for a patent, a copyright, a trade or service mark? Is it worth investigating any of these items? Will you be able to charge more for your services or products because you have any of these items? Will you be able to sell your business at a higher price if you have any or all of these items in your quiver of arrows?

Are you building your business on transactional sales or on recurring revenues or perhaps both? Are you aware of how your market and investors value businesses such as yours? Are you consistently profitable from year to year? Have you consistently invested in your business – both its systems and its people?

Engaging a Valuation Firm or enlisting the aid of your Accounting Firm is a way to determine business value. First, you have to ask what is the purpose of having a 3rd party value your business. Sometimes, for tax purposes, the goal is not to have the highest business value. On the other hand, if you are selling the business, well, I guess you would want the highest value possible.

Valuations can be determined in several ways including a multiple of revenues, or EBITDA which is essentially net income with interest, taxes, depreciation, and amortization added back to it, and can be used to analyze and compare profitability between companies and industries. Valuations can also be based on the selling price of public companies in an industry sector that matches your business.

One thing I can assure you, it is always a challenge to get the highest valuation for one’s business. But, if you can answer as many of the questions I’ve mentioned in this section, you will have a good shot at getting the value you desire.

My intent in this paper was to present what I think are the 3 steps for achieving sustainable business growth – systematizing, being deterministic and increasing business value. I would never say doing business is easy, but I believe knowing what the steps are for sustainable growth can help ensure success!

 

 

 

 

Thinking about selling your business?

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Just the other day, I gave a talk to my NetworkNetwork Group on Business Planning as a Strategy for Success. One of the topics I addressed was planning for one’s exit from the business. The NY Times must have heard about my talk because this article in the Personal Business section of the newspaper appeared a few days later! It also talks to small business owners who are planning to sell or have recently sold their business, and I thought it would be worthwhile to share some of the points made in the article with all of you.

  • The first piece of advice is to start running your business as if a buyer will come along at any moment.
  • Another piece of advice is not to run the business as if the deal is done before it is.
  • Part of running a business to be sold is regularly reviewing how it is doing relative to its competition.
  • And, as to the financial offer itself, the amount is always going to vary on the buyer and what the buyer wants from the business owner.

 

I urge you to read the full story here and let me know what you think.

 

 

Are you doing enough to make work meaningful for your employees?

I am always fascinated about finding meaning in one’s work, since it is so much a part of who we are and what we do for so very long, and work is so critical to our well-being for almost all of our lifetime.

In the Atlantic  Monthly recently, I fell upon this article by Uri Friedman who interviewed both David Brooks, a columnist from the NY Times, and Arthur C. Brooks from the American Enterprise Institute about how to make work more meaningful.

This is really an unbelievable statistic – in  a  Gallup poll conducted in 142 countries a few years ago,  respondents were asked  about  how they felt about job satisfaction, whether they felt  their work was important, and whether they believed there  were opportunities for growth in their workplace –  87% WERE NOT ENGAGED OR WERE ACTIVELY DISENGAGED – THEY WERE UNHAPPY AND UNPRODUCTIVE!

So if you are a business owner or a CEO, knowing that your employees may just be working for a paycheck has to be very disconcerting, especially since I hear many business owners so often say they are overpaying their employees!

The good news is that Both Brooks’ offer some advice for employees to make work more meaningful for themselves: attach work to ideals; recognize meaningful moments; serve others or don’t; ask why you do what you do; follow fear; be conscious of life stages; don’t invest everything in work.

And I would add that a business owner or a CEO who is  dedicated to making his/her company the best that it could be, must also be absolutely committed to making work as meaningful as possible for their employees.

I encourage you to read the full article and let me know what you think.

 

Read the full article here.