Archive for 2010

Strategy Made Practical

Monday, October 11th, 2010

Back in June a friend of mine Jeremy Miller at Sticky Branding commented in his blog that “When you get into strategy and planning you can easily get caught up in the MBA speak.” While I might have phrased it differently (probably because I have an MBA) he has a good point.

All of the business owners we talk to have a strategy. Some may not refer to it using the word “strategy”. But they can all answer 3 questions:
1. Why did you start the company?
2. What do you want to get out of it in 3 years?
3. How are you going to get there?

The answer to the first tells us what their vision and mission statements are. Their response to the second question reveals their goals and the answer to the third is their strategy.

Some colleagues argue that we’re over-simplifying. But we always get a response to those questions, while we’ve proved we may not if we say “Tell me your vision for the company”. If the answers we get are not complete we simply ask follow on or clarifying questions.

By asking the questions in a way that they can be easily answered we avoid making anyone feel uncomfortable if they’re not familiar with “technical” terms. And the responses are generally phrased in practical, pragmatic language.

Returning to a sports analogy for a moment, developing and executing strategy is like playing your favorite sport. We all have some level of skill at it but there are times when we need, or want, to improve those skills.

That’s when we get some help from a professional, e.g. a personal trainer. We usually get the best results when their input is in language we understand and is practical.

Imagine a personal trainer saying something like “The rectus abdominals and obliques can be strengthened using a vehicle with wheels which is moved by pushing pedals with the feet while the internal and external obliques can be flattened and the waist can be reduced.”

When they could just as easily have said “Cycling can strengthen your stomach muscles and trim your waist.”

We believe that to get the best results – steady growth and increasing company value – strategy has to be made practical. That’s one of the reasons we started the business.

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“You Can Achieve Any Result You Want To……”

Wednesday, September 29th, 2010

If you’ve read any of my earlier blog posts you’ll know that I play golf. I realize that not everyone shares my enthusiasm for the game so you will find absolutely no discussion of the technicalities of golf in the following paragraphs.

In fact, if you want, you can substitute any game you personally prefer and still get the benefit of the points I’m going to make.

At the beginning of the summer I decided that my golf really had to improve. As a result, I took some lessons from someone with the experience to help me improve my swing. He turned out to be a terrific teacher who not only helped me improve my practical skills but also gave me confidence in my ability to become a “decent” golfer.

At one point, when we were discussing my goals, he said to me “You can achieve any score you decide to.” These were words of great encouragement for me. When I thought about it later I realized that he was pointing out two things:
• I alone had control over how much of my potential I realized.
• My attitude would play a large part in determining how good I actually became.
Adrian also told me that I had to practice hard, 2 or 3 times every week.

I’m sure you can see where this is going.

After taking stock of my personal strengths and weaknesses as a golfer, he gave me the opportunity to develop a better swing by avoiding the threats of a bad grip, bad posture etc. (OK so I lied a little bit about golf technicalities.) This was the golfing equivalent of a business owner developing a strategy for growing her/his company.

But actually making an improvement in my game would depend on how well I executed that strategy – the consistency of each swing at the ball (a process); how often I practiced (implemented the action plan) and how I adapted to what happened on the course each time I played (regular reviews using feedback from actual results). Also similar to the things a business owner has to do when he/she is growing a business!

I don’t want to draw this metaphor out for too long so let me tell you what happened. For a number of weeks I practiced regularly, improved my swing and learned my lessons when things didn’t work out during a game. My scores steadily got better.

Then, just as happens so often in business, things began to get in the way. I had to go to the UK, then we had house guests arrive. Work was being crammed into early morning and late night sessions.

I stopped practicing regularly (lost focus on my action plan) because I “had” to deal with these other things. My performance on the course (that great golf marketplace) and my scores began to slide again. I did wake up before I’d fallen too far behind (that razor sharp analytical mind at work). And I have improved, but not to the extent that I might have done, could have done, should have done.

I fell into the classic trap that we face as business owners – the day-to-day, tactical stuff took more of my attention than the strategic stuff.

So, the lesson I’ve learned this summer is that I have the potential to achieve a “decent” score in golf. I was certainly able to develop a better strategy (swing) than I’ve ever had before. But my attitude to execution meant I didn’t get to reap the full benefit of my strategy.

