Archive for August, 2013

4 Decision-Making Tips for Business Owners

Tuesday, August 27th, 2013

Often, when I read something in a book or a book review, I think “Oh that’s just common sense.”Common sense isn't common practice in decision-making

But then I remember one of Stephen Covey’s famous sayings, “What is common sense isn’t common practice”.

What brought all of this to mind?

A discussion of the 4 steps in the decision-making process identified by Chip and Dan Heath in their recent book “Decisive”.

Can they be applied to business decisions? You bet. Are they practical and useful? I really think so.

Here they are.

1.  Widening your options. Psychologists have found that very often people focus only on one alternative when making a decision.

A business owner, for example, receives an unsolicited offer to purchase her business. At first, there may appear to be only 2 options – sell the company or tell the buyer to go away.

But, after more thought, the owner realizes she has other options, for example, to sell only part of her equity, or to look for other buyers and start a bidding war.

2.  Reality test assumptions. Confirmation bias occurs when we like 1 alternative more than the others and start to look for things to support that alternative.

For example, the owner thinks, “I really like this candidate for the VP Sales position”. That thinking can prevent him asking, “Is this person the right fit for the team?” or “Is this person’s experience relevant to our situation?”

3.  Attain distance before deciding. I often ask clients, “Do you really have to make that decision now?” And, many times, they don’t.

Waiting until closer to the deadline may allow more information to emerge – which has to make for a better choice. Note, however, that this is different from avoiding making a decision.

Even sleeping on a decision allows the owner to get some mental distance from what may be an agonizing set of choices.

4.  Prepare to be wrong. I’ve been working a long time. But I’ve yet to find someone who can accurately predict the future. No matter how thorough the analysis before a decision is made, it can still go wrong.

There are studies which say that even when doctors are certain they’ve made the correct diagnosis, there’s a 40% probability they could be wrong.

So why not have a contingency plan waiting in the wings? Why not, for example, take out some insurance and do some limited scale testing before a national rollout?

Do the 4 steps seem like common sense? They do to me.

But I know that I, and the business owners we work with, make these mistakes.

Which is why they aren’t as common in practice as they could be.

You can read the review of the Heaths’ book here.


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Want Your Company To Grow? Here Are 3 Words To Live By

Tuesday, August 20th, 2013

“We’ve grown from start-up to over $10 million in 6 years. We think we know why but I want to be sure I really understand why. Help me figure it out.”3 words your company should live by to keep you in business

A few weeks ago, a potential client said almost exactly those words to me.

In the 16 years I’ve been working with business owners, I’d never heard anything like it.

It’s the opposite of what many entrepreneurs say and do. Normally they’re very confident that, because they’ve been successful, their company will continue to do well.

More recently, I met with another owner. The revenues in her company have halved.

To her credit she’s trying to find a solution, trying to find a way out of the industry that has matured and declined on her watch.

“Just find me ideas,” she said, “I don’t need advice, we know how to be successful”.

An interesting contrast, don’t you think?

Then, the other day, I saw something interesting that pulled it together for me.

From their earliest days, we teach our children 3 important words – stop, look and listen. We tell them to do it before they cross the road or do anything else that could cause them harm.

As adults, we lose sight of the lesson. Ask the shareholders of Polaroid, or Kodak, or DEC – or Blackberry.

Stop, look and listen – it can keep you in business.

No matter how well things are going, take time out from the day-to-day operations of your company.

Let’s face it, if things are going that well, there’s no reason you can’t take one day a month, or even a quarter, to think about the future.

Look outside the walls of your office or company. What’s happening in your customers’ industries? How do they use your products or services? What alternatives are they looking at?

And what’s happening in your industry? What’s the worst thing that could happen? Do some contingency planning.

Listen – surf the web, find out what’s trending in your industry. Attend some events; what are the rumors about competitors? What are your suppliers saying? What are your contemporaries thinking about the economy and the availability of funding?

The companies I mentioned earlier weren’t blindsided by threats they couldn’t have seen coming. They failed to react to market changes and new competitors that were around for some considerable time. No one came from out of left field with no warning.

Their leaders fell so deeply in love with their success that they were unable to overcome the blinders they put on their own thinking.

Stop, look, listen or risk seeing your success swept away.

The “something interesting” I saw the other day can be found here.


If you enjoyed this post you’ll also enjoy 6 Tips for Protecting Your Long Term Success

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Keeping the Business in the Family – A Cautionary Tale

Tuesday, August 13th, 2013

The stories written by the children who bought family businesses should be mandatory reading for all business owners.