But I am now keeping a keen eye on the execution of my business plan (see Physician Heal Thyself)!

The Next Research In Motion/RIM?

Tuesday, September 21st, 2010

Last year we helped a company called School’s Cool www.schoolscool.com with their growth strategy, including pitching to investors. In the interests of full disclosure we were paid for our work, but ProfitPATH doesn’t normally work with early stage companies.

We made an exception in this case for 2 reasons. The results delivered by their product are outstanding and they have been independently verified over a number of years. Secondly, the team – led by the exceptional woman founder – is driven by their desire to help people who do not have the advantages most of us do.

The School’s Cool program runs over 6 weeks and accelerates the developmental skills of children by up to 1 year in that period! It levels the playing field for children who would otherwise enter kindergarten unready, and thus have less chance of starting their education successfully.

We believe that School’s Cool, which is based in Haliburton, Ontario, could be the next Canadian success story. So did Flaghouse, a major distributor in the educational space, and their visionary, Canadian-based, lady executive, who signed School’s Cool to an exclusive deal.

And did we mention that over 50% of profits go directly back into charitable activities?  (All of this means they’re covered by the guidelines for ProfitPATH’s social awareness policy, which is why we’re blogging about them.)

Now School’s Cool has been entered in a world-wide contest for social enterprises that a) have an idea that could change the world and b) are prepared to “give back.” The contest is called “The Best Brilliant Ideas for Humanity.”

Here’s where you can help.

Go to http://www.bestideaforhumanity.com/profile.cfm?eid=148 and register so the organizers can validate your email address.  They will send you an email with a link to go and vote for School’s Cool.  Then tell your friends about this great Canadian company and post a message on your blog or Facebook page.

Physician Heal Thyself

Monday, September 13th, 2010

We’ve just finished the business planning session for our fiscal year which started 1 Jul 10, using the same tools and processes we use with our clients. But it’s so much easier when you’re telling someone else what to do.

The first thing was that we were late getting started. So we immediately broke one of our own cardinal rules – get next year’s plan in place before the end of the current fiscal year. This is something we preach relentlessly to the business owners we work with.

We had done all of the regular quarterly reviews of last year’s plan giving us, under some circumstances, a pretty good starting point for this year. For about a nano second I was tempted just to roll things forward.

But last year was our best year ever and the business had grown in some interesting new directions. Also, we hadn’t taken a look at our 5 year goals during the quarterly reviews. Rather than break another rule, we decided to do a full analysis and went through the lot – target market; competitive evaluation; product and service offering; pricing strategy etc.

So we set some dates on which we’d work through the steps – and then proceeded to change them, pushing them out. Well, I heard myself say, we can’t let day-to-day operations slip, there’s client work to be done; we can’t miss those deadlines. And a little voice asked “Hmmm, where have you heard that before?”

While we were figuring out where we had to be in 3 years’ time that voice in my head was back. At first I couldn’t believe it – that can’t be me. But it was – I’d slipped from consultant into business owner mode. I had to have a stern talk to myself – “Come on Jim, be realistic, where’s your objectivity?”

Going through the gap analysis and figuring out what had to be done was relatively easy. But when we got to prioritization and looking at the investments we had to make I actually broke into a cold sweat at one point.

Then I thought – I’ve done this dozens of times, what’s the problem; this isn’t nearly as difficult when we do it for other companies! The answer was really simple – it was my baby (I mean company); it was my future (I mean retirement plan); it was my money we were risking (for those nasty investments).

To make a long story short, we finished the planning process and identified 5 strategic initiatives I am convinced will take us to the next level. The action plans are in place and being worked on even as I write this. We made some minor adjustments but we confirmed again, from our own experience, that the process we use with other companies works.

And I promise to be more understanding with other business owners in the future!

4 Reasons Why Every Business Should Be Sold…..Eventually

Thursday, July 22nd, 2010

We’ve had a couple of interesting conversations result from the last post. It warned against letting fear caused by the short term economic outlook drive you into making decisions which will damage the value of your business in the long term. The reason for building long term value is so that the owner can get a good price for the business when he/she is ready to do something else.

One conversation started when a colleague suggested that not all business owners expect or intend to sell their companies. (When I say “sell,” I’m including the transfer of ownership from one generation to the next.) I’ve always believed that, on a day-to-day basis, most owners are more concerned with making the year’s profits goals than the value of the business as an asset. But it had never really occurred to me that anyone would not consider selling either for the right offer or when they’re ready to retire.

I can think of at least 2 things that would affect your expectation of being able to sell. One is thinking that your company couldn’t be worth much and the other is believing that it wouldn’t be interesting or attractive to anyone else. I have met owners who believed one or both of those things. It happens if they have never talked to anyone about how a business is valued, or they are too close to (and overwhelmed by) the day-to-day challenges of their situation. But, provided there is enough time, it should be possible to position any business for sale.

But to have no intention of selling your business! That jolted every Scottish cell in my body – and then some! My friend argued that some people start businesses simply to keep themselves – and possibly family members – busy and to provide them an income. I couldn’t argue with that, particularly if it was a small business in a very specialized field, although I couldn’t think of anyone I knew who thought that way.

It just all seemed so illogical to me. Whether they own a small business or a larger one, all entrepreneurs take the same risks. It’s only the extent of the risk that varies. But surely the perception of risk varies with the person taking it. What may seem to be very little risk to one person can still keep another awake at night. In that case the same 4 reasons for selling apply to everyone.

The first 2 reasons are all about rewards – one for taking risks and the other for investing time.  Why would anyone take the financial risks – personal guarantees to Banks, liability for statutory deductions and civil lawsuits, working without healthcare and pension benefits and the missed opportunity of a steady income working for someone else (and that’s only a partial list) – for only a salary and bonuses? In the early years the salary (if there is one) will be lower than an employer would have paid, so the bonuses (when they come) may only be a way to catch up.

Best case is that the salary and annual bonuses pay for the dream car, boat or cottage, provide a nice home for the owners’ families and give their children access to healthy hobbies and a great education. But what about the money to take great vacations with their spouse or partner when the owner’s ready to move on, the kids have gone or when the owner’s ready to retire? That’s the sort of thing that the funds from the sale of the company are required for.

The second reward is for the long, long hours – the evenings, the weekends, the missed vacations – which business owners pour into their companies. The annual compensation may seem good in absolute terms – but try calculating an owner’s hourly rate. And the countless frustrations they deal with during those hours – demanding customers, unreliable suppliers, unsympathetic financial backers, difficult employees, to name but a few.

Reason #3 – No one lives forever – but a company can easily outlast a person. Think about Wal-Mart, The Body Shop and any company that continues to thrive after the founder has moved on. A business owner spends a significant portion of their life building something which generates profits and cash – and jobs – on an ongoing basis and which gives them enormous satisfaction. So, why would they not want to see it continue (as a legacy if nothing else)? Perhaps it’s a characteristic of entrepreneurs that they believe they’re indestructible, even in the face of overwhelming evidence of aging.

The final reason (at least for now) is that we want our kids to have more than we did. Ideally the business owners’ children would want to spend their lives doing the same thing they have done, running the business. If that is the case, fine. But if it isn’t, the child could grow into the Doctor who discovers the cure for cancer, or a successful businesswoman in a completely different field. Either selling to them, or selling for them to do something else, is a great way to give them a start.

This is why we remind every business owner who will listen that there are 2 reasons for growing a company. It’s why I remind people that every recession I’ve lived through has come to an end. And when that happens some companies take off more quickly than others. They’re the ones whose owners refused to be panicked into doing things they would later regret. They kept long term value and the selling price in mind – when making short term decisions.

6 Tips for Protecting Your Long Term Success

Sunday, June 13th, 2010

Some of things I’ve written about in the past were confirmed recently by a man with an outstanding track record for building successful companies! I’ve followed the writings of Norm Brodsky http://blog.inc.com/ask-norm/norm-brodsky/ for a number of years. He’s built 7 companies and is blunt, to the point and often outspoken. In his March column in Inc. magazine www.inc.com Norm says……

Don’t let fear lead you into making decisions that will damage your business in the long-term. When you’re looking at implementing cost-saving or even survival strategies, remember that this economic downturn, like all downturns, will come to an end. Norm uses the example of a retailer of luxuries whose monthly revenues have dropped by 50%, but his logic applies to any business. So what does he say?