Let’s face it, the successors have a unique perspective. They’ve seen what does happen, not what might happen.

For example, a young Australian woman – let’s call her Alex – was told by her father that he had only 12 to 18 months to live. Would she buy the family business?

She, of course, said yes. Most of us would have done.

The company printed “What’s On in Sydney” and distributed it through every hotel in the city. Over the years there had been offers for the business, but they hadn’t met her father’s valuation so he hadn’t taken them.

Alex was a successful freelance writer. She’d never run a business and, until her father announced his illness, had never shown interest in the family one.

She co-opted a brother to redesigning the magazine, they built a web site and her father introduced her to all of her advertisers. And she got to spend 2 or 3 days a week with her father as he taught her the business.

But, after a few months, Alex realized that, while she loved writing, she hated selling advertising so much that she couldn’t keep on doing it.

And she had to tell her father.

So, one day a few weeks before he died, Alex called him. She felt devastated, that she had really let him down.

Soon afterwards he was admitted to palliative care.

With her father’s business partner, Alex found a business broker and put the business up for sale just before her father died.

What’s to be learned?

1.  Her father had passed up opportunities to sell the business because he was stubborn about the valuation that he wanted. He should have compromised. In these circumstances the company probably sold for less than it would have done had the sale been well planned.

2.  Alex responded with emotion rather than logic when asked to buy the business.

3.  Would things have been different if her dad had brought Alex and her brother into the business earlier? They could have complemented each other – Alex writing, her brother doing the design work and her father selling ads.

4.  With more time to prepare, they could possibly have hired someone to replace her dad.

Alex describes the experience as being “rough at the time”. That’s probably an understatement.

Losing a parent is hard. Watching one wilt under cancer has to be worse.

Moving into and learning a business is difficult in the best of times. Deciding to sell is probably one of the hardest things that anyone does in their life.

Dealing with two major life events at once cannot be easy.

And it’s all so avoidable. It’s called succession planning.

If you want to read the story in Alex’s words go here.



If you enjoyed this post you’ll also enjoy 4 Reasons Why Every Business Should Be Sold…..Eventually

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3 Questions Linking Strategy and Execution

Tuesday, August 6th, 2013

My friends think it’s a little sad, but I get excited when I find a book about business strategy that I haven’t read.The link between strategy and execution

I saw an article about one the other day, and was impressed by the author’s answers to 3 questions about the link between strategy and execution.

Judging by the article, the book focuses on larger corporations. But the lessons apply, I think, equally to owner-managed businesses.

Question 1:  Why do companies spend more energy on strategy development than execution?

Strategic planning off-sites usually take a few weeks to prepare and only last a few days.

But executing a strategy takes months or years during which time things go wrong – e.g. the economy changes, competitors react and the managers who developed the strategy leave the company.

Also there are more people involved in execution than in development. Some have different attitudes and levels of commitment to the strategy than the people who developed it. They may not really understand how what they do fits into the strategy or they become distracted by day-to-day problems.

So it’s easy to give up when things get in the way of execution.

Question 2:  What are the biggest mistakes, or most common pitfalls, when it comes to turning strategy into results?

A big one is failing to realize that there’s no silver bullet. Turning a strategy into results takes time.

Another classic is not putting a detailed implementation plan in place. Without one there can be no focus on key action plans and the responsibility and accountability for completing them. Nor will there be a process to manage the relationships and reactions between the constantly changing variables – e.g. resources, priorities, departmental rivalries – that are in play.

A third is that, in some bigger companies, management think that having created this beautiful strategy, their work is done. “Other people” have to buckle down and turn it into action.

Question 3:  What can you do to improve the odds of executing successfully?

Here’s where the saying “culture eats strategy for breakfast” comes into play.

Because the best way to execute successfully is to have a company that is “results oriented”. In those companies everything – the values, processes, individual rewards and, most of all, the behavior of the owner and management team – supports the achievement of the company’s goals.

Building this kind of culture isn’t easy and it can’t be done quickly.

It takes time build a workforce in which employees’ personal values match those of the company. And it takes time for employees to feel confident that they won’t be ridiculed if they suggest something new, or penalized if they take a risk and it goes wrong.

By the way, the book I found is called “Making Strategy Work: Leading Effective Execution and Change” and the author is Lawrence Hrebiniak. You can read more about it here.


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