Point #1 – Don’t reduce your exposure to your customers. A lady he’s advising (Lisa) wanted to reduce the time that all of her stores were open by 2 hours a day. Norm’s point – she’s cutting her selling time by 25% to save an amount that doesn’t compare to the margin dollars she could make in that time. Our thought – across the board cuts to marketing expenses in B2B markets, without first weighing their impact, could just as easily produce negative, long term results.

Point #2 – Think about your people. Lisa had built her staff carefully over a number of years by hiring and training good people who reflected her values. Norm’s point – by cutting their hours she was cutting their pay – and risking losing them – instead of reassuring them their jobs were secure. Our thought – think about the knowledge of your business and the investment you’ve made in training that walk out of the door when you lose good employees.

Point #3 – Be creative when cutting expenses. Being in retail, rent was a big component of her monthly expenses. Because Lisa had 4 stores and had signed personally for her leases, her landlords were unlikely to renegotiate with her. Norm’s point – be creative in the face of apparent barriers. He suggested she ask for a short term reduction in rent which would then be added to the end of the lease. Our thought – brainstorm creative solutions and write down every idea that comes up, no matter how crazy it seems. This process will unfreeze your mind and help you find things that can be made to work.

Point #4 – Avoid the temptation to cut prices. Lisa suggested holding a sale. Norm’s point – instead do everything possible to hold the line on prices and add extra value instead, for example hold a customer appreciation event. Our thought – adding value takes so much more energy than cutting prices but once you cut prices how do you justify putting them up again? Bundle an extra add-on or service with existing products and services for a limited period of time.

Point #5 – Find untapped markets or other opportunities. While Lisa had 4 stores, they were all on the West coast. She had a dislike for both paying commissions and giving up control of her sales efforts. Norm’s point – she had great gross margins with which to pay commissions on what would be brand new revenues and she had to let go to grow her business. Our thought – Type A personalities (i.e. most entrepreneurs) hate giving up control and many (particularly the males, my wife assures me) have great difficulties moving outside of their comfort zone. But if you keep doing the same things then don’t be surprised if you get the same (or worse) results. The economy and our markets have changed dramatically – we have to do the same.

Point #6 – Using/increasing debt. With very strong margins Lisa had managed to stay debt free but now she was thinking of applying for a loan. Norm’s point – you can’t borrow your way out of debt so get a Line of Credit instead and use it only as an absolute last resort. Our thought – by maintaining your prices and margins and using creative ways of reducing costs you can keep on generating profit. By focusing on collections (perhaps by offering incentives for quick payment), keeping tight control over inventories and working with your suppliers you can keep the cash flowing.

Norm closes his article by echoing a couple of themes I’ve seen in a number of places recently. The first one is that, no matter how things look today, the downturn will come to an end. Our thought – it’s sometimes hard to remember when you’re shovelling the snow off your driveway in the middle of a January snowstorm that, in 4 or 5 months the golf courses will be open. But summer always comes. The second theme is that some companies will come out of the recession stronger than others. If you want yours to be one of them then you have to take advantage of your most important resources – imagination and creativity.

5 Tips To Improve Margins and the Bottom Line……

Wednesday, May 5th, 2010

Sometimes the old truths are the most important ones. A conversation with a client the other day got me thinking about these simple tips that can pay major dividends.

There are really only 4 ways to increase profits – sell more, improve margins, cut costs or do all three. Costs always have a habit of creeping upwards over time. So, particularly in these economic times, it pays to take a hard look at them and then eliminate the things we can live without. But there’s a limit to the extent to which we can cut costs before we hurt the company’s long term growth potential. To get steady, incremental increases in profit we have to sell more and improve margins.

There are only 2 ways to sell more – add new customers or increase sales to existing customers. In my experience, when we talk about selling more we tend to put the focus on adding new customers. But we know that it costs at least 6 times more to sell to a new customer than to an existing client. That’s not hard to understand when we consider the “acquisition” costs – e.g. advertising, telemarketing, etc.

Tip # 1. Don’t lose your least expensive prospects – existing customers. They must be convinced that we do a great job; otherwise they wouldn’t buy from us. Every business loses some customers over time, but when customers leak away, replacing them with new ones cuts into profits. The key is to focus on our “retention rate”. We need to have a process that alerts us when a customer stops purchasing from us. And we must find out why exactly they’re leaving – not simply make assumptions. Keeping customers satisfied is better for your bottom line than replacing them.

Tip # 2. Remember not all customers are created equal when it comes to profitability. Pareto’s rule tells us that 80% of our profits will come from 20% of our customers. But, how many of us slip into the situation, over time, of treating all customers as equally important? That actually hurts our profits because we waste money using the same marketing and selling techniques on everyone and treat them the same way when they contact us.

So, how do we recognize the 20% of customers who give us 80% of our profits? They are the companies who buy from us regularly and understand the value of what we do for their business. They focus on quality and reliability rather than price and they pay on time. Because they are successful in their field, they have the potential to grow, allowing us to grow with them. They may even refer potential clients to us. These are our “A” customers. Can you identify yours?

Tip # 3. It makes good business sense to treat “A” customers differently than the others. Everyone in the organization should know who they are. So, when they talk to them on the phone or face-to-face, answer their email, make product for them or pick their orders, these “A” clients get the most prompt, attentive, efficient service we can give. We should market differently to them too. Stay closely in touch personally and via email, e.g. send them our newsletters, and develop the relationship by figuring out how we can help them respond to the changes in their industry.

Tip #4. Watch the customers who offer some, but not all, of the benefits of our “A’s” very closely. They still focus on quality and reliability but may not have been around as long as “A’s” and so may not buy as regularly and/or as much. These are our “B” customers, and apart from what they do for our bottom line today, they have the potential to be the “A’s” of the future. Identify them and build a strong relationship with them. They may get fewer face-to-face visits than the “A’s” but they do get regular calls from our internal sales staff – a very effective but much less costly method of maintaining contact. They are also on our email database.

Then there are customers who buy smaller amounts consistently but who have very little potential for further development. These customers – our “C’s” – are solid contributors to the remaining 20% of our profits but the ones who may be most likely to drift away. Our sales and marketing strategies are designed to maintain these relationships in a cost effective way. Primary contact is via regular (but less frequent than for “B” clients) calls from internal sales and email contact about the products or services they buy.

The final group is easy to recognize – they complain most and buy small quantities of our products irregularly. That’s because they are focused on price and discounts. They buy from us only when we’re cheaper than our competitors – they have no loyalty. When they do buy from us, they are abrupt, demanding, they always need delivery immediately and people hate dealing with them. Processing their orders requires our staff to drop everything else and get them to the front of the line. They are our “D” accounts. Dealing with “D’s” can be so disruptive that occasionally they even cause us to make mistakes with the orders for the profitable customers.

Tip # 5. The final tip is to “fire” your “D” accounts. That’s correct, if orders from “D” customers are profitable they’re at the bottom end of the margin scale and the amount of resource required to get them out the door wipes out anything we were going to make. Yet we all have “D” accounts – why don’t we just get rid of them? We don’t have to be rude, simply play them at their own game – quote high prices or long lead times. They’ll make the decision not to deal with us. Do it often enough and they’ll stop calling.

Focus on your “A” and “B” customers and you’ll improve your margins. Match your sales and marketing resources to customer type and get rid of your “D’s” and you’ll improve the bottom line. Make retaining “C’” customers a priority; work hard at turning your “B” accounts into “A’s” and get your sales staff focused on understanding your “A” accounts’ business – then you’ll not only sell more but you’ll make more profitable sales.

Some “oldies” but truly “goldies” in these very difficult times!

4 Laws of Effective Implementation

Tuesday, April 27th, 2010

When we want something – for example more revenue, bigger profits, a new home, or a dream vacation we’re told that we have to do 3 things. They are set a goal; make a plan to reach the goal and implement the plan. But which is the most important – the goal, the plan or the execution?

There’s no doubt in my mind that the third thing – implementation or execution – is the most important of the 3. Many years ago someone told me that “A weak plan strongly executed is better than a strong plan weakly executed”. Just last week someone told me about a promotional piece that had been written for them some time ago. They didn’t think it was great but, having spent time and money on it, they decided to use it and much to their surprise it worked. Not perfectly, but sales did go up and they did attract new customers.

So, how do we make sure we tackle this key activity – implementation – effectively? Here are 4 aspects of execution that are so important that they could be laws. Follow them and dramatically increase the odds of achieving your goals.

Law # 1. The first law of implementation is that 80% of something is better than 100% of nothing. Don’t wait for the perfect opportunity, try to develop the perfect product, try to find a “breakthrough” strategy or write the perfect plan. You must take what you have and make a start – now, today. Because if you don’t then there will also be some reason not to start tomorrow and before you know it the month or the quarter or the year have gone – and you’ll have accomplished nothing.

Law # 2. Persist. There’s an old adage about 10 salesmen who hear about the same deal. In the early stages, it’s hard to get an appointment, the prospect is demanding but slow to return calls, and 4 of the salespeople become so frustrated they just give up. Four more drop out when the prospect begins to bring up objections and does price/benefit comparisons and asks for references. The moral is that the 2 salesmen who stay at it improve their odds of getting the deal from 1 in 10 to 1 in 2 – simply by persisting.

Law # 3. Be prepared to adapt. There has never been a plan developed that worked precisely as conceived and exactly on time. All plans are based on assumptions which, even if they are logical and include the most detailed information available at the time, are just that – assumptions. Effective owners and managers review their plans regularly, for example quarterly, and compare what actually happened to their assumptions. Then they adapt their strategy and action plans for the rest of the year.

Law # 4 is all about commitment. Once you’ve decided to implement a plan then support it by allocating sufficient resources to it. No half-hearted measures – buy high quality raw materials, train everyone thoroughly, make the right equipment available and put enough people on the job. Because anything less than total commitment will jeopardize the goal.

The odds are that none of the 4 laws are a revelation. But in the face of day to day pressures we all lose sight of lessons that we’ve learned, things that are common sense. Remember these 4 laws and you’ll achieve more.

4 Simple Styles Help Get Great Results……..

Friday, March 5th, 2010

When someone says they’re not a people person, what does that really mean? Do they mean it in the general sense – that they don’t like people? That seems odd because friends, parents, spouses or partners, kids – well, they’re all people. Or do they mean that they like people but just find them difficult to deal with? That seems easier to understand because we’ve all found ourselves in that situation at one time or another.

Why is that though, why are people difficult to deal with? Sometimes it’s because they’ve just made up their mind to be that way. You can still try to deal with them, but be prepared to fail (someone who has made up their mind to be really difficult will make sure you fail)!

Most often, however, it’s not because they, as a person, are difficult – or indeed that we are difficult. It’s because we either don’t understand the other person’s perspective on the situation that has brought us together and/or they don’t understand ours. Why, you ask, is that? Well, we all see things differently. That’s the result of our education, our background, our experiences and all of the other things that make us who we are.

The ways in which we see things, our perspective, exhibit themselves in what Dorothy and Robert Bolton call our style. There are no right or wrong styles or good or bad styles, there are just styles – and everyone has one. The key is to know our own and to be able to identify the style of the person we’re dealing with. The Boltons came to the conclusion that there are only 4. So, they’re not too difficult to remember or to use.

Each person’s style is a product of how Assertive and Responsive they are considered to be by the people around them. Assertiveness is the degree (relative to other people) to which we are seen as being directive or forceful. Responsiveness is the degree to which we are perceived as being either emotionally responsive or controlled.
• People with the Driver style blend a relatively high degree of emotional control with a high degree of assertiveness; they are seen as being decisive, pragmatic and efficient. Their opposites are Amiable types who combine a high level of emotional responsiveness with a relatively low level of assertiveness. Amiables are supportive, patient and loyal.
• The Analytical style is often found in, for example, accountants and engineers – two professions which typically attract people with high emotional self-control and a relatively low level of assertiveness and who are logical, thorough and serious. An example of their opposites is salespeople, who are often Expressives, highly assertive and very emotionally responsive. Expressives are outgoing, enthusiastic and persuasive.

Notice that I referred to Analyticals and Expressives as opposites (as I did with Drivers and Amiables). If 2 people with opposite styles set out to communicate how difficult is that going to be? Odds are that they may – to use the old expression – rub each other up the wrong way. But what will happen if the Expressive (seeking to improve his/her sales skills) has learned about the 4 styles and understands the typical Analytical’s style? The salesperson can adapt his/her behaviour to accommodate the accountant’s approach and steer the meeting to a win-win outcome.

What applies to a salesperson, applies just as much to the rest of us – particularly if we have people reporting to us. Taking time to adapt – or flex – our style to that of the people we work with means our company will benefit from the most effective efforts we all have to give. It also means less frustration and that everyone will be happier at work.

Understanding a person’s style also helps us understand how they will react when they are under pressure. The researchers established that all 4 styles move to more extreme, rigid and non-negotiable forms of behaviour when under stress. Analyticals become avoiders, perhaps even leaving the room when stressed, while Amiables acquiesce and comply, although they may not do what they have agreed to do. Drivers become more pushy and autocratic, insisting that things are done their way – now! Expressives typically unleash a personal attack accompanied by strong language, high volume and emphatic gestures.

Try this: think of 1 or 2 people you work with and figure out their style using the characteristics mentioned above. Then think about the last time you saw them under pressure. Did they behave as expected? Odds are that they did. We can use this knowledge to avoid or defuse potentially destructive situations.

We say people are our most valuable resource. So take a little time and figure out your own style. Then take a little more and do the same for the people you work (and live) with. Understanding and using these 4 simple styles will help you get a much better response from people – and leave them wondering why you’re never difficult!

To take issue with anything I’ve said, share your experiences or to learn more about the book “Social Style/Management Style” by Robert and Dorothy Grover Bolton, drop me an email.

Don’t Destroy the Long Term Value of Your Company……

Friday, February 26th, 2010

The economists are still trying to figure out how long and how deep this downturn will be. As a business owner I think they’re missing the point. The point is that this downturn or recession will come to an end as every one before it has done. That, and the fact that this one is different from any other, are the only things we can say with certainty.

There are 2 types of financial reward for being a business owner and, while it is still with us, the recession will almost certainly affect 1 – annual profits. For some companies they (and the bonuses and dividends that result from them) will be smaller than in previous years. But the recession should not affect the second reward – the ability to obtain a premium price for your business when you sell it – unless you allow it to. 

How do you avoid the danger of letting current events erode the value of your company? The first step is to ensure the (strategic) awareness that the recession will end influences every short term (tactical) decision you make. Keep your long term goals firmly in mind as you make the changes that are required in the short term. The second step is to continue positioning the business for its eventual sale.

The value in a company lies in it’s future as a going concern – independent of current ownership. The same things that guarantee that a company has a future – Plan, People, Process and Peformance in my language – make it independent of any specific owner. All potential buyers will look at historical financial results in arriving at a valuation for a company. But there’s more to a going concern than the strength of its past, normalized EBITDA. Informed buyers will look for the things that will continue to produce great financial results in the future.

Consistent, superior Performance is perhaps the most visible way of demonstrating your company’s potential as a going concern. While the performance during next year and perhaps even 2011 may not be what you anticipated only 18 months ago, remember that success is relative. Outperforming your competitors, and growing more quickly than the industry, for example, are tremendous accomplishments in a recession. Successful companies perform well in any market conditions.

If your business Plan for 2010 and the following 2 years has not been modified yet, this is a good time to do it. Modifying your existing strategies to, for example, put more emphasis on customer retention may be an option. Considering how to finance growth opportunities – resulting, for example, from weakness in a competitor – might be wise if cash flow is likely to tighten and external financing remains tight. But these steps are about changing how you will achieve your vision and goals, not about changing the vision/goals themselves.

Having a planning Process involving the management team – large or small – is one way to show the company is independent of the owner. Most companies have financial, operational and human resource processes in place. But some key processes, for example, a disciplined approach to developing and launching new products or selecting and entering new markets are less common and present owners with opportunities to increase the value of the company. There are also fewer companies with a well mapped sales process, which would give them everything from better forecasting to higher close ratios, than you might imagine.

Despite the fact that cutting headcount is a quick way to cut costs, this is not the time to let good People leave your company. My definition of “good” prioritizes those who, because of their experience in other growing companies, know what has to be done to add value to yours. A strong culture will drive a company forward regardless of who is at the top and is based on never losing sight of the values and beliefs on which the company was founded. The current situation is also an opportunity to implant strong change management skills and get every employee engaged by asking them to contribute their ideas for implementing the company’s strategies.

A flexible plan, wide spread use of well thought out, documented processes and people who can implement both of them will drive great performance – which will lead to great Profits. So, make the decisions required to meet today’s challenges in the context of building the company’s value over the long term. In that way you’ll reap both sets of rewards for the long hours, financial risks and strained relationships that come with the title of business owner.

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